Creative Entrepreneurs: Options to Finance Photography Equipment

 Eventually you will have to bite the bullet and purchase new equipment.  Depending on what you are looking at, you probably aren't going to have the cash to pay for it.  That is where financing comes in.

Let's look at the things to consider.

Why Photography Equipment is an Investment

Cameras are an expensive essential part of your creative business.  Depending on the technology, they can serve your business for many years.  When considering purchasing equipment is best to do it from a business perspective and not be caught up in the latest shiny options.  Financing and credit are two of the options to consider.

Sure, you need to research the technical aspects of the equipment to ensure whether it will meet your needs.  More importantly, does it meet your business needs.  Will it pay for itself, and when?  Do you really need it, or is there a less expensive alternative?  Don't let your emotions sway this important BUSINESS decision.

Do Your Research Before Financing

There are a lot of financing options depending on your needs.  The retailer or manufacturer often will have financing terms, and they are usually very generous.  This makes sense, since they want to sell the equipment.  Remember, if you finance with the retailer, you generally are going to pay full retailer prices.

Often times you can purchase used equipment for less than retail price, but that will require an alternative financing source.  Fortunately, there are many options available for business credit.  Which one you choose will depend on a several variables such as the cost of the equipment, what your credit score is, your credit history with the company, the interest rate you are willing to pay, and the length of the financing, which drives the amount of the monthly payments.  Collectively these items are called loan terms.

There are bank options and non traditional lenders such as Canon Financial Services.  Each will have different lending criteria, rates, and terms.  You can even lease equipment with financing companies.   You can even use a credit card, but the interest rate is going to cause additional cost.

When comparing your options, it can be very confusing.  In order to make an informed decision, ensure you know your TOTAL costs of financing for comparison.  Sometimes it pays to go through a more difficult application process with additional credit checks to secure better payment options.  If your financial situation improves in the future,  you can always look at redoing your financing.

Consider Your Budget

When financing equipment purchases it is not just the total cost of the equipment you need to consider.  You need to consider the impact on your cash flow from the monthly payments.

When considering your monthly installments, think about the amount of revenue that equipment will generate.  Although the equipment may not pay for itself every month, you want a positive cash flow over the year.  In other words, the revenue you receive from using the equipment should be more than the cash outflow for the year.  Ideally it would be twice the amount of the payments.

Also consider the life of the equipment technology.  Is this something that is going to be obsolete in two years?  If it is, you need the payback period to coincide.  This allows you to have the equipment paid for if you need to replace it.

Renting vs. Financing Equipment

Most creatives rent equipment initially for items they don't have.  Special use equipment or high ticket items may be something you always rent.  There is absolutely nothing wrong with that!  Sometimes you will be renting the same piece of equipment frequently, and you may ask yourself if you should purchase the equipment rather than rent it.

When making this decision, you need to consider the impact on your profitability.  Your monthly loan payments will likely be less than your rental payments, but consider the overall cashflow impact.  Similar to the discussion above regarding budget, does the revenue from using your rental equipment exceed the payments?  If the excess is less than twice the rental amount, it might be time to consider purchasing the equipment.

Protecting and Insuring Your Equipment

Protecting and insuring your equipment and accessories is crucial to ensure its safety and longevity. Photography gear is often expensive and delicate, so taking proper precautions is essential. Here are some steps you can take to protect and insure your photography equipment:

1. Invest in sturdy, protective cases: Purchase high-quality, durable cases to store and transport your equipment. Look for cases with padded compartments for your memory cards and secure locks to safeguard your gear against bumps, drops, and theft.

2. Use camera bags and lens pouches: Camera bags and lens pouches provide additional protection for your equipment while you are on the move. They help to prevent scratches, dust, and moisture damage. Choose bags with adjustable dividers for customized compartments to fit your specific gear.

3. Get a camera strap or harness: A good camera strap or harness keeps your camera secure while shooting and helps prevent accidental drops or damage. Look for straps with padding and adjustable features for maximum comfort and stability.

4. Install a UV filter: Using a UV filter on your lenses offers an extra layer of protection. It helps shield your lens from scratches, dust, and accidental damage. Additionally, UV filters can improve image quality by reducing unwanted glare and reflections.

5. Store in a safe and secure location: When your equipment is not in use, store it in a secure place, such as a locked cabinet or a designated photography gear storage area. Keep it away from extreme temperature conditions and humidity that could potentially damage your gear.

6. Consider equipment insurance: Insuring your photography equipment is vital for financial protection against theft, loss, or damage. Explore insurance options specifically designed for photographers, which can cover equipment replacement, repairs, and liability. Compare policies, coverage, and premiums from different insurance providers to find the best fit for your needs.

7. Register and document your equipment: Keep an inventory of your photography equipment, including serial numbers, models, and purchase dates. Register your gear with the manufacturer to benefit from warranty coverage and potential discounts on repairs or replacements.

If you are financing equipment, the financing company will likely require you to maintain insurance on the items, and name them as a loss payee on the policy. Remember to regularly assess and update your insurance coverage as your equipment collection expands or changes.

Tax Implications of Financing Equipment

All of the equipment you finance, from audio equipment to photographic equipment will be treated the same on your business tax return.  The IRS classifies all of these assets the same.  If an individual item is below $2,500 you can take an immediate deduction for the item.

If an individual item is more than $2,500 you will have to depreciate the item.  There are multiple depreciation options under the current law.  Consult with your tax professional to see which period of time you want to deduct this expense.

The finance charges and interest are fully deductible in the year that you pay them.  Lease payments generally are expensed as you pay them as well, but again, consult your tax professional about your specific situation.

Conclusion

In conclusion, investing in high-quality photography equipment is not just a financial decision, but a decision to invest in your passion and your future. By carefully managing your finances and making smart choices, you can turn your hobby into a successful business. Remember, the right equipment can make all the difference in capturing those beautiful moments that will last a lifetime. So go ahead, seize the moment, and capture your dreams!