How to Quit Spending All Your Photography Income

So you’re a photographer and you’re getting paid. But you noticed that you don’t have much income to speak of. You’ve been busy reinvesting into the business, but you haven’t been paying yourself. You may be wondering how to budget business income so that you can pay yourself, save for taxes, cover expenses, and plan for profit.

In this post, we’ll be chatting all about how to budget your business income!

Listen, I get it, talking about budgets and business isn’t the sexiest topic. I’m willing to bet that a lot of photographers and creatives find it boring. However, if you’re running a business, budgeting and numbers are so important!

Did you know that 1 in 5 businesses fail in the first year according to recent data from the US Bureau of Labor Statistics? That’s 20% y’all! I don’t want that for you. If you’re serious about running a business, we’ve got to get you in tip-top shape.

manage your finances as a photographer

Why You Don’t Have Any Income Left

I know what it’s like to get to the end of the year, or get to tax time and wonder where all your hard earned money went. Or, if you’re new to business, maybe you haven’t ventured to pay yourself yet. Or, perhaps you want to pay yourself, but you want to do it the “right” way.

When I started my photography business over 13 years ago, I was scared to pay myself the “wrong” way. As a new business owner, I think may of us struggle with the idea of the “big bad IRS” coming to audit us if we get something wrong. I know it was one of my big fears. As a result, for the longest time (longer than I care to admit) I never paid myself!

Instead, I reinvested in the business, paid for photography education, bought camera equipment, and more. It felt “safer” to just reinvest in the business.

I think this is the trap that may creatives and photographers can fall into. We’re excited that our business is making money and so we reinvest, but then (sometimes) we neglect to pay ourselves!

Note: This blog post is for businesses running as sole proprietorships whether you are registered as an LLC or not. If you are an S-Corp business formation, you pay yourself via payroll and that’s a different conversation.

Why Learning How to Budget Business Income Matters

So even if the business side of your photography hustle is not your thing, if you want your business to be around in the next couple of years, it’s crucial to know your numbers. You need to have a plan for how to budget your business income.

While it’s fun to think, “Oh hey, I just made $500 or $2000!” not all of that is yours. It’s key to know how to divide and allocate your money so that you can cover your expenses, save for taxes, and most importantly, pay yourself! That’s why you accept money from clients, right?!

Learning how to budget your business income also matters because then you’ll be able to make better business decisions, compare how you’re doing year over year, and know when it’s time to increase saving or decrease spending, or give yourself a raise!

How to Budget Business Income

It’s the “B” word. I know. The word “budget” and “budgeting” can put people in their feels. Some people just want to ignore the budget. Others feel like they “know” what they have and don’t need a budget. And then there are those people who don’t want to spend anything, just hold onto their money, so they think they don’t need a budget either.

I get it. Dealing with numbers, money, and taxes sucks. But it doesn’t have to. Dare I say, it could even be fun!? (#maybeitsjustme)

Here’s how to budget business income in a few easy steps:

  1. Income – all income from your business
  2. Owner’s Compensation – how much you pay yourself
  3. Save for Taxes – money you set aside for quarterly taxes
  4. Operating Expenses – money used to operate your business – subscriptions, contractors, etc
  5. Profit/Bonus – money you can use to bonus yourself at the end of the quarter/year

When you receive income in your business, it’s important to decide how you’re going to allocate the money into different “buckets”. If you’ve ever done “envelope budgeting” or Dave Ramsey’s budgeting method, this is very similar – it’s the same basic idea. Give every dollar a “job”. Don’t just let it hang out in your account without purpose.

How to allocate business income

So when you receive a payment from a client, you’ll divide it up and allocate it accordingly – budgeting for paying yourself, saving for taxes, covering your expenses, and saving up a little bonus.

That might look something like this:

Income –

  • 45% owner’s compensation
  • 25% tax savings
  • 28% expenses
  • 2% profit/bonus

From over a decade in business, I recommend having a checking account, savings account, personal checking account, and separate interest-earning savings account. However, if you want to keep it super simple, have at least a business checking and business savings account. You’ll need a personal bank account as well.

Note: Please do not use your personal checking account for business. Even if you are a sole proprietor. Keep all your business transactions running through a business bank account. Keep all your personal transaction running through a personal bank account.

So when that income hits your checking account – you’ll transfer (based on the above numbers) 45% to your personal bank account (owner’s compensation), 25% to your business savings account for taxes, 28% can remain in your business checking account, and then you can transfer that last 2% to the high interest earning savings account. I recommend using the separate savings account so you don’t feel tempted to withdraw or transfer money from it.

How to Quit Spending All Your Photography Income

So if you’re tired of getting to the end of the year and realizing that you didn’t really pay yourself, you didn’t account for saving up for taxes, and yet, there’s still not much left in your business account…let’s chat.

I want you to know your business numbers. Do you know how much you’re spending every month to run your business? Is your income steady or irregular? Do you depend on this income for personal expenses or do you have a full time job?

Ask yourself these questions:

  • How much are you spending on expenses every month?
  • How much do you want to pay yourself?
  • How much are you setting aside for taxes?
  • What is your average sale with a client?
  • How many clients can you handle per month?

By knowing your numbers, you’ll have a much better idea of how many sessions you “need” to take on versus “can choose” to take on. So that begs the question, do you know your numbers?

When you know your numbers, you’ll know you can’t afford that $3,000 lens right now or pay for that mentorship without a payment plan. You’ll know how much you need to save up for to by the things you want and need in business.

How to Budget Business Income: the easy way

Alright, so you may be thinking, that’s all well and good, but you hate math. The idea of figuring out percentages freaks you out and gives you flashbacks to high school.

I don’t want you to freak out. I want you to feel empowered by knowing your numbers. So I made a thing for you! It’s the Pay Yourself First Calculator. This calculator will allow you to input your income and it will tell you how much to transfer/allocate/budget to the different areas of your business.

You’ll make sure you’re paying yourself, saving for taxes, and covering expenses EVERY. SINGLE. TIME.

Sound good? Check it out below or visit my shop!

Other Helpful Business Finances & Budgeting Posts

How to Manage Your Finances as a Photographer

How to Price Your Branding Photoshoots

I’m Catie, and I’m a personal branding photographer for female business owners who are ready to stand out online and increase their impact and income.

I'm based in North Dallas, serving the greater Dallas/Fort Worth Metroplex. Here at Catie Ronquillo Photography, I provide strategic marketing photos that will help you grow your business.

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