Updated: Oct 15, 2023
You’ve built a thriving brand as an influencer. But now it’s time to master the essentials of bookkeeping. We’ll explore everything you need to know, including why it’s essential to stay on top of bookkeeping from the very beginning.
You’ve built a thriving brand as an influencer. But now it’s time to master the essentials of bookkeeping. We’ll explore everything you need to know, including why it’s essential to stay on top of bookkeeping from the very beginning.
Keeping accurate financial records (books) is critical for taxation purposes. After you earn a certain amount of money as an influencer, you must begin reporting your income to the IRS and paying taxes. Keeping accurate records is an essential part of that. Some possible outcomes of not doing so include:
Bookkeeping is rarely straightforward, even for those who own “normal” businesses. You must keep up with invoices, utility bills, expenses, equipment, and other business-related costs. Influencers face an even more complicated bookkeeping landscape because their lives are so intermingled with their business.
Failure to keep good records could land you in hot legal water, the same way it did Chris Agront, who is accused of failing to report over $11 million in income. There’s also a long list of others, including eight influencers charged by the IRS and DOJ in a stock-pump-and-dump scheme.
While poor bookkeeping can lead to serious legal and financial problems, effective bookkeeping offers critical benefits, including:
Of course, you’ll need the right tools to master bookkeeping while also running a successful business.
While some people might be fine using Excel at first, successful influencers will eventually need to graduate to full-fledged bookkeeping software. Some of the best options out there are tailored to your unique needs. QuickBooks Simple Start, Xero, and Wave all bring something unique to the table, although they differ in some ways.
When shopping around, make sure you’re aware of each accounting platform’s pros and cons. For instance, some are free to use but lack scalability. Others may require that you pay more for access to specific tools and features. Yet others are so powerful and robust that they come with a major learning curve.
In addition to your accounting software, you can also benefit from tax apps. These tools help simplify expense tracking and deductions for more accurate reporting and save you money when you file. Some of your options include Stride, Bonsai, QuickBooks, and Mint.
Remember, there’s no one-size-fits-all solution here. Compare the different options and find one that fits your needs now, but that will grow with your business. And don’t forget to bring in the pros when necessary. Software can only do so much and there’s no replacement for the experience and expertise of a tax professional who understands the nuances of influencer bookkeeping and tax reporting.
Accurate bookkeeping relies on a simple process that becomes second nature. It all begins with setting up a dedicated business account for your influencer activities. Never use your personal bank accounts or you risk blurring the lines between you and your business, which could have serious financial ramifications.
Second, schedule time for bookkeeping. We recommend setting aside at least 30 minutes each month at a minimum to handle bookkeeping. If your bookkeeping is more complex, you may need to do this weekly.
Third, make sure you track invoices, receipts, and other financial documents. Our recommendation is to digitize them immediately and sort them into folders. The goal is to create a system that ensures you can maintain accurate records, document expenses, costs, and income, and keep your books straight.
Finally, don’t try to go it alone. Make use of financial experts or services tailored specifically to the needs of influencers.
Yes, like any other business professional, influencers have tax obligations and benefit from maintaining accurate financial records.
In our experience, the most common influencer bookkeeping mistakes include neglecting to track small expenses, mixing personal and business finances, and not preparing for tax season properly.
We recommend that you update your financial records regularly, at least every month, to avoid a backlog and ensure accuracy.
Influencers can often deduct business expenses like equipment, travel for work-related events, and sometimes even parts of their home if used as a studio. It’s essential to consult with a tax professional for specifics.
As a business owner, maintaining accurate financial records is essential. Failure to do so could put you on the IRS’ radar, lead to financial penalties, or even trigger an audit. All business owners must report their incomes to the government, and influencers are not exempt from this requirement.
Be proactive in protecting your financial health. Use the available tools to track your expenses and set aside time regularly to handle bookkeeping.
Don’t feel that you have to go it alone, either. Consult with tax professionals who have deep experience with the unique needs and challenges influencers face. Start your bookkeeping journey today for a financially healthier tomorrow.