Business Development Manager at Karla Dennis & Associates INC, overseeing the Sales Department in North America. Follow me @karltondennis
“When I grow up, I want to be a YouTuber!”
We are living in a day and age where attention is the new currency. Mega companies like YouTube can earn their stars top dollar in exchange for ad views and clicks. With some people boasting millions from their YouTube status, it’s no wonder why more and more people are choosing to monetize on platforms like YouTube every year. If you are fortunate enough to make a full-time income on YouTube or other social media channels, not only could you be in for some serious cash, but you can also expect to pay some serious taxes every year.
Treat Your YouTube Channel Like A Business
Whether you have a channel focused on reviewing children’s toys or giving baking tutorials and regardless of the theme, you should treat your YouTube career like a business. As a YouTuber, you may consider yourself more of the creative type, but it’s so important to be disciplined in establishing a business and tax strategy for your YouTube business. After all, one of the best parts about being a YouTuber is that you are working for yourself as a contractor, not a W-2 employee.
Know The Benefits Of Your YouTube Business
As a licensed tax accountant, I’ve seen that being self-employed and setting up the right entity structure can be beneficial to your taxes, as it can eliminate some of the self-employment tax. Some of those items you are spending your money on, such as cameras and lighting, can also be written off, but only if you follow the tax guidelines and have a good understanding of the tax codes. Working with a tax strategist can help you take advantage of the items that you are already spending money on for your business so you can receive tax write-offs.
How Does A YouTuber Get Taxed?
As a YouTuber, you will automatically be considered a sole proprietor; however, you can also register your YouTube Channel as an LLC or partnership. You must pay self-employment taxes, although some LLCs make an S-corp election to reduce their self-employment tax obligations. The way in which you get taxed is important as a YouTuber because all income you earn will be taxed due to the fact that you’re self-employed. It may not seem to make too much of a difference when you are just starting out, but once your channel is popular enough to generate millions of views, it will be necessary to already have yourself set up properly to qualify for tax write-offs.
Subscribe To This Final Idea
Now that you have your sole proprietorship, LLC and/or partnership for your YouTube business, your journey has just begun. It’s time to figure out what personal expenses qualify as business expenses for your tax write-offs. Under the tax codes, your business is eligible for tax write-offs as long as, among other rules, you are transacting under an intention of the pursuit of income. The needs of your business will change as your channel develops over the years, and only you can know what your business needs to succeed. Subscribe to the idea that as long as you properly track what you spend for your YouTube channel’s videos, you can receive the write-offs you deserve and reduce your tax bill legally.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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