Streaming seems like a hobby, but others turn it into a career. They can make money as people donate to them, subscribe, and watch their ads. However, accounting for streamers can quickly become complicated since they may not know about finances.
If you find your finances challenging to deal with, you can try the tips below to work on your accounting as a streamer.
Hire an Accountant
Handling finances on your own quickly becomes challenging, especially if your job doesn’t give you a standard W-2 form. Since streamers need to consider multiple sources of income and treat themselves as a business, they should consider accounting for streamers.
An accountant will tackle your finances and help you through the process while ensuring you maximize your money. They can also keep track of your spending to see if any strange activity occurs.
If you hire an accountant, they can tackle your financing needs, so you can focus on streaming rather than juggling those challenges on your own.
Consider Consistent vs. Varying Income
You’ll receive consistent and varying income when you work as a streamer. Consistent income refers to the money people pledge to you each month while varying income refers to one-time payments people make.
For example, you can receive money through monthly subscriptions if you work on Twitch. You can also use different services where people pledge monthly amounts to you.
Some people may send you donations directly to your page, while others may give you bits through Twitch. Both of these have varying incomes. Consistent money will give you an idea of what to expect while varying income can help you during difficult financial times.
Identify Your Expenses
You can get tax write-offs on your different expenses when you work as a streamer. Since you are a sole proprietor, the government considers you a one-person business. That means you can identify other costs and not count them towards your income.
For example, if you need to purchase a new camera for streaming, you can count it as a business expense. Doing so means you don’t need to pay taxes on the camera since you use it for your business.
Make sure you review your purchases regularly to see what counts as a business expense.
Form a Budget
Since you can’t always predict how much money you’ll make, you must create a budget. Some months may lead to tons of money while others may seem dry, so figure out an ideal budget for your situation.
You can review your income over the past few months and determine how much you make. You can then look at the lower months and build your budget around the expected amount. Doing so will help you remain financially stable during the months when you make more money.
You can constantly adjust your budget based on how you grow as a streamer.
Pay Your Estimated Taxes
Some streamers fall into the habit of only paying their taxes when they file them. While you can do that, doing so usually leads to penalties and fees depending on how much money you make. To avoid the penalties, you need to make estimated tax payments.
Estimated tax payments involve paying the IRS money every three months before the due dates. If you make estimated tax payments and get close to the due amount, you won’t receive penalties for your taxes.
You can easily find tax calculators to determine how much money you need to pay for your estimated taxes.
Accounting for streamers has some challenges, especially if you receive your income from multiple sources. If you utilize the right tips, you can make it easier to maintain your finances while simplifying the processes involving your taxes.
Make sure you go through the tips and apply whichever works best for your situation.