How a CPA for Influencers Saves You Money
Written by Amanda Bower | Published: March 28, 2023
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Talk about a dream job: if you want to work with your favorite brands, make money from social media, and create your own schedule, look no further than influencing. Being an influencer, or someone who promotes brands and companies to their audience on their social media channels, is a career many aspire to have.
In fact, it’s recognized as “one of the most aspirational jobs for kids and adults.” And like all jobs, those who work in influencing need to understand their accounting and tax obligations and find a CPA for influencers who can meet their precise needs.
Influencing is a unique job for many reasons. Influencer income can range wildly in a new and ever-changing industry.
One report found that 26% of influencers earn less than $1,000 per year, 25% earn from $1,000 to $10,000 per year, and 11% earn between $50,000 and $100,000. But whether influencing is your full-time job or a part-time side hustle, you’ll need to get a handle on your business’s financial aspects.
The truth is that accounting and taxes can be challenging for influencers to tackle on their own. For example, when you’re employed full-time, you receive a W2 in the mail, and your employer puts aside money for your taxes. But when you’re making money from influencing, you need to manage taxes on your own, ensure your bookkeeping is accurate, and maximize your deductions.
Because of the complexities that come with the financial aspects of their business, many influencers choose to work with a skillful CPA for influencers. Here’s what to expect if you decide to do the same.
What Exactly Can a CPA Help Me With?
Why is a CPA for influencers useful, and how can they help you with your business? Influencing is anything but a straightforward industry, meaning your accounting and tax needs are equally as complex. Here are a few ways a CPA for influencers can assist you.
1. Proper Bookkeeping
When earning income as an influencer, it’s crucial to keep track of all of your revenues, records, and documents related to your business. This is called bookkeeping, and it’s one of the many things a CPA for influencers or a small business CFO can assist you with.
Plenty of documents can come with influencing; simply keeping them on your computer isn’t enough. Contracts, invoices, deposit notices, and other documents must be organized to ensure you have what you need to make this process easier.
2. Accurate Guidance
Influencing is a very social career, and it’s easy to find out how your influencer friends and colleagues are tackling their accounting and finances. But this can be tricky: when it comes to the financial aspects of your business, many risks come with doing things the “wrong” way.
Because there are varying interpretations of IRS regulations, and everyone’s influencer business is different, you’ll want an experienced CPA for influencers on your side who is looking out for you and giving you accurate guidance.
3. Cash Management
A CPA for influencers is an expert at helping you with cash management, which has a few components. Here’s a scenario you might be familiar with: ever needed to chase a brand down for payment or have a partner brand fail to send your payment for months?
It’s all too common in the influencer space, but when you’re working with a CPA for influencers, they can help you with accounts payable management. This means they can assist with the process from invoicing until the payment is received.
There are other aspects of cash management that your new CPA will handle. For example, they can provide cash collections support and W9 collections.
4. Deduction Guidance
When tax season comes around, you’re definitely going to want to have expert guidance on tax deductions. Tax deductions are the amount of money you can subtract from your income to lower your tax liability, and business expenses fall under this category.
When you’re an influencer, it’s essential to not just keep track of your business expenses but actually understand what is legitimate. For example, depending on your business, you can deduct a home office, internet and phone bills, health insurance, meals and travel, and any other costs/purchases associated with your influencer business.
How Can a CPA Benefit an Influencer?
While it might seem like hiring a finance professional is just an extra expense, turning to a CPA for influencers can be extremely valuable. Here’s why:
- Everything is accurate: A CPA for influencers can help you stay organized and ensure your records, reports, and other financial information are 100% accurate. This is crucial to understand what your income is like, what your expenses are like, and how to properly prepare your taxes.
- Understand the nuances: Did you know that gifted items count as income? The same goes for revenue earned from affiliate links. A CPA for influencers can help you navigate the complexities of influencing.
- Separate personal and business finances: When working as an influencer, it can be easy to confuse your personal and business finances (especially when the two are so closely related). A CPA will separate them so you have peace of mind you’re getting things done correctly.
- Know your revenue streams: With influencing, what counts as revenue might not always be clear. Influencers often have multiple revenue streams, such as brand partnerships, affiliate marketing, and merchandise sales. A CPA will know which ones to focus on.
- Track your expenses: It’s not just revenue you need to take care of. Influencers incur various expenses related to their business, such as travel, equipment, and software subscriptions. It’s important to track and categorize each expense to understand your costs and deduct them from your taxes.
Will They Save/Make Me Money?
When you have an excellent handle on your finances, you’ll likely save money in the long run and perhaps even earn more. Here’s how a CPA for influencers can help you save money:
- Rock-solid tax planning: A CPA for influencers can help you identify tax deductions and credits you may be eligible for, reducing your overall tax liability. They can also help plan for estimated tax payments, reducing the likelihood of penalties and interest charges.
- Entity structure: Choosing the right business entity can impact an influencer’s tax liability. A CPA can help evaluate the options and recommend the best structure for their business.
- Financial reporting: With regular financial reporting, your CPA can help you understand where your money is going, where you can cut costs, and how to increase revenue.
- Expense management: As an influencer, many expenses can likely be categorized as business-related. Your CPA for influencers can help you organize your expenses correctly.
What Are the Unique Accounting Needs of Social Media Influencers, YouTubers, and Online Entrepreneurs?
Being an online entrepreneur is incredibly exciting but comes with unique accounting needs. Here are some to be aware of:
- Revenue streams: Influencers and online entrepreneurs may have multiple revenue streams, including sponsored content, affiliate marketing, product sales, and ad revenue.
- Expense tracking: Influencers and online entrepreneurs often incur various business-related expenses, such as equipment, software subscriptions, and travel expenses.
- Contracts and agreements: Influencers and online entrepreneurs may have contracts and agreements with brands, sponsors, and partners.
- Estimated tax payments: As self-employed individuals, influencers and online entrepreneurs are responsible for paying estimated quarterly taxes. Planning and budgeting for these payments are important to avoid penalties and interest charges.
- Entity structure: Choosing the correct business entity can impact an influencer’s tax liability and liability protection.
Being in a Unique Industry Comes With Unique Needs
Influencers, let’s face it: you’re in a unique industry, and while it might be exciting and profitable, you have precise accounting and financial needs. And even making a little bit of money on the side means you need to understand all the nuances of accounting.
While this might sound like a big undertaking, we’re here to help. We offer accounting services for streamers, influencers, and content creators and give you straightforward accounting in a not-so-straightforward industry. We can take care of your bookkeeping and reporting with cash management services and provide you with finance meetings, so you can focus on doing what you do best.
Learn more about our accounting for influencers services today.
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