If you’re an online content creator or influencer, you must consider taxes at some point. They could be more than you think, and if you’ve not been keeping track, you could end up dealing with legal issues.
You can reduce your tax liability on your yearly tax return by being aware of your deductibles! Social media influencers, bloggers, and/or content producers are considered sole owners by the Internal Revenue Service (IRS).
In the same way that freelancers and other self-employed people can deduct certain expenses from their tax liabilities, content creators can do the same. Of course, like most people, you might not know which deductibles apply to you and which aren’t.
If that is the case, don’t worry because we’re here to help with a useful tax guide for content creators and social media influencers.
Track the Value of Gifts You Receive
Product reviews are a common category of content produced by influencers. Influencers frequently acquire complimentary products from brands with the understanding that they will review and promote the product to their followers. Influencers should keep note of the presents they get and their value in dollars.
For example, the tax authority typically views your gifts as a component of the revenue generated by your YouTube channel, so they must be reported in your tax filing.
Hire an Accountancy Firm to Take Care of Your Tax Filing
Some content creators work for the public, but some sell content for the discerning few. The most popular platforms include OnlyFans, Sellfy, Patreon, and Substack. For these platforms, there could be taxes and hidden charges you might not be aware of.
The OnlyFans Taxes Guide is an excellent place to start if you create content for OnlyFans. Still, if you’re confused about how taxes work, we suggest hiring an accountancy firm.
With an accountancy firm helping sort out your taxes, you’ll be better positioned to handle government regulations if you are questioned regarding your income sources.
Always Track Your Income and Expenses
The best and simplest way to manage your taxes as a content creator or social media influencer is to keep track of your earnings and outlays throughout the year rather than wait until the year’s end.
As a content creator, if you cannot hire an accountancy firm, there are several money management apps available.
In addition to helping you pay your taxes, keeping track of your income and expenses provides additional advantages. One of the most significant advantages is during audits.
Always keep track of all cash, debit, and credit card transactions, and maintain a folder with all receipts, paid invoices, and monthly statements to avoid filing mistakes when the tax year comes around.
Deduct Legitimate Expenses
While most individuals consider paying their taxes, as a content creator and influencer, you must also consider deductions. These individuals can write off certain expenses to reduce their income tax.
Influencers and content creators are allowed to deduct anything and everything that is directly relevant to and required for their business operations. Typically, this covers transportation expenses for trips essential to filming, travel expenses (with certain restrictions), a shooting area home office, and storage space.
You can reduce the taxes you pay by deducting your legitimate costs from the money you make as an influencer or content creator.
That said, you must be aware of what you can deduct in the first place. We suggest hiring a professional accountant or tax expert to minimize deductions and reduce your tax liabilities as a content creator or influencer.
Did you know? You can deduct the cost of office supplies, personalized goods, software, and app fees, recording or writing equipment purchases, giveaway prizes, and website costs.
File Your W-9 and Receive 1099s
The W-2 tax form shows what you’ve earned from an employer, the taxes deducted from your salary, loans, and benefits.
For influencers and content creators who manage their own businesses, it’s not the same. Influencers use Form W-9 and receive Form 1099s from their clients as independent contractors at the end of the year. The IRS is informed of the total amount received through connections with brand ambassadors, sponsorships, and affiliate marketing under this approach.
If a customer pays you over $600 a year as an influencer or content creator, you are entitled to fill out a 1099 form by January of the following year.
Influencers must pay self-employment tax in addition to income tax because they are employed as independent contractors and other such positions rather than employees of a single corporation.
Because they are independent contractors and not long-term business employees, they must complete the 1099 form, especially the 1099 NEC.
Learn More about Your Business Entity
Knowing your business entity is the first thing you should do as a content creator or influencer who intends to pay taxes.
The default classification for an influencer who hasn’t established a business company is either an independent contractor if just one individual filed on Schedule C of the personal tax return or a partnership if you have multiple partners.
However, the best approach for influencers and content creators is to operate as independent contractors or sole proprietors. This is an excellent tax tip for people just starting and not making much money.
The simplest business structure is a sole proprietorship, but it is not the safest. It offers no protection for your personal asset or liabilities.
On the other hand, you should think about creating an LLC if your influencer or content creation business starts to generate more revenue. A limited liability company, or LLC, can reduce your company’s taxes and provide you with personal defense, especially if your company is ever sued in the foreseeable future.
While most people associate tax season with April, small business owners, content creators, and influencers view it as any time you receive money for your company or purchase on its behalf.
So, to be prepared to pay your quarterly taxes throughout the year, it’s critical to keep track of your income and expenses and set aside a portion of your earnings. Furthermore, working with a tax professional will also be beneficial as they will handle these issues, from calculating your yearly expenses to filing W-9s and everything in between!