4 Useful Tax Tips for Videographers

When you are in business as a videographer, whether as an employee or self-employed, you're probably spearheading video ad projects, producing some wedding or travel videography, and offering other video production services on the trot. Amid these bustles, however, there are some crucial duties that you should not overlook—filing and paying your taxes.

Even if you are employing someone else to handle your taxes, it is integral to understand tax processes to ensure that you are optimizing your business. Daunting as they may seem, but once you get a good grasp of these technicalities, tax filing and payment won't be a nuisance. After all, you do not want to see Internal Revenue Service (IRS) special agents showing up at your door. Not at all.

Income tax 101: For employees and self-employed

You can be classified as an employee or self-employed when it comes to paying taxes. Of course, this depends on your employment status. Employees' income is reported on a W-2 form from the IRS while self-employed individuals report their income on Form 1099-MISC. Take note that you do not necessarily need to have a business to report your income on the latter form. You may simply perform services as a non-employee.

Meanwhile, employees' expenses are listed on Form 2106 while self-employed people list their expenses on Schedule C (Form 1040). Should payment for services you provide be listed in Form 1099-MISC's box 7, Miscellaneous Income, the payer is treating you as a self-employed worker, which is referred to as an independent contractor.

Ensuring a smoother tax journey

Make sure to proactively prepare for the technical stuff so you won't have to deal with the painfully complex process of retracing all your financial activities (plus finding lost or strewed documents) when the tax season approaches. Consider these useful tips and witness a smoother tax journey for yourself or your business.

1. Keep impeccable records

Your expenses will be needed to calculate how profitable your business is and determine how much tax you will need to pay. And yes, it is your responsibility to track your income and tax liability throughout the year. Things can get puzzling especially if you lose sight of your records. Thus, it is critical to document every purchase receipt and invoice you have as well as other production costs you incur—both above and below the line—rigorously. You may also want to keep an electronic copy of your printed documents, whether scanned into PDF or captured using a device.

To ease the hassle of bookkeeping, you can start an expense diary, a tax planning tool, or utilize a user-friendly accounting software to aid you in recording and tracking your transactions.

2. Know your tax deductions

Tax deductions cut your taxable income, which is the amount of money the government can claim taxes on. Per the IRS, deductible business expenses are those incurred in connection with one's trade, business, or profession; "ordinary'' and "necessary"; and not lavish or extravagant under certain circumstances. Some common deductibles include computer-related software or items, film and video production equipment, subscriptions, travel and meal expenses, office supplies, reference materials, online expenses (including cloud storage, membership fees, and website costs), promotion costs, among others. Make sure you can justify your tax deductions too.

Amount-wise, some tax deductions may seem insignificant. However, adding many of them together may result in hefty savings, especially when complemented with tax credits.

3. Hire a seasoned tax advisor or CPA

If you are self-employed or a freelancer who needs help in navigating the nitty-gritty of what can be deducted and not, you may find it useful to hire a seasoned tax advisor or CPA with existing clients in the same industry as yours. Your CPA and/or advisor can help you with bookkeeping, tax planning, cash flow analysis, and other financial matters. This allows you to allay some of your responsibilities and focus more on your craft.

With their knowledge and expertise, you can enjoy smoother financial management and have more savings. Your tax advisor or CPA can guide you better in making the best financial decisions and support you when you are audited by the IRS.

4. Set payment reminders

As a videographer, you may often be tied up with a couple of projects and remain busy. Make sure to stay on top of your taxes by setting payment reminders on your calendar. This can help you identify your next tax-related undertaking and know when to complete your tax filing and payment. As a result, you can save more time.

Final thoughts

Keeping your finances organized is a demanding task that requires more time and effort. Therefore, you have to consider these tips and start planning for next year's income tax returns so you can work on your creative pursuits peacefully.

Written by Sophia Young