I’m sure everyone has their own way of doing their finances, but I remember it being somewhat confusing when I first started, so I thought this was a good topic and a great follow up to my last post about setting goals! I definitely recommend that everyone work with an accountant if possible, but I also realize isn’t always do-able for everyone. And even if you do use an accountant, you still want to make sure you are keeping control of your finances on a regular basis.

One of the most important things I can say about handling your finances as a business owner is this: keep your business and personal accounts separate!!! Keeping your accounts separate makes things less confusing and makes it easier for you to accept payments. Having separation between your business money and your personal money also gives you a little bit more peace of mind and protection were anything to happen. Plus, then you’ll be able to see how much money you really have on hand at any time! For business OR personal stuff!

All business income (so basically, all of my income at this time since I’m a full time photographer) funnels through my business bank account. I look at it as though that is my company’s account, not mine. It’s funny thinking of my business as a separate entity, especially since I AM my business…but it helps a lot!

From my business account, I pay for any of KNP’s expenses (client gifts, gear, website fees, tolls, gas, etc) even if it isn’t tax deductible. I also pay myself a salary from this account once a month by writing myself a paycheck (which, is essentially just a check…haha). I’m sure some banks have an easier way to do this via transfers or whatnot, but I find this to be the best solution for me at this time, especially since I use two different banks for personal/business purposes.

Now, you’re probably wondering, “How do you know how much to pay yourself?”. That can be so tricky! Especially since the nature of our work means that you never quite know exactly how much you will book for a year and our income is never a set amount. Here’s what I do:

Using a spreadsheet I’ve put together with all of our weddings on it, I add up the income I have coming in for the rest of the year (any weddings booked, workshop seats sold, etc), then subtract my expenses and taxes and divide by the remaining months in the year. That amount is my salary!

>This can be a bit tricky towards the beginning of the year when I’m still working on filling anywhere from 5-10 spots on my calendar and I just don’t know for sure what exactly I’ll book. That’s where my goals come in. I always set a goal to book enough weddings so that I can make $XYZ per month because I know that’s what I need to pay bills and buy groceries. This is my default salary and I can tweak my pricing and other things if I need to in order to get to that number per month.

Budgeting for Off Season

Ah, off season. I like it because I get to spend a lot more time with friends and family and I’m able to catch up on a lot of my behind the scenes work, but it also sucks because that’s when I’m not really making any money. What do I do during that time? Do we just rely on John’s income? Do we eat a lot of ramen??

Nope. To both. If you budget your money right, you should have enough to pay yourself through the months when you really don’t have money coming in. This is hard and you have to use a lot of self control when you see that you have $$$$ in your business bank account right before busy season and you think to yourself “Hey, my 5D Mark III could use a twin brother!” or “Yassss, totally going to WPPI this year with all this extra cash in my stash!”. That is why it is so important to budget your money AND to pay yourself your salary once a month. If I spend all of my “paycheck”, well, that sucks. I won’t give myself more money (unless it was a dire emergency) until the next month starts just like you wouldn’t get another paycheck from a regular job in advance unless there was some kind of extra special circumstance.

One strategy I have used for putting aside money for the off season is to put aside any retainers I booked for my next year’s weddings as a fund to pay yourself from for the first couple of months until you start getting regular income again. I save my retainers in a savings account so that they’re there in case something were to happen and I had to refund one (which, would really be a freak thing, since in 99.9 percent of cases, I would keep the retainer even if the client and I went separate ways for some reason…knock on wood that doesn’t happen though!!!). In my mind, a retainer for a wedding booked for the next year is really income to help support me THAT year, so saving them to help me pay myself through off season makes sense to me.

Well, what do I do if I book MORE than my goal?

Pop open champagne and get taco bell, that’s what! Okay, okay. I know that’s not what you came here to read. If I book more than my goal for the year, I automatically know that those weddings will be either deposited into my savings (either business or personal) minus the cost of photographing the wedding. That’s when I can start making decisions about whether or not we can afford a vacation or if I have the extra funds to buy another camera or do other improvements to the business. Pretty simple stuff.

So, that’s it! How I handle my business finances in a nutshell. Some of the things I do may be unconventional, but that’s the beauty of owning your own business! You can create systems that work for YOU and no one can tell you no (other than the government, I mean). One thing I didn’t mention above that I think is important is to remember that as an entrepreneur, you are really in charge of your financial destiny. If you need to book more to cover something you really want to promote your business or to fund a personal dream, then the key to that lies in your hands. Knowing that has been the single most empowering thing about being a small business owner for me and I hope that it helps you too 🙂

Got a question? I know this was a lot of info! Email me or comment below and I will try to respond as best I can 🙂