So I know the topic of managing your finances is not the most exciting thing but this may well be one of the most important posts I make. Keeping your books organized throughout the year is going to make your life so much easier and you will be so glad you did it especially when it comes time to file your taxes. I personally use Quickbooks Self-Employed which has become indispensable to me and might be the best $15 a month I spend as a business owner. In this post I’m going to take you on a tour of Quickbooks Self-Employed and show you how I utilize it and also talk about what I’ve learned about managing my finances for my business over the years.
Later in this post I’m also going to go over how much I’ve earned as a real estate photographer in 2021 now that the year has come to an end. I know this has become sort of a cliche thing that people do on YouTube nowadays but I think it's pertinent information to this site and its content. Why would I share this information? No, it's not to show off. I know there are real estate photographers out there making much more than me. I think it's a good idea for several reasons. Firstly, I want to be as transparent and real with all of you as much as possible. Secondly, I’m sure there are people that watch my videos who may be just getting started in real estate photography and may be wondering what the earning potential of this particular field could be and whether or not it's a worthwhile endeavor. I hope to show that it is! Finally, since I’m someone who is trying to convey valuable information on the internet I want to hopefully show that I am a credible source. I simply hope people may find it motivating. As I’ve stated before, one of my main goals with this whole thing is to share the experience that I’ve gained over years of doing this to hopefully help and inspire others and I think this falls under that umbrella.
So now let’s go over some of the features of Quickbooks Self-Employed and why it's so helpful to small business owners like us. By the way, if you are interested in signing up for Quickbooks Self-Employed you can do so here.
When you sign up for Quickbooks Self-Employed you get access to their website and also their mobile app. The mobile app is great since it allows you to add income and expenses while you are on the go but the best part is that it will auto track your mileage for you while you drive to your appointments. All you have to do is periodically go in and then mark each trip as either business or personal by swiping either left or right respectively. I used to keep track of my miles manually when I first started doing this so I can tell you that this is such a time saver. Quickbooks in general is such a time saver which is why it's so valuable to me. There is nothing else that I have so little of or cherish more than my precious time so anything that saves me considerable time is worth its weight in gold. Miles are also a valuable tax deduction so it's always nice to know that they are being tracked automatically by Quickbooks so I have peace of mind that all my miles will be logged and trips won’t be forgotten or missed which would definitely happen if I was manually keeping track. Just to give you an idea, in 2021 I drove 15,447 miles for business which amounted to a possible $6647 deduction. As I said, miles are valuable so you want to keep track and Quickbooks makes it easy.
There's a similar automated feature in Quickbooks for your income and expenses as well. You have the option of linking your bank account to Quickbooks which will automatically import deposits and purchases from your account and enable you to mark them as business income or expenses. For some reason I’ve been hesitant to enable this feature and just handle inputting my income and expenses manually. I don’t find it takes me much time and I always want to be super precise about making sure everything is correct in this department. I’m sure it works great though and maybe I will give it a try this year.
One of the greatest things about Quickbooks Self-Employed is when it comes to your taxes. As you go throughout the year inputting your income and expenses, you will see up in the right hand corner the amount that Quickbooks estimates you will owe for federal taxes for that particular quarter. At the end of each quarter, I log onto the IRS website and do what's called a 1040ES or estimated tax payment in the amount that Quickbooks says I owe. I highly recommend setting aside money as you get paid and pay your taxes quarterly. It will save you so much stress and anxiety in comparison to at the end of the year finding out how much you owe then trying to come up with that money last minute because you didn’t set any aside. You definitely don’t want to be in that situation. Just to give you an idea, I paid $21,467 in federal estimated taxes over the course of 2021. I find Quickbooks is usually on the conservative side with their estimates and I always usually get a fairly decent tax return when I file. Never have I owed any money after filing since I started using Quickbooks. I would much rather over pay and get a return rather than find out I owe the government a bunch of money.
When it comes to state taxes, Quickbooks does not estimate that for you probably because it's different for every state. You can pay estimated state taxes on your state's website quarterly as well. At least here in NJ you can and I assume the same goes for all of the other states. If you use an accountant they should be able to give you an estimated amount to pay every quarter. I’ve been paying $500 a quarter for the past couple of years. I may owe a little bit more than that after filing but it won’t be much probably.
The last thing I will mention in regard to taxes is that Quickbooks seamlessly integrates with Turbo Tax since they are owned by the same parent company. I would definitely recommend using an accountant to file your taxes in case you ever get audited or anything like that but if you want to go the Turbo Tax route that option is there and will automatically take all your info from Quickbooks and import it and make filing your taxes yourself fairly easy.
Now I’ll quickly go over my method for setting aside money throughout the year for paying my taxes. It’s worked well for me so you may find it helpful as well. Basically all I do is whenever someone pays me for a job, the money gets deposited into my business account. I then just take 70% of that amount and transfer it into my personal account and that’s my money to keep and the other 30% remains in my business account. I do this for every single deposit I make so that way by the end of each quarter I have a good amount of money accumulated in my business account that I can then use to pay my estimated quarterly taxes. 30% is more than enough for this and the remainder of what's left I contribute towards my ROTH IRA retirement account. I also highly recommend starting a retirement account as early as you can by the way. I waited way too long to do it and now I’m trying to play catch up so don’t make the same mistake I did.
Another component of Quickbooks that I will mention quickly that you may find helpful is the invoicing feature. You can send clients invoices for your services directly from Quickbooks and the advantage of doing it this way is that Quickbooks will automatically log your business income as your clients pay their invoices so it can save you a little bit of work there. Of course there are some additional payment processing fees associated with this feature but not really any different than any other payment processing service such as PayPal or Stripe. I don’t personally use this invoicing feature because I require my clients to pay prior to downloading using another automated service but it is another attribute of Quickbooks that might be helpful to some people.
The final thing I will mention about Quickbooks is the reports section. This is an important section especially for your accountant if you are using one. Here you can download your tax summary report which will more or less contain all the relevant information that your accountant will need to file your taxes. Also there you will be able to download your mileage report, profit and loss report, all your receipts for the year etc.. All helpful financial reports pertaining to your business that may need for multiple reasons.
My 2021 Earnings
Ok now I will get into my personal earnings from 2021. Again, I just want to make clear that I’m sharing this information to be helpful is in no way me trying to boast. There’s people that make more than me in this field and there’s people that make less. If you make more than me then I hope you feel good about that and continue to be more and more successful. If you make less than me then I simply hope you find this information motivating and inspirational starting this new year. I know I personally find it motivational watching other peoples videos like this so that is where my heart is here. It gets me fired up and I hope it fires you up as well, I’m rooting for all of you to succeed! I think that sharing information is an important part of building each other up as a community. The better we all do individually the better the community will do as a whole. My focus is more on camaraderie than competition with one another.
Ok, so I’m sure you’ve had enough of me blabbing. My total earnings for 2021 were $131,840. The vast majority of that income is generated by my real estate photography business but obviously some of that is income from this YouTube channel but I will get into more about that in a minute. My expenses for the year 2021 were $47,023. About half of that is what I paid in estimated taxes this year for both federal and state which totaled $23,720. I will most likely get some of that back in a tax return. The remaining 23 thousand of spending was just money I spent on stuff for business this year such as the Mavic 3 Pro and this new 16” MacBook Pro. That makes up 8 grand of it right there. So the amount I ended up with in my pocket after paying taxes and expenses was $84,816.
So how much of my earnings came from this YouTube channel? Let’s go over that now. The biggest income areas for me on YouTube are YouTube ad revenue and Amazon affiliate payments so I’ll show you those now. My YouTube ad revenue for 2021 totaled $13,961 so basically a little over $1000 a month on average. Amazon affiliate payments totaled $9870 for the year. There’s a couple other small earnings having to do with the YouTube channel but those are by far the most significant. So looking at the big picture, my photography business brought in over 6 figures and YouTube was definitely a nice bonus income for the year.
Alright guys, well, I hope you found the information in this post helpful and hopefully motivating as well. Also again, if you’re interested in signing up for Quickbooks Self-Employed you can do so here. I wish you all nothing but the best this coming year!