We are in the beginning season of getting our taxes in order. So, I thought it might be helpful to give you some high level tax info for photographers and editors.
Did you know that you can deduct your outsourcing expenses? Yep, that’s right, you will want to take full advantage of it. It’s considered a business expense and is part of your profit and loss (PNL). If you don’t already, I highly recommend using a qualified CPA to help you with your taxes, as they will know the best ways to help you and save you money. If you don’t already have one, I recommend Poulsen & Stowell, PLLC http://pnstax.com/. They are awesome and will really help you figure out all this tax craziness!
So, if you haven’t already, you will need to send a W-9 form to all your clients who have spent $600 or more in editing services. Your client should send you back a 1099. It’s in their best interest, so they are able to deduct your editing costs.
When sending your W-9, be sure to fill it out using your business EIN (Employer Identification Number) and not your personal Social Security Number. If you aren’t already running as an LLC, you will want to get that started. Talk with your CPA on how to do that. Generally, it’s easy to do and provides asset protection and potential tax advantages. I personally run my business as an LLC, taxed as an S-Corporation.
As I mentioned in the beginning, you can deduct the cost of editing when you file your taxes. If you’ve spent $600 or more on editing services, you should be getting a W-9 from your editor. If you haven’t, make sure to request one. In turn you will need to give them back a 1099 that shows all you’ve spent on editing. I would make sure and talk to a CPA to help you do this correctly. Don’t miss out on the opportunity to reduce your taxes!
As a side note, are you currently working as an LLC? If not, reach out to a CPA to help you get that set up. As a small business, it generally easy to do and important when running a small business.