If you're getting ready to work with a CPA, or do your business taxes by yourself (which I don't recommend), here are a few things you'll want to start gathering and organizing to make the process easier. Disclaimer: I'm not a CPA, just a small business owner who pays taxes every year. Always take final consultation from a professional CPA with regard to your situation.
1. Do you have an assistant or contractor you paid over $600 total last year?
If they aren't on payroll as an employee, and have been working as an independent contractor, you'll likely need to send them a W-9 form request for their tax filing information and then a 1099 Misc. form with the total fees you paid them during the year. This information needs to be gathered and shared with your contractors before January 31 to allow them proper filing time as well (you can still file late, you just pay an additional fee). This helps you legitimize the expense for the independent contractor and it helps them document received income from your business. If you paid them via an online service like PayPal or Venmo, you can likely easily search all payments made to an individual according to year.
Official IRS information on documenting independent contractor payments:
https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors
2. Did you travel to any of your jobs or clients last year?
If you're an on-location photographer, you likely traveled for almost all of your jobs. The good news is that you most likely can expense that cost to your business. If you took Taxis, Uber, Lyft, Car Rentals, or Airlines - you likely have records of all those purchases in your bank accounts or in the apps you used. If you don't claim a car as a business asset & expense because you also use it regularly for personal and family travel, you can still claim the mileage you drove to meet and serve clients as well as any parking fees incurred during the job. If you weren't tracking this all along with an app like Expensify, perhaps you have the addresses on your contracts or in your calendar that can help you determine the mileage you traveled for each business meeting, job, networking event, or on-site project, coupled with any debit card records made to parking structures.
Official IRS information on documenting & expensing Business Travel: https://www.irs.gov/publications/p463/ch01.html#en_US_2016_publink100033773
3. Did you entertain or buy meals during business meetings or travel?
If your work required you to eat away from your home office location, or if you bought meals for clients, vendors, or contractors while doing business, you may be able to deduct those as well. This is generally only a 50% tax deduction, even if it was a 100% expense to your business, so it would be best to talk to your CPA with regard to what is considered a Meals & Entertainment expense. If you usually use a debit or credit card for these transactions, you likely have evidence in your monthly statements of what you've purchased by date while on a job or meeting. If you haven't been tracking it all along and need to do it retroactively, an online financial organizer like FreshBooks or Mint can help you pull multiple credit and debit cards together in the same place to organize expenses.
Official IRS information on documenting & expensing Meals & Entertainment:
https://www.irs.gov/publications/p463/ch02.html#en_US_2016_publink100033862
4. Did you buy equipment for your business last year?
New computer? New software? Online services? Cloud storage? Paper and ink to print contracts on? Office desk & chair? Currently, the IRS allows $500,000 in business equipment deductions, up from $25,000 in previous years. For many freelancers, the overhead expenses of keeping equipment updated are often the sleeper costs that surprise them year to year, so it's important to consult on which business expenses are considered deductible.
Official IRS information on documenting Equipment Expenses:
https://www.irs.gov/publications/p946/ch02.html
5. Did you use any home utilities or home office space to run your business?
You probably needed a faster than normal internet connection to deal with all of those file uploads and deliveries to clients. You probably needed a cell phone and/or business line to manage phone calls with clients who panicked at the last minute about their project. You probably needed electricity to charge your phone and keep your computer running to deliver projects to your clients. All of these things can be considered in the appropriate percentage for how they are used for business versus personal use. Make sure you're keeping tabs on all of these expenses as they apply to your business so that you can properly deduct what's used to keep your business running.
Official IRS information on documenting Home Office expenses:
https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
Again - always consult with your local CPA to make sure your record keeping and tax deductions are relevant to your situation.
1. Do you have an assistant or contractor you paid over $600 total last year?
If they aren't on payroll as an employee, and have been working as an independent contractor, you'll likely need to send them a W-9 form request for their tax filing information and then a 1099 Misc. form with the total fees you paid them during the year. This information needs to be gathered and shared with your contractors before January 31 to allow them proper filing time as well (you can still file late, you just pay an additional fee). This helps you legitimize the expense for the independent contractor and it helps them document received income from your business. If you paid them via an online service like PayPal or Venmo, you can likely easily search all payments made to an individual according to year.
Official IRS information on documenting independent contractor payments:
https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors
2. Did you travel to any of your jobs or clients last year?
If you're an on-location photographer, you likely traveled for almost all of your jobs. The good news is that you most likely can expense that cost to your business. If you took Taxis, Uber, Lyft, Car Rentals, or Airlines - you likely have records of all those purchases in your bank accounts or in the apps you used. If you don't claim a car as a business asset & expense because you also use it regularly for personal and family travel, you can still claim the mileage you drove to meet and serve clients as well as any parking fees incurred during the job. If you weren't tracking this all along with an app like Expensify, perhaps you have the addresses on your contracts or in your calendar that can help you determine the mileage you traveled for each business meeting, job, networking event, or on-site project, coupled with any debit card records made to parking structures.
Official IRS information on documenting & expensing Business Travel: https://www.irs.gov/publications/p463/ch01.html#en_US_2016_publink100033773
3. Did you entertain or buy meals during business meetings or travel?
If your work required you to eat away from your home office location, or if you bought meals for clients, vendors, or contractors while doing business, you may be able to deduct those as well. This is generally only a 50% tax deduction, even if it was a 100% expense to your business, so it would be best to talk to your CPA with regard to what is considered a Meals & Entertainment expense. If you usually use a debit or credit card for these transactions, you likely have evidence in your monthly statements of what you've purchased by date while on a job or meeting. If you haven't been tracking it all along and need to do it retroactively, an online financial organizer like FreshBooks or Mint can help you pull multiple credit and debit cards together in the same place to organize expenses.
Official IRS information on documenting & expensing Meals & Entertainment:
https://www.irs.gov/publications/p463/ch02.html#en_US_2016_publink100033862
4. Did you buy equipment for your business last year?
New computer? New software? Online services? Cloud storage? Paper and ink to print contracts on? Office desk & chair? Currently, the IRS allows $500,000 in business equipment deductions, up from $25,000 in previous years. For many freelancers, the overhead expenses of keeping equipment updated are often the sleeper costs that surprise them year to year, so it's important to consult on which business expenses are considered deductible.
Official IRS information on documenting Equipment Expenses:
https://www.irs.gov/publications/p946/ch02.html
5. Did you use any home utilities or home office space to run your business?
You probably needed a faster than normal internet connection to deal with all of those file uploads and deliveries to clients. You probably needed a cell phone and/or business line to manage phone calls with clients who panicked at the last minute about their project. You probably needed electricity to charge your phone and keep your computer running to deliver projects to your clients. All of these things can be considered in the appropriate percentage for how they are used for business versus personal use. Make sure you're keeping tabs on all of these expenses as they apply to your business so that you can properly deduct what's used to keep your business running.
Official IRS information on documenting Home Office expenses:
https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
Again - always consult with your local CPA to make sure your record keeping and tax deductions are relevant to your situation.
Anne Ruthmann is a professional photographer in New York City. She has been a small business owner since 2004 working as a photographer in weddings, portraits, editorial, and now architecture and interiors. She spends any extra time she has helping others find smart solutions to business problems. Stay in touch on Instagram, Twitter or Facebook.
