CODB Calculator

Money spent on advertising and promoting your business. Include the cost of your web hosting, business cards and any promotional items that you use. Does any photographer still use Yellow Page ads?

Tax law can be a bit complicated here. But to determine your true cost of doing business, include the full cost of your business meals and entertainment expenses. You should always keep receipts and, on the back of those receipts, write the names of anyone who joined you and what business was discussed. General travel meals will be included in another category below.

This includes any business insurance, camera insurance, dental insurance, supplemental health insurance or disability insurance that you may have. Do you have tenant or other insurance for your office or studio?

Car insurance, home insurance and travel insurance will go in other categories.

Any interest that you pay on any business expense. For example, if you buy a $12,000 lens with your credit card and pay it off over two years at 19% interest, the $2,500 you pay in interest becomes another business expense. Interest paid on a car loan will be included in another category below.

Include the cost of any business-related membership fees and government business permits. Do you subscribe to online seminars or other online courses? Do you subscribe to any photo magazines?

Letterhead, envelopes, pens, paper, toner cartridges, ink, optical discs, etc. It’s pretty much whatever you buy at an office supply store like Staples.

For non-consumables such as a desk, chair, laser printer, etc., how often do you (or should you) replace them? If you think your $225 office chair will last three years, add $75. If your $500 desk will last 10 years, add $50. If you hope your $300 multi-function printer will last four years, add $75.

Do you have a label printer? Filing cabinets? Do you still have a fax machine? Special shelving to store your gear? Do you pay for online cloud storage of your files? Look around your office and add up every item.

Include only what’s not billed to customers. Do you pay delivery charges when you buy business-related items online?

Fees you pay to a lawyer, accountant or any consultant.

This includes bank fees and credit card fees but not interest. For example, you might be paying for a business banking package that costs a couple hundred dollars per years.

Are you renting office or studio space?

If you work from home, you should calculate the cost for that even if you’re not deducting it from your income tax. You need to know the cost associated with your office space.

In general, if your home office occupies, for example, 15% of your home’s total square footage, then your office expense is 15% of your home’s total expenses (e.g. heating, utilities, insurance, maintenance, repairs, mortgage interest, property taxes, alarm system).

How much do you spend on camera gear and computers each year?

If you buy a new $2,000 laptop every four years, add $500. If you have a desktop computer and monitor, how long do you keep them, four years? Do you have an inkjet printer or scanner? A half-dozen external hard drives?

While it’s possible to use the same cameras, lenses, lights, bags, etc. almost forever, that’s simply bad business. You have to stay reasonably current because that benefits your customers and you. And that costs money.

How often should you replace your cameras lenses, camera bags, flashes, light stands, softboxes, tripods and the hundreds of other items you have? Certainly it would nice to get new gear every year but how frequently should you be replacing your tools? Every three years? Four years at most?

If you buy a $6,000 camera, use it for four years and sell it for $1,000, then that camera cost you $1,250 per year [($6000-$1000)/4]. Do this type of pro-rated calculation for every other major item you have. Remember that resale value can’t be relied upon since a lot of gear has little resale value after a few years of professional use.

Do you regularly rent gear? Include any rental charges that are not billed to the customer.

Do you own a generator for location shoots? Do you have dollies or other carts to transport your gear?

Of course you have software. If you rent software, then your annual cost is easy to figure out. But if you “buy” software then it’s much tougher to determine the average annual cost. Add up the cost of all your business software and maybe assume a two-year software life? For tax purposes only, the federal government assumes a one-year software life, excluding operating system software.

Include all the little things and consumables that you buy: batteries, memory cards, card readers, various cables, adapters, gaffer tape, background paper, sheet filters, A-clamps, a multitool or other small tools, flashlights, extension cords, camera cleaning supplies, camera straps, bag straps, etc. Generally, these will be under $500 each.

How much do you annually spend to maintain and repair your camera gear and other business tools? A “minor” camera repair is a few hundred dollars. A major repair is at least many hundreds of dollars. All camera equipment should go in for routine servicing every once in a while.

Vehicle maintenance and repair will be included in another category below.

This is for any travel you do to help earn a business income. For example: airfare, hotels, taxis, car rentals, bus fare, meals, travel permits or visa, a carnet, travel insurance and any other travel expenses. Include only travel costs that are not billed to the customer. You can also include the cost to attend any business-related conferences, conventions and seminars.

The annual cost of your cell phone, landline, fax line(?), Internet access, long distance charges, etc.

The CAA has an online driving cost calculator to help give you a reasonable idea of the expense associated with your model of vehicle and your general type of driving. But, as they say, your mileage may vary. :-) If you know your actual costs, use them instead.

The federal government’s “acceptable” automobile allowance rates for company employees will give you a quick estimate of mileage rates. But these may not be an exact fit for your situation because you are not an employee.

Generally speaking, if you use your vehicle for, let’s say, 70% business then your business expense is 70% of your total vehicle expense. The percentage is based on mileage driven not time spent in the car :-). You must track all your business mileage throughout the year in some type of log book, either electronic or paper, and keep all auto-related expense receipts.

Expenses include the cost of the vehicle (including any loan interest), maintenance, repairs, insurance, vehicle registration and fuel.

To be accurate, once you have calculated the business portion of your car expenses, you should deduct any mileage fees that clients paid you throughout the year.

Parking expenses and road tolls incurred while driving for business, and which are not billed to the customer, are not pro-rated and should be included in full.

And just to point out, if you have a car accident while driving for business, the full cost of the repairs is a business expense and is not pro-rated.

Take a few moments to determine if you have any other business expenses not covered above.

Do you have a photovest or other specialized clothing? Rain gear, cold weather clothing or hip waders? Ladders? A special vehicle trailer to haul your mobile studio? Do you pay an assistant or makeup artist for your test shoots? Do you take any business-related college or night school classes? Do you buy books to help you run your business?

You need to earn a salary or else you’ll be the “free” in freelance. Ideally you should be earning a salary AND your business should be earning a profit.

According to StatsCan, the average Canadian salary before deductions, as of December 2014, was $49,036/year. For what it’s worth, 90% of Canadian income earners make less than $80,400/year (using 2011 data).

Also note that the average hourly wage for a full-time Canadian hourly-paid employee is $27.95/hour (April 2017 data) which works out to $58,136/year (based on a 40-hour work week).

Also remember that while employees pay only 50% of their Canada Pension Plan (CPP) contributions, you have to pay 100% of your CPP.

If you don’t have a salary then you can’t put money into your RRSP, TFSA or other savings account. You also won’t be able to buy food, clothes, a vacation or anything else.

Remember to give yourself a raise from time to time, at least equal to the rate of inflation and the increasing cost of living.

Do you earn income from stock sales, prints sales or book sales? Do you teach photo classes or are you involved in photo workshops? Enter the annual amount you earn from all other activities. The time spent on these activities is not considered to be billable days.

The amount entered here will lower the amount of money you need to earn from shooting but still meet your overall salary expectation and cover your overhead expenses.

How many days each year will you be directly working for a paying client? A newspaper staff photographer and most other types of employees work less than 236 days per year, assuming two weeks vacation, five sick days and ten statutory holidays.

A freelancer cannot work seven days a week. You must have days off for yourself. You also have to spend time working on your business. These are not billable days. No one pays you to update your web site, answer e-mails, take gear in for repair, send out estimates, prepare invoices, organize and archive your images, run errands, learn new software, etc.

How many days each year will you be working on a paying job? If you think 250 days, then good luck with that. If you hope 150 days, then congratulations, you’re above average. A rough average might be around 100 days per year although some photographers work less than that.