Wedding | Being Thrifty
April 5, 2012Camera 101
April 10, 2012I know you jumped for joy when you saw the title of this post 😉
I want to talk about being a small business owner today…. AKA how the government is sucking the life from my soul.
Up until I started this business, I was a pretty apathetic American…. I didn’t have a good grasp on government, and how taxes effect the small business owner…. because…. well… I wasn’t a business owner yet. It didn’t effect me and I didn’t care. NOW I CARE.
I love the confidence my friends all have in me…
“Jessica, you need to quit your day job.”
“Jessica, you need to focus on photography full time, you can make it!”
Or my most recent favorite from bride, Maggie… (Maggie, I love you and so wish I could!)
“Jessica, you need to quit your job and help me plan my wedding.”
I’m here today to educate you. I know that most Americans pity those who do such important jobs, like teachers, firefighters, police, etc. and get paid such a small salary. Here’s why you should also pity those of us who are self employed (along with those other professions).
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In 2011 my business grossed just over $32,000…. that sounds AWESOME… right?? Wrong.
I spent about $13,000 in expenses… so that takes us down to $19,000 automatically.
And just for clarification, our expenses are…. gear (we bought a lens, several flashes and batteries, etc.), rent (I pay $397 a month), internet ($80 a month), phone ($80 a month), pretty packaging to send your CDs, albums and prints in, office furnishings, shipping costs, sample products, hotels when we travel for weddings, etc. (oh yeah and GAS!… but we deduct mileage, not what we spend on filling our tank)
THEN…. we pay sales & use tax each quarter… so that 7.25% we collect from you… yep…. goes straight to Uncle Sam. Use tax is tax we pay on all the crap we buy that isn’t taxed when we buy it. So that $950 lens we bought… wasn’t taxed…. cha-ching-cha-ching….
THEN…. we pay estimated taxes. You know when you get your paycheck & it has all that money taken out…. yep, we gotta pay that too. Currently we pay ~$1,200 to Federal and ~$300 to State… EVERY QUARTER.
So… we had $19,000 left after expenses….
subtract about $500 each quarter for sales & use taxes (this is rough, I don’t have our actual numbers in front of me) x4 quarters… = $2,000
Now we’re down to $17,000
subtract about $1,500 each quarter for estimated taxes = $6,000.
So, I only got to take home about $11,000 for all of 2011.
I can only think of how many hours and hours and hours I slaved over this business (building it, networking, shooting events, driving to and from events, editing, blogging, etc.) and how many weekends and nights I gave up free time…. time away from my dogs, my family, my friends…. to only bring home $11,000.
And we wonder why so many small business owners fold up and quit after only a few short months or years?
So, when you hire a professional, legitimate, tax-paying photographer, and you think their CD of images cost a lot, or their prints are pricey…. understand the back end, and everything we pay for…. We too want to live above poverty.
5 Comments
Amen amen!!!! You took the words out of my mouth!! I was like you about taxes before we started this business. Once you go through a few tax seasons, it will change your outlook for sure!! Hang in there 🙂
Thanks Leslie! It’s comforting to know we aren’t in this chaos alone. We had a very eye-opening email from our CPA last night :-/
Being self-employed as an interpreter, I completely understand. Our tax system SUCKS. And it is nowhere close to getting better… unfortunately, it is those of us who get that full amount and are honest in paying our estimated taxes that see how much the government takes… because it is OUR money, not theirs. Most people don’t realize 1. how much they really are losing and 2. it is our money to begin with. Thanks for getting me on my soapbox 🙂
It’s crazy how much Uncle Sam takes and not just from small businesses. Taxes are one of the reasons why we haven’t started any of our ventures yet.
P.S. You were worth every penny and its sad how little of it you get to keep 🙁 but, you’re doing what you love and you’re good at it. That’s something that Uncle Sam can’t take away from you.
awwww! Thanks Kseniya! It really is pretty crazy and sad :-/ I guess it just makes us work that much harder & smarter…. if you can’t work smart, you don’t survive.