Sound Knowledge from Nakata Consulting
Today I'm pretty darn excited to have my "secret weapon" guest blogging for me! Everyone, meet Joe of Nakata Consulting, my business manager, tax guru and all around helps-me-make-my-business-run guy! I was lucky enough to meet Joe about a year after I started my business thanks to the recommendation of some other local photographers. Up until that point I had been "winging" it, taking advice from others and online and trying to piece together all the things I needed to run a legitimate business. After meeting Joe with my husband we both decided that the smartest thing I could do for my business was to hire Joe and have him take over this area!
Because I know that this area can be incredibly overwhelming for beginning and established photographers alike I asked Joe to guest blog for me, sharing some tips for all photographers on a few of the key pieces to the business puzzle. So grab a pen and paper and get ready to take some notes. And if you have any questions for Joe, be sure to leave them in the comment section below!
Hi everyone!, my name is Joe and I act as Deb's business manager. By way of background, I am not a CPA or an account; my professional training is actually in law. I went to law school believing I wanted to be an estate planner, and I learned very quickly that in order to be an estate planner you had to learn the tax code. I had the good fortune to have one of the greatest human beings to have ever walked the face of the planet as my tax professor and mentor. He made the code approachable and interesting, and as a result I took to it. When I graduated law school there were no jobs, so I opened my own office and naturally gravitated toward people like myself; self employed and start-ups, and I had this "in" because I could help them with their taxes.
One early lesson I learned is that many small business people are great at their "art" but sometimes lack the business savvy to keep the back end of their business, like taxes, and administration going. So as a result I started to "moonlight" as folk's business manager- helping them with the back end stuff, like setting up systems for keeping track of income, expenses, invoices and all of the administrative stuff, including taxes. Today I work with photographers and small business owners all over New England!
Deb asked me recently if I woudl guest blog on the business side of things, kind of some "how to(s)" or important things to do in order to make running a photography business simpler. Here are my top tips to photographers running their own businesses:
(1) Every business needs systems. The most important system for a small business owner is what I call your infrastructure - In other words, a system that helps you track your income, expenses, costs, and assets. Income is simple, its money you make from selling your services or products (more on that later). Expenses and Costs sound alike but they really are not and that is why you need to think of them differently. Costs are the things we purchase in order to provide something to a customer. For example, if you promise someone an album you need to know how much that album, its design and the lab fees for the images cost us so that you can determine if you are charging enough, or just breaking even. Expenses are all the other things we spend on in order to keep our business running. Some are necessary (insurance, communication), others are discretionary (advertising, continuing education, professional dues). Assets are the tools which make your business run. For a photographer those are things like camera bodies, lens, and lighting. These items have value for your business not just in the year you purchase them, but in the years that come, so we need to track the money you spend on them differently than costs and expenses.
(2) Know what type of business you are. Photographers are service providers by nature; people pay you for your time and talent. At the same time, clients want "stuff" that are the by-products of that time & talent. As a result when you sell them something, be it a print, an album, canvas, or digital images on media (DVD/USB) you become a retailer. When we become a retailer that means we need to think about things like sales tax, shipping and packaging. In order to maintain your professionalism you need to handle the administration of this correctly, otherwise it can mar how customers look at you, and even worse financial implications for failing to report, collect and pay sales tax.
(3) Have a sound contract. And one that is tailored to the rules of the jurisdiction(s) or places where you do business. With the advent of the internet, we can find and download templates from almost any where; professional associations, contract business sites, and other profiteers. You have to be careful. Templates serve a purpose - they are good starting places, but you should speak to someone familiar with contracts for the state(s) you work in and make sure they are sound, and cover all of the important terms and situations for your business. Speak to friends and colleagues, seek the advice of professionals, but before you put yourself out there make sure someone gives it a look.
(4) Know the rules of where you do business. Just because you are a photographer in Massachusetts does not mean that you are only subject to Massachusetts laws. If you travel or shoot in other states, you need to be familiar with the rules of those states, including, things like deposits, sales tax and liability to others.
(5) When it comes to income taxes, resist the temptation to do it yourself. If you do not have a significant other, or a family member who has prepared taxes as a professional, seek the help of someone. The laws change each and every year and it very important not only for your liability from the prior tax year, but also preparing for your liability in the present tax year that you are prepared, and that means having someone who know what goes where and what deductions you can take both on the professional and personal side of your tax return.
(6) Network. Treat others in your profession as colleagues, and not as competition. We can learn from others, and so we should treat others in the same way we would want to be treated in return. Never underestimate the value of "people" to your business. Self employment can be lonely, so do not make it isolating by pushing people away. Take the time to know your colleagues, the service providers you work with, and your clients. The best advertising we can do is word of mouth. Do a good job, be a good person, be humble, and remember "nice guys (& gals)" do not finish last!
Thanks so much for sharing today Joe!! I know that this information will be incredibly helpful to other photographers out there!! Like I mentioned before if you have any questions leave them in the comment section below!