Due to the different types of businesses streaming can generate, it’s normal to be confused about paying taxes as a streamer. However, if you earn any money while streaming, even if it is a donation, you are responsible for paying taxes just like any other successful business. The amount you pay depends on numerous different factors and will vary between streamers.
Just because one streamer has a high tax bill with the same viewers as another streamer doesn’t mean they will owe the same taxes. This is why it is so important to figure taxes out before even making one penny live streaming. This way, you know you are doing everything right to run and continue to build a successful live streaming business.
Tax Tips for Streamers
Federal and State Taxes
All streamers are subject to federal, state, and county taxes depending on where they are located. If you are live in Florida, for example, you will not be responsible for state taxes. Still, as a sole proprietorship or independent contractor, you will be responsible for at least 15.3% to the federal government for self-employment tax and income tax depending on how much you make. Depending on the platform you use, they will report the money you make to the IRS.
Keep Track of Expenses and Claim Deductions
Anything that you need to run your business can be classified as an expense. For example, paying your internet bill, your monthly subscription to Adobe Premiere Pro, or the ingredient and material costs needed for the stream are all examples of expenses you can claim to reduce your taxable income.
Possible deductions include:
- Computer or camera equipment
- Microphones or other audio and lightning equipment
- A portion of your internet and rent bill
- Computer desk and chair
- Charitable donations
What you can deduct depends on if it is used only for business. For example, if you want to deduct computer equipment, make sure you only use it for business. If you use it regularly in your business and consider it needed by the industry, it will be deductible from your income before you do your taxes.
Use Bookkeeping and Accounting Software
From day one, set up as many tools as possible to make the process easy and stress-free. For example, wave accounting is free-to-use financial software that easily tracks expenses, payments, invoices, and even payroll. In addition, open a business banking account to keep your personal finances separate during this process. This way, you have no confusion on how much you are putting into your business. Plus, if you don’t and mingle your business money with your personal funds, the IRS may not act as fairly as you think they will if there is a disagreement.
Pay Quarterly Taxes
If you earn enough to owe more than $1000 to the IRS after estimating your yearly taxes, you must begin paying quarterly taxes. Otherwise, you will be charged a fee. In the United States, you have to pay taxes on your income as you earn it. It’s actually very easy to work with the IRS or through your accountant. Programs such as QuickBooks Online or QuickBooks Self-Employed help you keep track of your finances and expenses so you can be sure to pay your taxes on time.
Hire an Accountant
If you are too confused, busy, or make too much money to feel confident in your ability to file and keep track of your own taxes, then you should hire a certified public account. Even small streamers can benefit from one, and you’ll be surprised how affordable they really can be. Even so, you don’t want to ruin your business because you skipped paying taxes or owe too much to the IRS.
As you can see, streamers are just as responsible for paying taxes like any other business or independent contractor. So don’t neglect your responsibility and always hire an accountant if you are not sure.
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