Content creation on sites such as YouTube and Twitch is a part of a growing industry which is only getting bigger. It’s reported that 96% of 13-24-year-olds are watching online content as compared to only 81% watching TV shows. Seeing the success of bigger creators, it’s easy to see why more and more people are choosing to become YouTubers or Streamers. Making money from home has never been easier.
Creators usually generate income either through advertising or through a partnership with brands and companies to produce a certain amount of content within a certain amount of time. Many content creators also look to gain extra income through selling merchandise or asking for donations to sites such as Patreon. In-between trying to build up your following and trying to make creative content it can be easy to forget about the accounting side of things. Below we have listed some helpful tips for making sure your accounting is up to scratch if you are a YouTuber or Twitch streamer.
When do you have to pay tax on income from Twitch?
You will have to pay tax if your total income amounts to more than your tax-free personal allowance (Currently £11850). You can deduct allowable expenses (see below) from your taxable income. If you have worked out that you need to pay income tax, you may need to get in contact with HMRC and complete a self-assessment in order to declare all of your income. You can visit the HMRC website to register for self-assessment.
Do you have to pay tax on Twitch donations?
All income you receive, whether it comes from Twitch donations from sites such as Patreon & PayPal, or money you make from ad revenue, should be taxed.
Should you consider a different business structure?
If you are a higher earner you may want to consider a different business structure such as a limited company, partnerships, or trust.
What expenses can you claim as a social influencer?
You can claim expenses that are justifiable as a “business expense”. For example:
- Equipment that you use to make your content such as computers, microphones, lighting, consoles, camera etc.
- Computer Software that you use to edit content
- Content related purchases such as props and games (as long as they are used specifically for the purpose of making the video)
- Travel expenses such as any travel cost from going to business meetings or events. For example, hotels, trains, planes, food. Personal holidays are not allowed.
- Contracting work out to other professionals such as anyone you pay for editing or working on your website.
- Data Storage such as hard drives and memory cards
- Premises expenses. If you work from home you can claim the use of home or you could claim for rent if you were renting out an office for example.
It is extremely important that you keep all the documentation and receipts for all of your expenses in order to claim them.
Bookkeeping and accounting software
It is very important to have a good bookkeeping system in place. You may get investigated by HMRC and it’s always better to have organised accounts to save time and stress. Having good bookkeeping software can be the key to keeping on top of your records. Now with the new making tax digital scheme, there are more and more software options available to help with your bookkeeping. Cloud-based accounting software like QuickBooks, Sage One and Xero are helpful in keeping all your bookkeeping organised. They are an easy way to keep your books up to date and secured securely. You can even connect your bank account to most cloud-based software so it updates your transactions automatically. You can input any expenses and income easily with a few clicks.
Do you need an Accountant?
Whilst some people decide they can manage their accounts on their own they may be missing out on saving money. An accountant can advise you on where tax can be saved and will ensure clients are making the most out of available allowances. You could end up saving a lot more than you pay in accountancy fees.
Once you get to the Twitch affiliate stage, you need to ensure your tax return is correct and legal. We offer a basic tax return service from £95 to help you meet this requirement.
If you are a YouTuber or Streamer looking for accounting advice, please do not hesitate to get in contact with us.