here, we are talking about running a business.With all due respect, I do not really understand what is the point of doing all those depreciation calculations. Buy what you can afford and enjoy your photography...
here, we are talking about running a business.With all due respect, I do not really understand what is the point of doing all those depreciation calculations. Buy what you can afford and enjoy your photography...
With all due respect, I do not really understand what is the point of doing all those depreciation calculations. Buy what you can afford and enjoy your photography...
If the so-called "pro" has to adopt such a tight fisted approach, then clearly he is not successful. He should not be in this trade.
Depreciation is a given in any business.
The technology of digital cameras advance so fast that there is no chance for your equipment to depreciate fully over time.
Your equipment is obsolete long before their depreciation to zero date.
Depreciation of equipment in this case doesnt bother me much, at least to my business. The launch of 1DX doesnt mean my 3 year old 1Dmk3 (owned by previous user 1 year + me 2 year) cannot be used or no value. To me any equipment is precious and they have served me well over the years. In fact a piece of used equipment if found another user, is adding value to the new owner increasing its intended productivity.
For my stand, a piece of old and used equipment has its own uses.
here, we are talking about running a business.
Though depreciation is a fact of life when you are doing a business. It should be accountable for.
Each individual take it differently and I believe the essence of this post is to educate aspiring pro this side of equation, which seems to be so simple but often neglected.
I don't agree that the technology is outdated quicker than the depreciation schedule if you know what to do with them. I believe some of my camera equipment has beyond the depreciation schedule, but still relevant today... Of course, if one constantly needed to feel that newer technology makes them feel better or more "pro", they simply need to watch their spending. I would rather to have the money that I exchange with my hard work in my pocket then the equipment manufacturers. But there are other things to consider for capital outlay which sometimes works better as far as taxation is concern.
Though I know the intention of TS is ruffle some feathers... but I am sure many took it personally if they fall into a category of "hobbyist"... is there a need for this? It is an open interpretation.
Regards,
Hart
many interesting points to think about and thanks for sharing - and as readers we all should be kind, generous and encouraging - it is very easy to be critical - but it takes courage to accept some things and be gracious about it....
Depreciation cost is included in financial accounting. Hence I don't see why not included into consideration.
Right Hart, it is glaringly obvious from the replies who are in the business and who are in the passion, and who can manage both.
But, I can't have a thread where everyone nods and gives me thumbs up - that would be so one sided and propaganda its no longer a discussion anymore. Thus the opposition views are good too.
I do hope those have the desire and the ability to take their hobby into money generating levels, do so healthily. Who knows, one day your photography can take you further than your current comfortable job does, and you will want to do it right.
Hobbyist on the other hand care less about the cost of ownership. Hobbies are funded by disposable income, an amount you set aside to reward your hard work. You can invest that amount or do something that makes you happy.
Who cares? We are all dumb in one way or another.
Life is short.
Don't calculate too much.
Sometimes you win, sometimes you lose.
I'm not going to diss your point, and I certainly see what you mean. But we just have to be careful here. Depreciation is an accounting concept mean to measure the "cost of the asset" for the year of usage.
The best way of seeing depreciation is this - an asset, when new, is $1,000. You look into your crystal ball and you see that 5 years into the future, it is only worth $500.
Thus, you know the "cost" of the asset per year is ($1000 - $500) / 5 = $100. (Straight line depreciation)
So you can make sure that you need to earn at least $100 per year, on average, for the asset to earn its keep. You can always earn $500 at the end of Year 5 and it would still be the same idea.
For valuation uses, such as free cash flow analysis, depreciation is added back as it is only a conceptual outflow -once again, there is no real cash outflow.
You are right...
Our intention is not to sayang everyone's ego, but giving some inside information for people who would use it for the benefit of growing their income generation passion. Unfortunately, we are not here to please everyone because we can't.
One would have to make more right decision in their business to rise to the a comfortable level of income and number of working hours.
Never focus on end result, but always focus on future value. What you do and you don't impact the outcome years to come... Think long term and depreciation is just small part of mechanics.
Best way is to pay a good accountant to tell you your financial position and how to get the best of it.
Regards,
Hart