In a previous post I talked about some books that discussed working as a professional photographer. One bit of information that was repeated in all the books was that as a professional you have to treat the photography business as a business. This means that as well as taking pictures, you need to have clear ideas about goals, marketing, clients, income, expenditure and taxes.
How to organize your taxes will vary between individuals. Every country has different regulations, and if you get things wrong you may find yourself either paying more money than necessary getting an unexpected bill for unpaid taxes. (Try and cheat the system and you may find yourself following a similar path to Al Capone or Wesley Snipes.)
Obviously, you need to keep records of both expenditure and income. As a photographer this includes my major photography purchases ( bodies, lenses, lights, computers) expendables ( film, processing, ink, paper), maintenance of gear, insurance, marketing (website hosting, updates, exhibitions, mailings), communication (internet, phone), transportation (flights, hotels, trains) and various other expenses. In my case, income comes from a diverse range of sources from print sales to commissions from magazines, the key is to make sure it is all carefully recorded.
Once you have all the information, you can then take it to an accountant or try and work out taxes yourself. For me, as foreign residents in Japan, the website GaijinTax.com is very useful. All my income earned in Japan had 10% tax automatically deducted by the employer. However, if your overall income is not great (or your expenditures are high) then this will be more than you need to pay. In my case, after calculating income then deducting expenditure, the taxes I’d already paid were greater than necessary so I was due a refund. (If I hadn’t done the paperwork and applied I would not have got any money back.)
The irony seems to be that those starting out in business are probably the most in need of financial advice and yet are the least likely to have access to it. (Trying to do this in a foreign language, makes things that little bit more incomprehensible.) Luckily I figured things out just in time. Not only was I able to get tax back for this year, but also for 3 previous years. The money appeared in my account a couple of weeks ago, and has since been spent. The cost of a new lens and a flash generator for the studio have been duly recorded and filed away.