6 min read
The influencer life can be extremely rewarding if you are smart about it. Getting paid to dress up in free branded clothes, produce video content, visit exciting places, and enjoy brand partnerships that span digital media, oh yes!
An influencer – with a knack for creating digital content – is running a business, though, which means the not-so-fun parts of business need to be taken care of too – i.e., paying your taxes and managing your accounts.
Many such professionals ignore this part because they are unsure what to do – we promise, it is not that hard! Here are our top accounting tips for content creators and influencers to follow to maintain spotless accounts:
1. Record all transactions
Accounting for content creators requires you to keep a complete record of all income and expenses. Use an accounting tool to create invoices and record the payments when they come through. Affiliate income is another excellent source of digital content creator income. There is no invoice for this, so you can just record it as a general sale of goods.
To record expenses, your easiest option is to link your bank account to the software so it can automatically pull the details and calculate any relevant VAT.
Lastly, if you get paid in kind rather than cash, you need to record the market value of the gifted item for tax purposes. Gifted items can be tricky but must be included in accounting for social influencers – which brings us to our next point.
2. Be careful of freebies
Many influencer deals include freebies, i.e. the company gifts you an item separate from the money they pay for your content. If you are required to post about the gift, though, HMRC may ask you to pay tax on the item’s market value – so it is not quite as “free” as you think!
One way to avoid this is by demonstrating that the items you are given are for use only in your content, making them allowable expenses. However, this means that you must be careful about using them elsewhere. Gifts are to be included in accounting for content creators.
3. Plan for taxes in advance
The influencer life can be super-lucrative, from sponsorship deals to affiliate income streams. You do not want to spend it all, though! Keep aside a chunk for paying your annual tax bills, and consider tax-free investments for the rest. An accountant for digital content creators can help you manage your income to build wealth and minimise your tax burden.
4. Invest in an accounting software
Several accounting software solutions are designed for sole traders and business owners to run themselves. So even if you do not hire an accountant (which we recommend you do, by the way), you can stay tax-compliant!
The software provider will typically run you through the ins and outs of using the software, importing transactions and filing your accounts so that you can get started right away. At Golding Accountancy, we particularly recommend Xero to all our clients.
5. Consider operating as a limited company
A limited company requires more paperwork than operating as a sole trader. The big advantage, however, is that of limited liability. There is a distinction between what the company owns and what you own, meaning you do not have to be personally liable for your company’s debts.
Of course, no one size fits all, so consult an accountant about whether the limited company structure will work for you. And remember, even if you are a sole trader, you still have to submit your Self Assessment tax returns yearly!
6. Know what other allowable expenses you can claim
In accounting for content creators, you do not have to pay tax on several categories of expenses. These include (but are not limited to):
- Legal expenses
- Travel costs for work trips
- Advertising and marketing costs
- Office rent, maintenance and utility costs
- Cost of maintaining your website and email list
- Cost of outsourcing tasks to other professionals
- Cost of equipment like phones, cameras or computers
- Cost of software used to edit video/audio content you create
- Cost of getting trademarks and/or copyrights for your content
- Cost of business-related subscriptions, such as to a site providing licensed images
If you use part of your home as your office, you can claim part of the associated costs as an allowable expense.
7. Hire an accountant: Work with Golding Accountancy
Having an accountant like us on board who can handle things for you is always a good idea. Not only do we ensure that you are always compliant, but also we free up a lot of your time.
Your expertise (and interest) lies in creating great content – focus on that, and let your accountant keep the backend running smoothly! Things our accountants can help you with include the following:
- Tax reporting
- Analysis of each income stream
- Applying for relevant benefits and exemptions
- Visibility on the inflow and outflow of money
- Advice on navigating an economic boom (or bust)
Ideally, you want to pick someone with prior experience working with influencers and content creators, as the income and expense streams differ greatly from those of other kinds of businesses.
Luckily, we possess the necessary expertise to assist you in managing your digital content creation business in a professional manner.
We are equipped to guide you on matters such as taxation, determining your self-employment status, and identifying eligible business expenses for a deduction.
Over to you
In short, the influencer life can be your dream life if you run your business the right way. Taxes may not be fun, but they are a very real part of the influencer life – and you do not want to fall afoul of HMRC for not filing them!
Invest in the right accounting software, save judiciously, keep track of where your money is going, and, as we mentioned, get an accountant experienced in working with influencers to sort things out for you. Happy creating!
