Managing The

Finances
Suggested accounts to include in
your Chart of Accounts

July, 2018 Rob Hull Where to Start?

Key to any successful business is the Look at the tax forms that you’ll be required
proper management of finances. You to submit based on the business organization
need to clearly account for all revenue that you selected. For example, if you are
and expenses to ensure that you have a going to run your business from home under a
clear picture of what is generating the DBA (Doing Business As) name, and filing your
revenue and where your money is going. taxes as part of your personal income tax
This is the only way to make well return, then the first thing to do is look at the
informed decisions about your business. IRS 1040, Schedule C form.
The specific accounts that are used That form will show you how the IRS wants
depend on your unique needs. This is your income and expenses broken down.
where the help of a good CPA can be Remember, the IRS only cares about your
invaluable. They can help get you set up overall income and expense recording. You
on a good financial foundation. may want additional account to help you
manage your business. If so, just keep them as
simple as possible.

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Chart of Accounts for Photographers.docx
Chart of Accounts v Sales Tax Payable (*Very Important)
v Payroll Tax Payable (*Very Important)
A chart of accounts is divided into v Mortgage Loan
different categories; v Other Loans

v Assets *Very Important – It’s very important that

v Liabilities you understand that when you collect Sales
v Income Tax or incur any Payroll Tax obligations that
v Expenses you immediately set that money aside for
payment to the proper agency. Not paying the
More extensive accounting may also use; sales or payroll taxes is a federal offence and
v Equity is taken very seriously by the federal
v Cost of Goods Sold government.

Assets Income
Assets are those things that you own that Income, the good stuff. This is the revenue
have significant value. Listed in assets are you receive from the operation of your
things like a building, vehicles, camera business. Protect it.
equipment, and inventory. Within the chart of accounts, it’s important to
But only things with a value over a certain distinguish between different kinds of
amount should be listed. A $50 reflector revenue. For example, you’ll want to keep
most likely would not be a listed asset revenue from sales and that from services
while a $2,000 camera would be. Work separate since there may be different taxing
with your CPA to determine where you implications for each.
should draw the line. This is also an area where you may want to
Specific asset accounts would include; track a wide variety of revenue sources –
especially if you offer different products and
v Bank Account (separate account for services. You’ll find that you don’t need to
each bank account) create separate accounts for each revenue
v Accounts Receivable source. Most accounting software, like
v Equipment (Itemizes equipment Quickbooks, allows you to assign classes to
that has been depreciated) transactions giving you the ability to parse a
single account for analysis.
Liabilities Specific income accounts would include;
Liabilities account for what you owe to v Sales from products
others. These include any loans, v Sales from services
mortgages, taxes due, and unpaid bills.
Specific liability accounts may include;
v Accounts Payable

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Chart of Accounts for Photographers.docx
Expenses Sales Tax
Expenses are all the things you spend Many states require businesses to collect
money on as part of the business. And, sales tax. This falls under state and local
there can be a lot. jurisdiction and laws differ from state to state.
Specific expense accounts may include; The information below is for the state of
Texas.
v Advertising
v Vehicle expenses
v Contract labor (non-employees For businesses in the state of Texas you are
that help with your business. This required to impose Sales Tax on all retail sales,
would include 2nd shooters and leases and taxable services.
other assistants. The sales taxes are divided into;
v Insurance
v Studio Rental v State (6 1/4%)
v Mortgage (for business property) v City (1/4% - 2%)
v Legal & Professional Services (Your v County (1/2% - 1.5%)
attorney and CPA) v Transit (1/4% - 1%)
v Office Expense (Include office v Special Purpose Districts (1/8% - 2%)
supplies and postage) v Overall maximum is 8.25%
v Supplies (This would include books, Texas Registration / Application
equipment and software that you To collect sales tax you must apply for a Texas
don’t depreciate – things you’d Sales Tax Permit.
normally use within a year.)
v Equipment (Depreciable To register online go to…
equipment & software) http://www.window.state.tx.us/taxpermit/
v Travel To register you will need your Social Security
o Travel number or a Federal Employer’s Identification
o Deductible meals Number and a NAICS code.
v Utilities
v Education NAICS Codes – A NAICS code is a industry
classification code used to categorize all
Remember that you can use classes to businesses. For most photographers you will
provide more information about a use one of two codes;
particular account.
541921 v Photography Services
v Portrait photography
services
v School photography
v Video photography
services
v Wedding photography
services

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Chart of Accounts for Photographers.docx
 v Passport photography
services

541922 v Commercial photography

services
v Medical photography
services
v Aerial photography
v Commercial studios (Not
portrait)

For more information see…

http://www.window.state.tx.us/taxinfo/
sales/new_business.html

Conclusion
Once you have created and begin using a
properly structured chart of accounts,
you’ll find it easier to understand the
financial health of your company.
It’s important to keep up to date with the
accounting. And don’t forget to get help
from a professional CPA. Their help can
be invaluable and can save you far more
that what you spend on their services.

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Chart of Accounts for Photographers.docx