In this digital world, social media influencers are in and are making pretty good money. It is amazing to see how everyone are so glued to their phones and are constantly watching these social media influencers promoting products whether they are clothing, household items, or travel ideas.
A social media influencer is an independent contractor who makes money from promoting products or services or company they contract with whether it is a set pay or via commissions.
Independent contractors are just like sole proprietorships in many important ways. Many professionals like doctors, accountants, lawyers or tradespeople operate as independent contractors. This simply means that they work for other individuals or companies on a contract basis. Independent contractors are considered self-employed, and are subject to the self-employment tax. Social media influencers and creators also fall under this category of business. Most brands who pay influencers for their work set up each creator as a contractor within their accounting system.
As they are independent contractors, social media influencers get an annual form 1099-NEC when they make $600 or more per year for their services and they pay self-employment taxes quarterly since no one withhold taxes on their pay. Unless they are a corporation, they reflect this income on a schedule C and are entitled to show deductions against this income. This is where a good accountant can help a social media influencer
A social media influencer has many opportunities for tax deductions such as but not limited to:
- Business related travel
- Business related meals if you’re a travel influencer or to generate clients
- Office supplies
- Laptop, printers, monitors
- Raffle items or prizes used for social media posts
- Camera and filming equipment
- Staff or crew costs
- Dues and subscriptions
- Website fees
- Advertising costs like Facebook or Instagram marketing
Social media influencers can go from making a meager income to suddenly a massive cash boom so having an accounting and tax expert by your side can prove to be an advantage in helping you build wealth to keep more of what you make.
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Sharon Masler is the Managing Partner of Masler & Associates, CPAs. She has 25 years in finance and accounting. Her background includes planning and performing audits, reviews and compilations of financial statements, primarily for medium-size, privately-held companies in manufacturing and distribution industries.