Keeping Track of Finances for your Photography Business
I am by no means a financial expert at all but I have found that over the past couple of years, having a strong grip on my finances has helped me confidently grow my business and make really big decisions for it! It’s allowed me to take (very) calculated risks like going full time with the business, knowing when to invest in very expensive gear or an educational retreat or workshop. I have traditionally always been a numbers person because of my engineering background but didn’t formally learn about finances at any point! A lot of what I’ve learned about finances has come from managing money for the business.
I think that anyone can get in the routine of looking at their finances on a weekly basis and that in doing so it’ll turn your fear of them into a really positive and healthy way of understanding and running your business. Your numbers provide clarity and can help you focus within your business!
Here are three tips to get a better understanding of your numbers!
1. Use Quickbooks or an Excel Spreadsheet to track your income & expenses
I recommend having one central place where you can look at a couple of key metrics all in one place! HoneyBook does have an option to track receipts and look at your upcoming income but I like using Quickbooks to easily track all of my expenses in one place. Quickbooks pulls transactions directly from my accounts & business credit card so that I never forget an expense! It also allows me to track mileage which is a deduction and saves me thousands of dollars every year!
I also use a spreadsheet in tandem with Quickbooks to get an overall picture of my yearly overhead expenses (tools/platforms/software needed to run the business) and my cost of goods sold (so any costs associated with photographing a wedding or shoot!) as well as my income projection for the year. This way I know exactly how much money is going in and out of the business on a monthly basis. It gives me a good annual overview and shows me when I need to concentrate my marketing efforts and plan for a low-income month. This is especially important since my bookings do tend to be seasonal where I have a peak in January and in the early to late fall!
If you need an overview of your businesses’ expenses to help you plan for the future & make wise investments, you can grab my easy to edit Excel document here and start using it in your business today! If you have any questions about it, feel free to email me firstname.lastname@example.org.
2. Keep 3-6 months of business expenses in your bank at all times!
Using that spreadsheet, you’ll get an idea of what your yearly overhead expenses are. It’s super important to know exactly how much money you need to keep the lights on in your business. I divide this yearly number by 12 and know the exact monthly total I need to keep the business running on a day-to-day basis.
Knowing this, I can make sure to always keep 3-6 months of operating expenses in the bank account. This really helped ease some of the panic and anxiety when the pandemic broke out and I realized I wouldn’t be taking any new portrait shoots for the next couple of months.
If you need any help figuring out what your monthly operating cost is to keep 3-6 months worth of it in your account at all times, you can grab my Excel document here and start using it in your business today!
3. Know your breakdown of annual to quarterly income needed
Ok this is a big one guys! In order to know your annual goal, you first have to be aware of similarly how much your business needs on a monthly basis to how much you need in your PERSONAL life on a monthly basis! This tells you how much your business needs to pay you on a monthly basis. If you’re still in the early stages of your business, maybe you aren’t paying yourself and you’re reinvesting into the business itself.
But eventually, you want to be able to pay yourself for the hard work that you’re doing day in and day out! Figuring out how much to pay yourself can be really hard to do in a business since you have to make sure you have enough left over for those operating expenses and taxes. Again, I’m NOT a financial advisor so I can only really speak to what has personally worked well in my own business! Make sure to consult your own for how this applies to your specific business!
I allocate funds based off of the general principle of paying myself 50%, saving 30% on taxes and running the business on 20% of the overall income generated. This means that based on my personal budget, my business needs to make 2x what I plan on paying myself to cover my monthly expenses (plus a little to save and invest). This tells me the annual number that I am striving towards as well as my quarterly income goal for the business. I used to break this down into my monthly goal and am still away of the monthly income number but I realize that with a seasonal business some months are going to be higher income-generating months than others so I now look more to the quarterly goal!
There’s a tab on the Excel document that shows your current annual projection as well as your quarterly breakdown as well as your actual profit when considering your monthly expenses. It helps you visually track your progress which has been really helpful!
4. Quick bonus tip – move over money to your “tax” account on a monthly basis!
If you’re a business owner, chances are you’re paying sales tax to your state and quarterly income tax! I always move money over to my tax-only bank account on a monthly basis to pull for tax-related expenses! It helps me ensure that I always have enough to cover these important expenses. I make this a part of my monthly checklist and use HoneyBook (for state tax) & Quickbooks (quarterly tax) to help me calculate the exact amount I need.
If you’re looking for some backend business organizational tools that will help you better keep track of your finances, I recommend looking into both Quickbooks and HoneyBook. Both are tools that my business could not run well without! If you’d like to try them out, here are my discount codes for them: Quickbooks (50% off your first year) | HoneyBook (50% off your first year!)
I hope this blog post was helpful, be sure to reach out to your financial advisor to make sure you’re implementing these tips correctly for your financial picture & business!
READY TO RUN YOUR PHOTO BUSINESS IN HALF THE TIME & 3X YOUR PRICES?
If you’re wondering what the inside of a successful & streamlined photography business that focuses heavily on creating an incredible client experience, then the Behind the Business Course & Toolkit is for you!
It includes everything from email templates, client questionnaires, workflows for portraits & questionnaires, a breakdown of a profitable marketing strategy & how to streamline and organize each and every part of your business to grow it quickly through happy clients.
More of a visual learner? Be sure to watch the totally-free masterclass to uplevel your client experience and triple your prices!
More Great Business Tips – The MP Education Series