Content creation has enabled many to turn their passions into profits. Anytime there are profits, however, Uncle Sam comes asking for his share. If you’re even a minorly successful creator, make sure you have a solid understanding of how accounting for content creators works.
Understanding Finances
Creating content is a business, and every business owner needs a firm grasp of their business’s finances. Understanding your finances means recognizing where your money comes from and where it goes.
Include All Income Streams
Most content creators have multiple income streams, which are any sources of revenue that stem from your content and brand. You should think of income streams as both platforms and methods:
- Platforms: Instagram, Twitter, TikTok, Facebook, YouTube and all other platforms.
- Ad revenue: Payments received from Adsense or other ad platforms.
- Affiliate Marketing: Payments from Amazon, niche, or other affiliate programs.
- Sponsored Content: Payments for sponsored videos of blog posts.
- Membership Fees: Recurring payments on Patreon, a website, or other platform.
- Product Sales: Payments for physical products, classes, plans, etc.
- Merchandise Sales: Payments for merch sold through a third party.
- Free Products: Free products value given by a business in exchange for visibility
It’s important to include all sources of income, even including products that are received in lieu of payment. Review your tax documents or bank statements to make sure all sources are included.
Qualifying Deductible Expenses
Legitimate business expenses are generally deductible against your taxes. Some possible business deductions include:
- Equipment: For video and photographing, managing posts, and making content
- Business Travel: Transportation and lodging expenses for business-related travel
- Home Office expenses: A portion of rent/mortgage, utilities, etc. if maintaining a home office
A CPA that specializes in accounting for content creators can help make sure you claim all qualifying deductions, without deducting non-qualified costs that could lead to trouble if you’re audited.
Common Taxes for Content Creators
Depending upon your business structure, whether it’s a sole proprietorship, limited liability corporation, C corp or S corp, you may have a few different taxes to pay:
- Income Tax: Everyone pays income tax on income they personally earn
- Self-Employment Tax: Most content creators pay a self-employment tax of 15.3%
- Corporate Tax: A 21% alternative option for LLCs, and applies to all other corps.
These taxes require submitting estimated quarterly payments, and then any appropriate adjustments are made when the year’s tax return is filed.
To help with these, make sure you keep records and retain some income for the payments. Set aside a portion of each income payment to pay taxes.
Work With Tax Professionals
For efficient and accurate tax management, work with professionals who know accounting for content creators. Hire a bookkeeper, who can keep detailed financial records on your behalf. Consult a certified public accountant (CPA) for help with preparing taxes, filing taxes, and navigating more complex tax questions.
To talk with a CPA who specializes in accounting for content creators, contact us at Gurian CPA Firm. We’ve worked with many people in the space, and are ready to help you.
