The Photographers Guide to Taxes

Aug 05, 2023

I had the pleasure of interviewing Desi Alejandre with Desi Tax Service the podcast and together we took a deep dive into taxes for photographers! This is a MUST read! 

 

About Desi:

Desi Alejandre is the owner of Desi Tax Services located in Broken Arrow, Oklahoma. Desi offers taxes and booking services for entrepreneurs and small business owners. She can work with clients throughout the United States. Desi works with her clients to have a solid tax strategy.

 

What is the different between a sole proprietorship and an LLC from a tax stand point?

 The purpose of an LLC is to protect your personal assets from any business liability. What a lot of people don't realize is that if you are an LLC and you use your business bank account for personal uses or if you continue to use your personal account for business uses, you actually make your LLC void and you are no longer protected from any liability. When it comes to actual taxes, they are the same. To the IRS, you are still a sole proprietor. Where it can be different is if you elect to be an S-Corp or a Corporation. The differences between these two come from a legal standpoint, not a tax standpoint.

 

How should we be coming up with the amount we should be paying in taxes?

 Every tax professional will have their own opinion on the percentages, but there is really no right or wrong answer to this. Desi recommends saying 15% of the revenue of the business, which is income before expenses. Everyone is different and have different situations, so it is best to talk to a tax professional to find out about your specific situation.

 

At what point is it no longer a "hobby" and you have to pay taxes?

 The IRS says that if you receive $400 or more in self-employed income, you are required to file a tax return. The IRS defines a hobby as any income from an activity you pursue because you enjoy it with no intention of making a profit. 

 

Are any expenses you have in your business able to be deducted to get your net income?

 Clothing is an expense that is not allowed to be claimed as a business expense unless it has your business logo on it and it is only used for business purposes. As a photographer, the outfits you buy for weddings are not tax deductable because they don't have your logo on them. Shoes fall under the clothing category. 

In the past, meals for client meetings were 100% tax deductable. As of 2023, meals for client meetings are now 50% tax deductable. This would include paying for both your client and yourself. 

 

 How often should we be paying taxes for our business?

 Quarterly taxes are recommended. Quarterly taxes are required if you are expected to owe more than $1,000 at tax filing. If you don't pay your quarterly taxes and you are required to, then you will receive a penalty from the IRS.  Keep records of when and how much you pay in taxes.

 

When a photographer goes and buys a new camera or equipment, should they be having this as an expense?

 Any single item that is less than $2,500 is deducted from the revenue, giving you less taxable income for tax purposes. An item purchased over $2,500 should be depreciated over time and not claimed all at tax time. 

 

Are healthcare premiums a deducation for photographers?

 You can only claim health insurance premium write off's for months neither you or your spouse where eligible to participate in an employer subsidized health plan. An example is if you are a single photographer and not eligible for employee health insurance through another job, you can deduct the premiums you paid for your health insurance. Just note, the deducation can not exceed the amount earned in the business. 

 

What are common deductions that photographers would have at the end of the year outside of common business expenses?

  • Bank/processing fees 
  • Milage for traveling to sessions
  • Home office space - mortgage, electricity, wifi
  • Cell phone payment

 

Do we need to keep receipts for everything we spend money on?

 Receipts are only required for transactions over $75, all meals, and all travel. Digital copies of your receipts are good to keep, don't need to keep the actual physical receipts. You do not need to give your receipts to your tax professional. 

 

When you hire a second photographer/contractor, are there any forms that you or they need to fill out?

 A second photographer will need to fill out a W9 form which is an information form. You are not filing a W9 form anywhere. It is recommended to get this form filled out form before you hire and pay them. We (the business owner) will file a 1099-NEC form with the IRS, using the second photographers information you collected from the W9 form. This is how you report to the IRS what you paid the contractor for their services. 

 

Get an exclusive discount with Desi Tax Service! 

DISCOUNT INFO: reach out to Desi and let her know you listened to today's show to get 15% off 

For the CEO: 15% off cleanup services + 1 month free if signed on for ongoing bookkeeping services.    For the DIY-er: 15% off cleanup services + Training on how to maintain cleaned-up books!

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