Bookkeeping for designers

A business made of small charges

Sam runs a one-person brand studio. Ask what the studio spends and Sam says, honestly, “almost nothing.” There is no office, no stock, no truck. Then they print a year of card statements and count. The design suite. A prototyping tool. A font subscription and two one-off font licenses. Two stock photo sites, one forgotten. A plugin bundle, a mockup library, a cloud drive, a portfolio host, a scheduling tool and a password manager. Forty-one charges, most under $30, that add up to about $4,000.

Designers do not have expensive businesses. They have businesses made of many small, quiet charges. Good books here are less about tax technique and more about seeing a long list clearly, once a month, and putting each item in the same place every time.

How the money comes in

Most designers keep books on the cash basis, which Publication 334 explains: income counts when it reaches your bank, expenses when you pay them. A project deposit that lands in December is December income, even if you start the work in January.

Design work usually pays in stages: a deposit to start, a payment at a milestone, the balance on delivery. Enter what the client still owes as a receivable when you send the invoice. Righto keeps an open list, so you can see at a glance that a client has paid the first two stages and still owes the third. Income is still counted on the day the money arrives.

Clients who pay through a card processor or a design marketplace lose a fee on the way. If a $4,000 payment arrives as $3,884, record $4,000 as income and $116 as a fee on line 10. Marketplaces can take a much larger cut. Record their commission the same way. Your income then matches the gross on any Form 1099-K, and the fee is deducted where it belongs.

Business clients who pay you $2,000 or more for services in 2026 should send a Form 1099-NEC. For payments made before 2026, the threshold was $600. Report all of your income either way, form or no form.

Where the subscriptions go

The Schedule C instructions do not have a line called “software.” Preparers use office expense, line 18, or other expenses, line 27b, with a short description. Either works. What matters is choosing one and sticking to it.

In Righto, a rule does this once and for all. After you tell it that the design suite charge goes to line 18, every future renewal lands there with no further thought. Thirty rules cover most designers’ whole year.

Licenses for client work

Fonts and stock images raise a question that most designers never ask: whose license is it?

If you buy a font or a photo for one client’s project and bill the client for it, the cost is your expense and the amount the client pays you is income. Record both. Do not net them. If the client’s 1099-NEC includes the pass-through, your books will match it.

If the license should belong to the client, as it often should for a logo typeface or a hero image, it is better to have the client buy it directly. Then it never touches your books, and the license is in the right name. Either way, keep the license file with the receipt. A font license is a legal document, and you may be asked to show it years later.

The computer and the tablet

Equipment is the one bigger decision. The IRS lets a small business deduct an item or invoice of $2,500 or less in the year it is bought, under the de minimis safe harbor in the tangible property regulations. You make the election with a statement on your return. A $1,299 monitor or a $1,099 drawing tablet goes on line 22.

A $3,600 laptop is over the limit, so it goes on line 13, depreciation. A section 179 deduction can often let you deduct most of it in the first year. Publication 946 has the rules, and your preparer chooses the method.

If the laptop is also the family computer, only the business share counts. Write down how you worked out the percentage.

The home office

Most designers work from home. If a room or a clearly separate area is used regularly and only for your work, you can deduct a home office on line 30 (Publication 587). The simplified method allows $5 per square foot, up to 300 square feet. The regular method uses a share of your rent or mortgage interest, utilities and insurance. The home office calculator compares them.

One year in numbers

Here is Sam’s 2026.

Self-employment tax is about $60,631 × 0.9235 × 0.153, roughly $8,567, before income tax. The self-employment tax calculator works out your own figure.

Sam paid the developer $3,600 by bank transfer, so Sam sends a Form 1099-NEC in January, using the W-9 collected before the first payment. Payments made by card or through a payment app are usually reported by the app instead.

There is a second lesson in the table. The subscriptions, fonts and stock together cost $4,070. That is more than the monitor and the printing combined. The yearly review below found $612 of it in tools Sam had not opened in six months.

The annual subscription review

Once a year, list every recurring charge. Righto’s reports, filtered to lines 18 and 27b, give you the list. For each one, ask three questions. Did I open it in the last three months? Is there a cheaper plan I would not notice? Does another tool I already pay for do the same job?

Cancel what fails. Then use the profit margin tool to see what the saving does to your margin. For a small studio, a few hundred dollars a year is real.

Setting tax money aside

Nobody withholds tax from client payments. You pay estimated tax four times a year; the estimated tax dates page lists the deadlines, and Publication 505 explains the safe harbors. Move a fixed share of each payment, often 25 to 30 percent, to a separate savings account on the day it lands. Then the quarterly payment is a transfer, not a crisis.

Common mistakes

• Netting client pass-throughs. Record the stock photo you bought and the amount the client paid for it.
• Recording marketplace payouts only. Record the gross and the commission.
• Software on a different line each year. Pick 18 or 27b and keep it.
• Lost licenses. Keep each license file with its receipt.
• Paying for tools you forgot. Review the list once a year.

A twenty-minute monthly routine

1. Import your bank and card statements. Righto reads CSV, OFX and QFX files, and PDF statements, including scanned ones read on your Mac (importing statements).
2. Check that rules caught the renewals, and add a rule for anything new.
3. Split client payments into gross and fees, and add the client name.
4. Mark paid invoices as received.
5. Reconcile each account to the statement.

What to hand your preparer

Righto’s year-end package gives a cash-basis profit and loss by Schedule C line, the detail behind it and your reconciliations. Add:

• Every 1099-NEC and 1099-K you received
• Copies of 1099-NEC forms you sent, and the W-9s
• Receipts for equipment over $2,500
• Estimated tax payments, with dates
• Home office measurements
• A note of which line you used for software, so next year matches

If a cost does not fit an obvious line, the Schedule C categories tool helps. And you can connect your own AI agent to Righto at an access level you choose (agents). Every change it makes is recorded, and you can undo it.

General information, not advice for your situation. Ask a tax professional about your own return.