Thursday, September 26, 2013

Gross income broken down for the independent photographer

If you are thinking about becoming a professional independent photographer, take a look at some of these numbers. You may want to keep your day job and do this as a hobby instead.

Numbers before lunch

One thing most self-employed people know about their business if they are successful is only a small part of what you charge a client actually is what you will take home to pay the bills.

These are my numbers and they will widely vary from business to business. Your age makes a big difference for medical for example.

According to my numbers this morning I could break down every $100 into four major categories:
  1. $19 Medical Expenses 
  2. $36 Business Expenses
  3. $14 Federal and State Taxes [Self-Employed pays double vs staff person, and no you don't get to take home more because you don't pay more as a staff person. The company pays that other 1/2.]
  4. $31 Net Income
Once you start figuring out where all your money is going you get a lot better at being sure your prices are high enough to survive. Surviving is paying all your bills and doing it on time. If I wasn't debt free then another piece of the pie would be for interest. 9% credit card interest may turn into a 3% loss of income going to pay off debt.

Numbers after lunch

So after working on those numbers I went to lunch and while eating broke my tooth. After a trip to the dentist I now changed some of the numbers by 1%. Medical went up by 1% and net income just went down by 1%.

You cannot plan for all emergencies. You cannot count on a certain income coming in either. 

What most business owners do is to run a tight ship most of the year and then in the last quarter talk to their accountants and then might do some upgrades to equipment or other purchases to help lower their taxes and also make capital improvements.

Many business owners will give more to their church the last quarter or to a charity. The reason for the delay is the importance of reserves.

If you are young and in your twenties and not married then your medical expenses could be drastically lower than mine. I am covering my family and I am in my fifties. Just being that old will give you higher rates for medical insurance.

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