Earned my first $1.00 today

Started Jul 23, 2012 | Discussions thread
LeoG
Junior MemberPosts: 44Gear list
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Re: creative vs real accounting
In reply to PenguinPhotoCo, Jul 24, 2012

PenguinPhotoCo wrote:

You are doing creative accounting then.

If you are indeed paying yourself then you are NOT in the black!

As I gave no Gross numbers it is hard for you to make a statement like that

If you have say, 10k in gear and have now down 10 $1k jobs (simple math) you have brought in as much as you spent on gear - but you have not paid yourself.

covering equipment and hard case goods is a fraction or a % of the fees you charge a client. The rest is overhead, taxes and my time. Only I can put a value on my time and adjust %. In the beginning my CAPEX was 70% I can keep it there to help fund future assets (gear) or shift it more to the labor/time side and a higher % of taxes also.

If you do real accounting - as in account for everything - you have perhaps 5 hours per shoot of your time, advertising/marketing time, shopping time, education time. If you worked for a company you'd expect to be paid for ever hour you spent on work, right?

So you've got 50 hours of direct labor and an easy 50 hours in other labor, so 100 hours of time.

Taxes get paid first then Employees then the hard bills, then whatever is left over is profit. (ok, some biz don't pay their taxes first but that can / will shut you down at some point).

So if your time is worth say, $15/hour (if you had to hire someone to do the work what would it cost you? Why would you work in your own company for less than an employee would get paid?) so you've got some $1500 in in payroll on top of your 10k in gear.

So you've not made $14, you're still in the loss column by $1386.

This is one of my peeves with 'part timers' - they claim to be running a business, to be competing fairly with others then do all sorts of funky accounting to prove they're profitable. Few are profitable at all. Paying for your gear isn't being proftiable, it's paying for your gear.

What you are not seeing is Gear is an ASSET.... Regardless of what depreciation method you use it still has a book value. Whether its 10% or more closely for photography equipment 50%...... So if I have payroll/labor liabilities of say $20,000 and booked assets after depreciation of $20,014 and close down tomorrow what is my take-away?

Assuming you're running a real business and you do real accounting, then you have deductions - home office (space, utilities, furniture, etc) overhead (website, insurance, computers, software, the gear -things you pay for whether you get one job or 100), marketing/advertising costs (samples, displays, website, cards, take clients to lunch, etc), transportation (mileage, parking, tolls).

I'm sure few part timers consider mileage on their car as an expense, but the IRS lets you deduct about 50c a mile to cover gas/maintenance/insurance because they feel this is what it costs you to run the car. I average about 5,000 miles a year for the business use of my van, or $2500. That's as much as a good lens or body and it is a real expense that is only there because of the business . So the business income has to pay it.

I have line items for all my expenses and Income from sales (prints) or shoots.
There is nothing "creative" in that

So be creative in your imagery, your marketing - but not in your accounting. You are only fooling yourself - cheating yourself - and you'd never stand for it if someone else counted your money that way.

TO ME, Photography is a hobby...meaning it is something that I do. If it makes money, or costs me money its how I choose to spend my time. would I love to make a living at it? You bet!!!

Most people have there hobbies(money pits)... I have friends with their Home theaters, fishing boats, BBQ pits bigger then my truck, golf clubs that cost more then my lenes, enough hunting gear to be out in the woods for a year, auto clubs, and homes that look more like a sports museum. ect.
Not saying that they can't cant make a income in what they love.

I have a passion that is marketable... easy as that.

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