If you report self-employment income resulting from your images sales, it is possible to reduce taxes by declaring relevant business expenses. These expenses can be deducted from your earnings, and you need to keep records for these expenses – invoices, receipts, and any other proofs of payments that show that you made an appropriate payment to claim the amount of deduction.
Expenses to declare
When you make money selling images online, you should keep the receipts of all your photography and Internet-related expenses. These expenses can include:
- Photography equipment;
- Computers, printers, scanners and any home office related equipment;
- Website hosting if you own a website;
- Photography equipment rental;
- Props and makeup for photo sessions;
- Tickets to the events where you took photos that you sell;
- Restaurants and cafes which correspond to the day and time of your photo session;
- Gas and parking expenses if you drive to the location of a photo session or other business related purpose (like purchase of photo equipment).
- Public transportation.
- Accountant fees;
- Postage fees;
- Healthcare (for example, dentist or prescription medicine);
- Business related courses and lessons.
- If you work from home and a part of your residence is occupied by your home office or photo studio, you can declare the percentage of your rent or condo fees. Only if your workplace occupies a permanent space. For example, it can’t be a living room that is occasionally used as a photo studio. In other words, if it’s a photo studio, this space should not be used for any other purposes.
And there is more! Check with your local tax authorities.
Keeping receipts and invoices
Traditionally, records supporting your tax return have been kept as physical copies. In these days of e-commerce, online payments and digital storage, electronic record keeping is becoming commonplace. You need to double check with your country’s tax authorities if they accept electronic copies and scanned documents.
If you keep paper documents, you need to set up a safe and organized system for storing receipts and tax records.
Whether you produce your tax declaration yourself or with the help of an accountant, you should prepare a document which indicates both your income and your business expenses. Your expenses should be organized into categories, for example: “photography equipment”, “internet”, “healthcare”, etc.
It is also a good idea to have a paper or electronic agenda, or any kind of a diary or calendar, where you can note the dates of photo sessions if there are any expenses associated with them, like meals or equipment rental.
I know some people who just put all the receipts into a big box during the whole year without sorting them. Then they have a hard time sorting out all those papers and trying to remember what they correspond to. It can take long and boring hours of tedious work.
I prefer to stay organized during the whole year, and it saves me lots of time and nerves when it’s time to prepare the documents. I have envelopes prepared in advance, with the type of expense written on each envelope, and I put receipts into the corresponding envelopes right away. Sometimes I also record details on the back of the receipts, to make sure I remember what this expense corresponds to. For example, “props for photo session”, “lunch – photo session downtown”, or “snacks for models” – some short notes that will make me remember the situation. For meals and entertainment expenses, it is also recommended to list the people involved in the expense.
If you’d like to get some inspiration on organizing your workspace, check out this article on smart workspace organization!