Taxes- Photography assets and depreciation

Clawed · Mar 17, 2011

Hello,

I am not here to ask for expert legal advice, but maybe just to have a couple simple questions answered by someone who has been in the biz for a little while.

First, I started purchasing photography equipment in 2008 knowing that I would make a business of it (in due time). I have spent quite a bit on this endeavor since then, but I have not claimed any of this on my taxes yet. In 2010, I finally established a trade name and now consider myself a professional (though maybe not by income standards).

Can I claim these past three years of expenses to grow my business? Is it correct to assume these purchases (lenses, cameras, computers etc.) are not considered start-up costs but assets? Is there a way to calculate asset depreciation on my own, and can I do that for equipment purchased in past tax years? Is it worth having my taxes done professionally instead of trying to do this on my own (I've always done my personal taxes on my own, but now I think it might be time to hire a professional- though I do not know what this typically costs). My business income is still very low, and I anticipate 2011 will be the year I acually see a net gain.

Thanks for any help in advance!
~Canaan

Bitter Jeweler · Mar 17, 2011

Well, I can only tell you what I remember from my start up...I believe the answer is yes. I made a list of all the equipment purchases I have made over the years, every tool, big or small, cabinets, everything that I owned personally that I brought to the business at the request of my accountant. The yes is that I believe these were called assets, not purchases, and are being depreciated over time. I would reccommend getting a pro to do your taxes, because they stay up to date on tax laws and find (if they are good) as many ways to save you taxes as they can. I also stress to get second opinions on things. I asked and asked and asked how much I should withhold from my salary for taxes, and I was told not to worry about it, that in the first three years, you will "probably" get money back. Well, my accountant didn't expect me to be doing as well as I am so I owe, a lot. He blamed me for not telling him I was doing well. Huh???

So from this experience, if you ask specific questions, and get non-answers...ask somebody else! That is my advice to you

c.cloudwalker · Mar 17, 2011

It's been quite a while since I've started a business in the US but I believe Bitter is correct as to the assets.

And I second his suggestion to get a pro. But I'll go a bit further. Get yourself Quickbooks, which is great, and get your tax person to help you with the set up. It will make your life a lot easier especially if you use Quicken and even more so if you have multiple businesses as I did.

Then keep your accounting organized and your tax person will be cheaper. A lot of people dump a box of receipts on this person's desk and then wonder why they pay more.

As for finding someone, ask for referals from friends and business people. Although they sometimes have good people working for them I would stay away from the tax factories because they have a lot of people who don't really know what they are doing.