Over the past years, many influencers have popped up in various parts of the world, and it’s getting hard to keep track of them. Today, it seems that a person who acquires over 5,000 followers on Instagram and has a well-curated feed can pass as an influencer. However, there are professional influencers, and there are also those who do it for fun. Whatever influencer category you fall under, it’s good to know some things you can use to your advantage. Who knows, you could even end up with a lot of money!
In this article, we will dive deeper into the serious aspect of your social media influencer status:
Establishing The Real Deal: Is It A Hobby Or Business?
First, you must be clear with how you want to use your “influence” on social media. If you’re going to establish a business, then go ahead and do it. When you see it as a business, you will need to commit more time to it, which includes regular posts and continuous work to snatch up brands to partner with you and grow your business.
Aside from this, you will also need to get the right documents in order, such as your registration and taxes. It may seem like lots of work at first, but getting these documents and sorting them out is a one-time process.
On the other hand, if you only see it as a hobby, you don’t have to worry about the minor details. Just do whatever makes you happy and continue to influence people!
Consider Your Business A PSI
If you earn Personal Services Income (PSI), meaning that you produce income from your personal skills or efforts and earn 50% or more from it, then your business will be classified as PSI. You will then be eligible for certain tax deductions you can claim, which is why you need to keep accurate records of your income and expenses.
However, if you don’t consider the PSI angle of you being an influencer, you could lose significant tax deductions!
Watch Out For Freebies You Receive
If you reach that “influencer” level when you receive plenty of freebies from companies and businesses, you need to be mindful of them. As part of a proposed “Instagram Tax” in Australia, influencers must pay tax on income made via sponsorships and endorsements, including non-cash benefits. You don’t need to declare small gifts you receive, but anything of substantial value should be declared.
Claim Home Office Expenses
If you work from home, did you know that you can claim occupancy expenses? This will even include rent and mortgage payments. However, you will need to pay for capital gains tax if you sell your house. On the other hand, if you classify as PSI, you won’t be able to claim occupancy expenses.
Keep Track Of All Your Financial Records
This is very important if you fall under “professional influencer” status, in which you classify it as a business. With that, you will need to keep track of all your financial records for compliance and for business purposes as well. This will ultimately help you go through the tax season with little issues along the way!
Running any type of business involves lots of bookkeeping. As an influencer, unless you already specialise in accountancy, it’s crucial that you work with a professional accountant, especially if you have turned it into a business. An accountant will help you sort out your finances, manage your money better, and ensure that your taxes are in order.
Are you looking for a professional influencer accountant in Australia? At The Ecommerce Accountant, our experts help online entrepreneurs minimise their tax and increase profit. Get in touch with us today to see how we can help!