Taxes for Photographers – Introductory Guide

When you’re running a photography business, navigating taxes can feel overwhelming. But understanding the basics of taxes for photographers is crucial to keeping your business financially healthy and legally compliant.

This post will provide a quick overview of the most common types of taxes photographers need to pay, and we’ll touch on some of the questions that tend to come up frequently.

Keep in mind, we cover taxes (and all things finances for photographers) in more depth in our Financial Management Course for Photographers.

Why Understanding Taxes for Photographers is Important

Let’s be honest: taxes aren’t the most exciting part of running a photography business, but they are essential.

I feel like I have to say that quite a lot about various business things!

Speaking from experience, you can do a lot of amazing things when you have a better understanding of your tax liability and how to take control over it. In my shoes, I’ve been able to reduce how much money I pay in taxes (legally – if it needs to be said!) and instead use that money for things like investing and traveling more. In the past, I wasn’t always like this – and my first year in business I actually ended up getting hit with a huge tax bill because I poorly managed this part of my business…so if you’re in those shoes, I feel you!!

Anyways, by getting a good grasp on the taxes you’re responsible for, you can avoid penalties, plan for the future, and ultimately grow your business more strategically!

Of course, we always recommend consulting with a CPA or financial professional for personalized advice. Even just an hour with a CPA can offer valuable insights that could save you money in the long run. Many photography businesses, as they grow, find it worthwhile to retain a CPA to help optimize their tax strategy.

The Most Important Taxes Photographers Need to Know About

As a photographer, there are several key taxes that you’ll need to account for.

Let’s break them down:

1. Federal, State, and Local Income Taxes: Just like when you were employed at a regular job, you’ll still be required to pay income taxes. However, as a business owner, these taxes are now calculated based on your earnings as a sole proprietor or as an incorporated business. The amount you owe can vary depending on your location, as some states don’t impose state income tax.
2. Self-Employment Tax: This one can be a bit of a surprise for new business owners. Self-employment tax covers contributions to Social Security and Medicare. As a business owner, you’re responsible for both the employee and employer portion of these taxes—totaling 15.3%. While it can feel like an extra tax burden, it’s important to remember that these are programs most of us will benefit from later in life.
3. W-2 Payroll Taxes: If your business is set up with payroll (for example, if your business structure is set up to file taxes as an S-Corp), payroll taxes are automatically deducted from your paycheck and sent to the government. These taxes typically cover income and self-employment taxes but are handled differently because they’re processed through payroll.
4. Sales Tax: Depending on where you live, you may be required to collect and submit sales tax on your photography services or products (like prints and albums). The rules vary greatly depending on your state or local jurisdiction, so it’s important to know what applies to you.
5. Business Privilege Tax: This is a more unique tax that some areas may require you to pay simply for having a business in a specific location. The amounts are often minimal, but it’s still another piece of paperwork to stay on top of annually.

These are the most common taxes, but keep in mind there is a lot of variation from place to place – so where you live and do business may have specific taxes not listed here.

As a side note, you also might not pay each of these taxes, either (for example – some states don’t have sales taxes).

How Much Should Photographers Set Aside for Taxes?

When it comes to estimating your tax burden, a good rule of thumb is to set aside 30% of your earnings.

This covers a safe margin for your federal, state, and local income taxes as well as self-employment taxes. F

For example, if your photography business brings in $100,000, you should be prepared to pay around $30,000 in taxes. Keep in mind, this example is super simplified just to illustrate this point.

However, this number can vary.

Many photographers find ways to lower their tax liability through deductions, such as business expenses or by contributing to tax-deductible accounts like SEP IRAs or HSAs.

Saving for Taxes

It’s one thing to know how much you need to set aside for taxes, but another to make sure you actually have the money when it’s time to pay.

Here’s a tip: keep 30% of all your income in a separate account specifically for taxes. That way, you’re always prepared when tax season rolls around.

Some photographers also like to follow the “Profit First” (this is a link to the book on Amazon) methodology, which helps business owners organize their finances by setting aside money for specific purposes, like taxes, overhead, and profit. This can be a helpful way to stay organized, especially if managing money isn’t your favorite task. Profit First is a great book and one we recommend along with many other business books for photographers.

Paying Your Taxes

So, how do you actually pay your taxes? The specifics depend on the tax. Here are a few common methods:

• Income and Self-Employment Taxes: You’ll generally pay these either quarterly or annually, depending on your earnings. Many photographers set up quarterly tax payments to avoid paying a lump sum at the end of the year. You can pay online through the IRS or your state’s tax portal.
• Sales Tax: Most states that require sales tax have an online portal where you can log in and submit your payments monthly or quarterly.
• Business Privilege Tax: In many cases, you’ll receive a bill in the mail and can send in a check, though some areas may offer an online payment option.

No matter what taxes you’re paying, it’s crucial to schedule your payments ahead of time to avoid any late fees or penalties.

Bookkeeping and Taxes

Keeping good records is essential to ensuring you’re paying the right amount in taxes, too. If you need help with bookkeeping, consider using software like QuickBooks or outsourcing to a professional bookkeeping service.

Financial Management Course for Photographers

Want even more clarity on your taxes (and other money-matters)? Check out our Financial Management Course for Photographers.