5 Things You Need to Know About TikTok Shop Taxes

For influencers and creators tapping into TikTok Shop, understanding the tax landscape is crucial to keeping your financial game strong. Let’s dive into 5 essential insights you need to know about TikTok Shop taxes as a creator!

1. TikTok Shop Creators Have to Pay Taxes

First and foremost, TikTok Shop creators do need to pay taxes. Some influencers believe that you don’t have to pay taxes if you make less than $12,000 or $600 a year, however, that is false. Even if you make only $1, you need to pay taxes on that income.

Unfortunately, there is a lot of misinformation regarding taxes for content creators and influencers, so it is important to work with an accountant who understands the creator space. An accountant focusing exclusively on creators and influencers will better understand your business and maximize your tax savings.

2. You Should Track Your Income and Expenses

Since you’re earning money as a creator, it is important to track all of your business income and expenses. Maintaining clear records of your earnings and business expenses throughout the year will greatly reduce your stress during tax season.

An easy and cheap way to get started is by creating a spreadsheet in Excel or Google Sheets. You can manually enter each transaction and see how much you are earning and log the expenses you’ll be writing off during tax season (more on that in the next section).

This DIY method is perfect for TikTok Shop Creators making less than $20K/year or if you only have a few expenses each month. We recommend upgrading to accounting software such as Quickbooks Online if you make more than that in a year.

You can download our free income expense tracker template to get started!

3. Get a Separate Bank and Credit Card

Keeping your personal life separate from your business will benefit you in the long run. Opening a business bank account and getting a business credit card makes it easy to track your income and expenses while legitimizing your business.

It can take a lot of brain power to sift through every transaction in your bank account and determine whether it was business or personal. A dedicated business bank account keeps all your business transactions in one place and saves a lot of time and effort when doing your bookkeeping.

On top of that, it legitimizes your business in the eyes of the IRS. Since you can prove that you have a business account for all your content creation work, the IRS will see that you are operating as a business and cannot classify your work as a hobby. If your work is viewed as a hobby, you’ll miss out on all the tax write-offs.

4. You Can Lower Your Taxes With Write-Offs

Speaking of write-offs. As a TikTok creator, you can deduct any expenses that are directly related to your work. Here are some common, and often forgotten, tax deductions that are specific to TikTok Shop Creators:

• Academy & Community Memberships: Education costs and memberships to helpful groups like Social Army and mentorship programs are tax-deductible because they are often used to grow your business and provide professional development.

• Home Office/Studio: A space in your home or a rented space outside your home where you record or stream can be written off as long as it is primarily used for business purposes.

• Equipment: All the equipment you use in production or to manage your business can be written off including phones, ring lights, tripods, green screens, chargers, and cables.

• Software: Streaming software like OBS or Streamlabs, editing software like Adobe or Canva, and accounting software like Quickbooks count as tax deductions because they are used to create your content and manage your business

• Operational Expenses: Bills associated with your business can be written off. This includes your internet bills and phone bills.

When you work through the TikTok Creator Center, you will have access to affiliate products that you can promote through your videos or LIVEs. The free samples you receive through the TikTok Creator Center cannot be written off since you didn’t pay for them. Write-offs only include the price of affiliate items that you purchased.

You can always refer to our Content Creator Deduction Cheat Sheet for more savings!

5. Make Quarterly Estimated Tax Payments

This is often a shocker for TikTok Shop Creators, but all content creators and influencers should submit quarterly estimated tax payments.

In fact, the IRS will charge an 8% fee for anybody who is self-employed and not submitting their quarterly payments. Many creators are already putting money aside to handle their taxes at the end of the year, so be sure to take the extra step of paying quarterly to avoid any fees.

Conclusion

TikTok Shop taxes can be intimidating for any creator regardless of how long they’ve been working in that space. This guide is the perfect place to start getting organized and find as many tax deductions as possible for your business.

Want to maximize your tax savings? Book a call with us today!