Your Guide to Taxes and Bookkeeping
Expert Q&A with Meg of Born to Roam Bookkeeping
Happy January!
Since the majority of clients that I onboard are new to the (wonderful) expense of outsourcing their editing, I sat down for a fun and informative Q&A with an expert in the field of all things money management for creative business owners.
This is Megan - she owns Born to Roam bookkeeping and aside from offering her services to creative entrepreneurs, she also provides educational resources on her website in the form of guides, to tools, and a very exciting course for business owners (The Money Management Roadmap) provides a DIY solution to bookkeeping!
My goal for this Q&A is to demystify outsourcing as an expense and provide some foundational knowledge so that you can feel more empowered and in control of your business finances! By interviewing someone outside of my business I get to not only introduce you to another awesome resource but provide information straight from an expert in the field!
Disclaimer: Please refer to your CPA for tax help and guidance specific to your business.
Leda: Hey Meg! I’m so grateful you’re here to give us the scoop on taxes. Let’s kick things off with the fast facts: Tell me about your business. What should we know about your clients?
Meg: Absolutely! Since 2020 I have partnered with dozens of photographers and wedding professionals across the country, helping them take control of their business finances through monthly bookkeeping services.
Each month my clients get financial reports delivered to their inbox that they are able to use to make strategic business decisions. Having this data in real time (vs waiting for tax time) allows them to review the data as it's happening and make adjustments as needed. Not to mention it’s a ton of fun celebrating milestone wins each month, whether it’s a new offer launched, a cost savings strategy implemented, or a financial goal attained. Bonus: when it comes to tax time, their finances are already in order and ready to be filed!
Leda: Sounds like we serve the same crowd! Help me clear up something: How should a photographer organize their editing expenses? Should they keep a spreadsheet, should they save every invoice in a folder?
Meg: I recommend setting aside a couple hours per month to do your bookkeeping. You might be wondering what the heck bookkeeping is, and that’s a great question. Bookkeeping is simply categorizing and tracking your financial transactions. At the end of the year that data will be used to file your taxes.
Keeping receipts in a designated receipts folder is a great idea! This should be done in addition to the bookkeeping.
Leda: When a photographer hires me to outsource their editing, what kind of expense is that? How should they factor that into their taxes and the cost of doing business?
Meg: Outsourced editing is a deductible business expense, which means it lowers your client’s taxable income, and ultimately how much they’ll owe in taxes.
Say, for example, your client collects $500 for a photoshoot and they hire you to edit the shoot for $100. Instead of being taxed on their revenue of $500, they’d be taxed on their profit of $400 ($500-$100).
Leda: What advice would you give to business owners who are uncertain about outsourcing? From entrepreneur to entrepreneur, what’s the real value of outsourcing?
Meg: There are a few things to consider when determining if you’re ready to outsource.
Are you booked out? If you are not able to take on more clients because your schedule is JAM PACKED and you are at your capacity, it might be time to outsource.
Does your pricing give you the flexibility and ability to outsource? A common issue I’ve seen with entrepreneurs who want to outsource, is their pricing doesn’t allow them to. Their margins are simply too low, which typically means they aren’t charging their clients enough. Before pulling the trigger on outsourcing, make sure the numbers make sense and that you will continue to profit the way you desire after paying for the outsourcing expenses.
Leda: What are three must-have bookkeeping tools to stay organized as a business owner?
Meg:
Bookkeeping System - I highly recommend using a spreadsheet to keep track of your bookkeeping prior to outsourcing. Using a spreadsheet keeps things simple, yet streamlined. Software like Quickbooks can be very confusing for non-accountants. Things can go sideways and if you’re not trained in the software or accounting, you may not even notice!
In my Money Management Roadmap course, I teach creatives how to DIY their bookkeeping using a robust Google Sheet template.
Receipt Management System - Keeping receipts is an underrated task that business owners tend to skip, but if you were to get audited by the IRS you might regret not implementing a system sooner. Something as simple as a Google Drive folder, where you dump all your receipts at the end of the week, could save you hours of headache later.
Time Tracker - Stay with me here! While this might seem like it has nothing to do with bookkeeping or managing your finances, we all know that time is money. Utilizing a time tracking tool like Clockify to determine where you are spending your time WILL be a game changer in your business. This info can help you determine what your next outsource will be, tell you that you aren’t as booked out as you thought you are, and even help you become more efficient with your time.
I encourage everyone to visit Meg’s website if you’re curious to learn more about her services and educational resources!
https://www.borntoroambookkeeping.com/
