What Influencers Need to Know When Doing Their Taxes

Now more than ever, social media influencers need ongoing support to maximize their tax savings and reduce the risk of an audit by being well prepared.   

Having spent years defining your brand and honing your craft, now is the time to ensure you have a proper tax strategy in place to protect your assets.  According to Influencer Marketing Hub, the influencer marketing industry is estimated to reach $16.4B in 2022. This market has grown from $1.7 billion in 2016 to $13.8 billion in 2021, more than 8x growth in 5 years with no signs of slowing down.

As an influencer, you are effectively a small business owner.  As such, your tax season is year-round, essentially any time you receive money into your business or buy something for the business.  Managing that process can be complicated, but it’s essential to keep your business in order.

With the significant growth in the influencer marketing industry, many digital influencers, including gamers, social media personalities, and streamers, find themselves in need of support and guidance to keep their finances in order, especially as the diversity of their revenue channels and overall income increases.

Some considerations for proper tax planning and preparation are best discussed with professional advisors, including:

• “Employment Status” – Influencers are generally classified as Independent Contractors so long as certain criteria are met. See this article for a detailed explanation of the difference between a 1099 employee and a W2 employee.

• Business organization – In certain situations, Influencers may act and operate as a complex set of business entities for various purposes.

• Beyond the cash – Influencers need to be aware of any additional non-standard compensation that they may be receiving for their services and how that would impact their 1099 MISC. Beyond the monetary compensation, they may receive merchandise, products, or experiences in exchange for promotion through their media channels.

• Performance – Determining whether the Influencer has performed services and derived income in various states should be considered.

• Tax deductions – Identification of the potential tax deductions to maximize write-offs and minimize tax burden will be critical to maximizing the income.

Adeptus has worked with influencers across the major platforms (eg, YouTube, TikTok, Instagram, Twitch) and can offer a full range of services that can be catered to each influencer’s needs. From base-level accounting to business management services, we ensure that your tax burden is minimized and you can feel confident that you are making the best financial decisions.

If you would like to speak to an Adeptus team member about our experience with influencers, contact us.