How to manage multiple brands deals as influencer
Influencers have become an increasingly popular way for companies to market their products and services. Brand deals are now commonplace and offer a great way to increase your visibility and boost your profits.
As the industry continues to grow, so does the opportunity. Working with one brand may be pretty straightforward, but adopting a multi-brand strategy can seem overwhelming. If you go down the multiple-brand route, you need to successfully juggle the different brands while still delivering the quality of content that your followers expect.
In order to manage multi-brand deals as an influencer, it’s important to plan and be organised. Have a clear idea of your objectives and establish processes for how you will communicate with brands, track progress and meet deadlines.
Whether you’re working as a solo entrepreneur or part of a team, having an organised system in place to manage multiple brand deals will help ensure you’re maximising the benefits of each deal. Multiple brand management is much easier with the right tools, planning, and strategies.
n this article, we will be discussing the best ways to manage multiple brand deals effectively. With a little bit of effort, you can maximise the potential of your brand deals and take your business to the next level.
What is a multi-branding strategy?
For an influencer, a multi-branding strategy is an effective marketing tactic to boost visibility and profits. It entails promoting multiple brands or products on your channels, either under the same company or from different companies. Usually, the brands/products will fall within the same sector, e.g. food, fashion, and tech.
A ‘branded house’ approach is when you work with one parent company promoting different brands within their brand portfolio. You could choose to mention the parent brand in your communications or just the sub-brands. This comes down to negotiation with the relevant brand managers.
Alternatively, you could work with several different companies to promote brands that complement each other. In this instance, it is vital that there is no conflict of interest, i.e. the brands should not be direct competitors and have distinct target audiences.
Multiple brand management does have a degree of complexity, but with the right strategy, planning and organisation can be very lucrative for influencers, whether they are working alone or as part of a team.
What are the benefits of a multi-brand strategy?
Brand partnerships present a unique opportunity for influencers to leverage their network and reach in exchange for brand association or payment. These partnerships allow influencers to make money while simultaneously creating brand loyalty, boosting exposure, and earning trust from their followers.
This can be achieved through various channels, such as sponsored posts, influencer-led ad campaigns, exclusive discounts and more. Through these strategic partnerships, influencers can build strong relationships with brands that not only benefit them financially but also enhance their status within their industry.
How should I prioritise multiple brands?
When it comes to managing multiple brands, it is important to consider which revenue streams you should prioritise.
There are several key factors to consider:
- First and foremost, it’s important to then consider the reach of each brand. Does it have a large existing customer base, a wide presence in the market and a strong online presence? These factors will determine which brands are likely to generate the most income, e.g. from sales, an ad campaign etc.
- Consider the potential for growth. If a brand is likely to reach more potential customers and generate more revenue over time, it could make sense to focus more resources on it than on one that is more static in terms of revenue.
- Look at the commitment level of the brands involved. Do they have long-term agreements in place, or are they more short-term deals? Long-term agreements are advantageous because they provide a more stable income stream, while short-term deals may be profitable but also more unpredictable.
- Think of the resources available to you. Do you have the capacity to handle multiple deals simultaneously? If not, it may be best to focus your energy on one or two new brands to devote your attention to.
- Consider the cost associated with each partnership. If a particular revenue stream is likely to generate a lot of income but is also costly in terms of time or money, it may make more sense to focus on revenue streams that are less expensive.
Ultimately, when it comes to managing multiple brand deals, it is important to prioritise the revenue streams that will provide the most value to your business. By considering the reach, commitment level, resources available to you and costs, you can ensure that you make the best decisions for your brand.
5 ways to successfully manage multi-brand deals
Managing multiple brands can be a daunting task, especially for influencers with a large following. It is important to have a clear view of your objectives and stay organised so that you meet the commitments set out in your contract, stay true to your own brand identity, and meet the needs of your followers.
Here are Capture Accounting’s top 5 tips on how to manage multiple brands:
- Hire an accountant that specialises in helping influencers
- Before embarking on a deal with new brands, it’s essential to have control of your finances. It’s wise to consult a specialist influencer accountant, like Capture Accounting, to ensure that your revenue and expenses are properly accounted for. They can also help you forecast the projected profits and costs associated with brand deals and how it impacts the finances of your business.
- Some specialist influencer accountants, such as Capture, offer full Virtual Finance Office service to help you implement cloud accounting software such as Xero or Quickbooks. Cloud accounting software is a great way to produce professional invoices, ensure that they are sent out on time and track their progress. It’s easy to use and can save you time and money by automating the process. In addition, professional invoices with the right VAT treatment will help to gain credibility with the brands that you work with.
- Have a clear idea of your goals and objectives
- Before you take on multiple brands, it’s important to evaluate your goals and objectives. This can help you determine which brands you should invest in and which ones you should avoid. Plan for how you will handle each separate brand to get the most out of the deal. Will you take a ‘branded house’ approach or work with more than one company? Are you looking to be compensated or for a brand association?
- Approach negotiation wisely
- This stage of the process involves designing contracts and negotiating prices and terms. In order to get the most benefit out of brand partnerships, it’s important to negotiate carefully so that your goals are not compromised and so you are compensated properly. Have a strong understanding of your leverage and evidence of your influence. State clearly how you will track the success of the partnership. Having an experienced negotiator on hand can help you secure the best deals and ensure that all parties are satisfied.
- Rule out conflicts of interest
- When managing a multi-brand campaign, it’s essential to rule out any conflict of interest. This applies to your own brand and the brands you are working with. Ensure that no two brands share the same target audience; otherwise, one could end up cannibalising the other, which is of no benefit to you or the companies involved.
- Communicate regularly and clearly
- Establish a good working relationship with the chief marketing officer of the parent company and the various brand managers involved. Confer with them regularly to share results and assess the success of each campaign.
Capture Accounting can support you in your multi-brand partnerships
At Capture Accounting, we work with influencers and content creators like you to help you understand your finances, capture your business expenses, deal with multiple sources of income, and even liaise with tax authorities outside the UK.
We do this with the aim of making sure you keep more of what you earn so you can focus on what you do best – creating content for your audience. If you find yourself overwhelmed with handling multiple brand deals all at once, we can help.
Book a call with us to find out if we’re the right accountants for you.
Conclusion
As one of the fastest-growing industries in the world, the demand for influencer marketing is increasing. Many brands want to work with influencers to get their marketing campaigns in front of the right people, but not all influencers are prepared to work with multiple brands.
If you’re already working with more than one brand and want to continue to do so, it’s essential to create a system that makes it easy to track and manage each brand’s progress. This will help you to be sure that you’re getting the most out of each and every opportunity, as well as mitigate any potential conflicts of interest.
If you found this blog useful, check our free guide about avoiding money mistakes influencers make!
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Do I need an accountant
Some people think accountants are just for old-fashioned, traditional businesses. But that’s simply not true! Accountants can help all sorts of self-employed people and small businesses understand the complicated UK tax system. So should social media influencers get an accountant?
Many influencers today use professional accountancy services to handle their finances. While it isn’t legally necessary for an influencer to have an accountant, it can save you time and energy and enable you to keep as much of your earnings as possible after tax.
In this article, we will explore the various services provided by a professional accounting firm, such as Capture Accounting, for social media influencers. We specialise in assisting influencers and content creators with their financial management needs while also providing tangible benefits that add value to their business.
Feel free to message us for more details and to book a callback.
Why do influencers need an accountant?
If you are an influencer starting to generate income from your social media channels, then you are required to register with HMRC, complete a self-assessment tax return and pay tax each year.
If you are new to the world of accounts and tax, then this can be a daunting prospect.
Rather than stressing over your accounts, it’s well worth reaching out to financial professionals, such as Capture Accounting, for help. Our range of tailored accounting services for the influencer community can benefit you and your business in so many ways. Here are our top 5 reasons you should consider hiring a specialist accountant.
Benefits of using an accountant
1) A valuable safety net
When it comes to your tax obligations, having the safety net of an accountant gives you valuable peace of mind, helping to minimise the risk of mistakes and being fined by HMRC.
As accountants, we have a lot of experience dealing with HMRC, and we can take care of all of the boring form-filling and correspondence on your behalf. You can rest easy knowing that your taxes are submitted accurately and on time – without having to deal with staying on hold for hours waiting for the HMRC call centre to answer!
2) Save time and energy
Running your own business as a social media influencer involves dedicating a great deal of time and effort towards creating great content.
Little wonder then that other (less fulfilling) tasks, such as bookkeeping and tax returns, can fall by the wayside.
This is where an accounting team can be of great benefit. They can help you to establish good accounting habits, provide valuable advice and deal with your tax obligations, freeing up time for you to focus on content creation.
3) Build your business
Influencers and content creators can make big money these days. If you are ambitious and want to expand your influencer business, your accountant can provide valuable support.
They can help you streamline your accounting so that you have sight of essential financial information, such as cash flow forecasts and management reports, which you can use to make strategic decisions. For example we regularly help creators make decisions around whether they can hire a full time employee, invest in equipment, take on a sponsorship – all this comes from having good financial data.
4) Achieving your personal goals
We can also help you with planning big purchases like buying a house or car. We get to know what your goals are, and if that involves buying a house or investing in property, then we can work with you to make that happen.
When you’re self-employed or trading through a limited company, there are quite a few hoops to jump through when it comes to getting a mortgage, so we offer advice to all our clients who are looking to buy their dream home and have partners in financial services that can help deal with the specific nuances of content creators.
5) A trusted partner
We can act as a valuable sounding board if you need advice on things such as raising capital, investments, banking, mortgages and anything else to do with your finances.
Think of us as your on-demand, trusted advisor who understands your business and has your best interests at heart.
Capture Accounting is always on hand to liaise with other professionals, such as mortgage providers, to give you peace of mind and save you from having to explain how influencers work time and time again!
When should I get an accountant?
As to when to hire an accountant, it’s really down to your individual circumstances. The main two aspects to consider are your time and budget.
Do you find yourself constantly overworking, stressing yourself out and struggling with the tax side of things? In terms of income, are you at the stage you can reasonably afford to hire an accountant?
It may well be that an accountant would effectively pay for themselves by helping to identify tax deductions.
It also depends on your business structure and what stage you are on your business journey.
Getting an accountant as an sole trader
When you start earning money online from influencing, you should register with HMRC when your income reaches around £1,000. You are then considered a sole trader, and you must pay taxes after you exceed your personal allowance of £12,570 per year.
For new sole traders, managing accounts independently may be cost-effective, with professional help yearly for tax returns.
As your income and brand grow, it may well be worth investing in accountancy services to free up your time to focus on building your business.
It’s also worth hiring an accountant at this stage to help you make the transition to a limited company.
The real question is not really of size but of ambition.
If you are creating content and building your brand just as a hobby and not expecting it to earn a living for you, then maybe you can handle your tax return and accounts.
But if you are looking to build a real business, a personal brand, or a community and develop products, then having an accountant on board early is essential.
Getting an accountant as a limited company
If your business starts to generate more than £40k per year, then it may be more tax-efficient for you to register as a limited company. Another big advantage of limited companies over sole traders is that the business owner has limited liability, meaning that they have no personal responsibility for the businesses’ debts.
Your accountant can help you decide when the time is right and talk you through the pros and cons of each business structure.
They can also advise whether it’s advantageous to register for VAT, to claim back VAT on expenses. They will also help you avoid traps and stay compliant with rules on selling digital products into the EU. Running your business through a limited company comes with quite a few legal responsibilities – unless you’re a trained accountants it’s best to engage an accountant to manage the various compliance obligations for the company to avoid risking penalties and even jail in extreme circumstances!
To learn more about your VAT responsibilities as an influencer, check out our blog.
What accounting services does an influencer need?
An accounting firm such as Capture can offer a wide range of services tailored to your needs. Here are some of the more common services we provide to our influencer clients.
Bookkeeping
Bookkeeping is a day-to-day chore that we can take off your hands. We live and breathe accounts all day and can help you spot things that you wouldn’t be aware of without the proper training and experience.
We can also help you to set up your accounts using the latest cloud-based accounting software and provide you with an app to zap your receipts and forward your invoices so you don’t have to do anything yourself in the software (although software is great, it still needs an understanding of accounting to make sure everything’s in the right place).
Tax and VAT affairs
Expert tax advice is perhaps the most valuable service an accountant can offer an influencer. There is so much legislation around tax and rigorous processes to follow which we can help you to understand without hours of research.
We can actively save you money with professional advice on tax deductions you are entitled to. We will also help you avoid penalties due to errors like late submission and not declaring gifts, which may be taxable.
It’s easy to think that the cash in your bank accounts is available at any time, but without proper financial planning, you may forget to save money for your tax or VAT bill. This is the most common compliant we here when creators come on board with us – that they are required to pay huge amounts of tax unexpectedly. This usually happens when your income goes up and either you are not aware of the tax you have to keep aside or your accountant isn’t dialled into your business to keep you informed on a regular basis.
Having an accountant on board will ensure you are aware of your tax liabilities and help you to plan for your bill so you don’t spend the money before it’s due!
Payroll
If you begin to employ people, then you need to run a payroll by law. It’s a complex and time-consuming job that is best handled by accountants.
They can do all the administration on your behalf if you wish and also ensure you are making the correct deductions, calculating income tax and National Insurance accurately, and that your employees are paid on time.
Claiming expenses
As an influencer, you are entitled to claim tax back on expenses, just as any other small business owner. The main caveat is that the purchase must be for business purposes only.
Expenses are deducted from your taxable income to reduce your final tax bill. Allowable expenses include things like travel, electrical equipment, gifts and even a proportion of your gas and electricity bill if you work from home.
It’s essential, therefore, to keep detailed records of your expenses for tax purposes. Your accountant will ensure you log and claim your expenses accurately so you receive every penny you are due after tax.
Capture Accounting specialise in social media influencer accounting
If you have your own business as an influencer or content creator, then working with a specialist accountant like Capture Accounting can save you time, money and stress.
We understand your business and can easily identify which services you require depending on your circumstances. We offer an initial consultation with each prospective new client, then design an accounting package just for them.
Get in touch by completing our contact form, and we’ll arrange a quick 30-minute Zoom call to see if we are a good fit for your business.
Conclusion
So, do social influencers and content creators really need an accountant? Legally, no, but if your circumstances allow for it, then it can reduce your workload, save you stress, keep you compliant and help you plan your financial future.
Having an accountant can help you focus on creating content and growing your brand without having to stress about your taxes. In addition, we can be on hand to steer you in the right direction when it comes to making important financial decisions.
Fundamentally, if you’re an ambitious online content creator and want to grow a successful business, then having an accountant on board who understands your industry is essential.
FAQs asked about influencer accounting
Can an accountant file my self-assessment tax returns?
Yes, many influencers hire accountants to file their self-assessment tax returns. Your accountant will ensure that all relevant income, expenses, and deductions are accurately accounted for, maximising your tax efficiency and compliance with tax regulations.
How often should you see your accountant?
The frequency of meetings with your accountant depends on your business needs. However, Capture recommends scheduling regular check-ins throughout the year to stay on top of your financial situation. For influencers and content creators, quarterly or semi-annual meetings are often beneficial.
At Capture we have an unlimited access policy – meaning you can call, WhatsApp or email us at any time without extra charge (unlike many accountants who charge by the hour!).
There’s no such thing as a free ride, and anyone who makes self-employed cash must pay taxes. As a social media influencer or content creator who earns a regular income from platforms like TikTok, you must understand the tax implications, or you could face penalties.
To avoid tax evasion, you must register with HMRC once you make £1,000+ from your social media platforms. If you file annual income tax returns and pay what you owe on time, there’s no risk of penalties. An accountant can ensure you pay the right amount of tax – not too little or too much.
If there’s someone you don’t want to be on the wrong side of, it’s the taxman, A.K.A. HMRC. They have crazy technology at their disposal and actively pursue and penalise those people they think are evading tax. If they find you guilty of dodging tax – even accidentally – you can face a hefty fine and even a prison sentence in extreme cases of non-compliance.
When it comes to tax, knowledge is power. This article will go through the basics of when and how social media influencers should register for tax. We’ll also look at the difference between tax ‘evasion’ (which is illegal) and tax ‘avoidance’ (which is perfectly legal and what a good accountant can help you to do).
Capture Accounting specialises in working with social media influencers, online sellers and other digital entrepreneurs. We help them understand their tax position and meet their tax liabilities while keeping as much of their hard-earned cash as possible.
Contact us today for an chat to make sure you’re not doing inadvertently committing tax fraud!
When do social media influencers need to pay income tax?
Social media influencers are defined as people whose online presence can influence the purchasing decisions of others and are paid in return for promoting goods and services. In the eyes of the government, they are businesses just like any other and must pay tax.
If you make a regular income from creating content on platforms like Instagram, YouTube and TikTok, then you are a professional influencer and must register with HMRC for self-assessment. You will then be considered a sole trader, which is a simple type of business structure.
If that applies to you and you haven’t registered, it’s advisable to do so ASAP. While no tax is due until your total earnings exceed £12,570 (your annual tax-free allowance), HMRC will still expect to file a yearly income tax return.
What kinds of activities do social media influencers get taxed on?
If you receive money for online activity, including sponsored posts, ad revenue, brand endorsements or other promotional activity, it’s deemed as a ‘barter transaction’ and is taxable.
If you receive free gifts in return for promotions, they may also be taxable, as they are considered ‘payment in kind’. Therefore, most gifts need to be factored into your taxable income and declared on your tax return.
How do I calculate my taxable income as an influencer?
It’s important to keep records of your income and expenditure, as well as any written agreements you have with brands. You can work out your taxable income by deducting allowable expenses from your gross income. This includes things like travel and internet costs. Read more about allowable expenses for influencers.
You will then be taxed at either 20%, 40% or 45%, depending on how much you earn. See the latest income tax bands and rates at gov.uk.
What is tax evasion?
Tax evasion, tax fraud, non-compliance…whatever you call it, it’s tax dodging, plain and simple.
While you may have visions of cash-in-hand jobs and stashing money under the mattress, many tax evaders simply fail to tell HMRC when they receive money in their bank account. This is illegal.
Depending on the seriousness of the situation and how much tax is outstanding, you could get a huge fine or even face jail.
If you’re asking yourself, “But could HMRC realistically catch me…?”. Uh – yes.
How can evading tax affect influencers and content creators?
HMRC has some crazy-level supercomputers that crunch data and raise red flags when there are inconsistencies with their records. They have access to third parties like banks, companies, housing and land registries, social media platforms and e-commerce sites like Vinted and eBay. In fact, online sellers will now have their income declared to HMRC by the platform itself, so there is nowhere to hide.
HMRC can easily identify influencers with huge social media followings from which they would expect to generate a decent turnover. When they discover one and they are not registered for tax purposes, they can expect mail. Or even just suspect that you might be and send you a letter in the hope that you are!
Trust us – you don’t want to be on the receiving end of THAT letter from HMRC!
What is a ‘nudge’ letter?
A ‘nudge’ letter, also known as a ‘warning letter,’ is a letter or email sent by HMRC to taxpayers who they believe may have made errors or omissions in their tax returns. They remind the recipient of the tax consequences attached to trading activity and prompt them to acknowledge the letter and take action.
What happens if you ignore a ‘nudge’ letter?
Ignoring a nudge letter can have serious consequences. While they are sent as a gentle reminder, failure to respond or take appropriate action can lead to further scrutiny and penalties.
This puts you at risk from fines, interest on outstanding tax owed, legal consequences, and reputational damage. As an influencer, reputation is everything. If you are prosecuted for tax evasion, brands may not want to work with you in the future, and your influence could take a nosedive.
Tax evasion vs tax avoidance
Let’s take a look at the difference between these two terms and how they can impact your earnings and reputation.
Tax evasion is basically when you try to dodge paying tax by hiding or underreporting your earnings, so you can keep more cash in your pocket. It’s 100% illegal and can land you in some serious trouble (see above). As influencers, it’s super important to play by the rules and report all your income to HMRC.
Now, tax avoidance is a bit different – it’s all about playing smart within the rules to keep your tax bill low. Good accountants can help you put tax strategies in place, like finding the most tax-efficient structure for your business or identifying lucrative tax reliefs.
While it’s totally okay to do this, getting professional guidance is crucial so you’re not pushing the boundaries into evasion territory. That’s why it’s a good idea to team up with an accountant like Capture Accounting; we know exactly what is and isn’t allowed and can keep you compliant while saving you money.
Conclusion
Social media influencers who make money online must understand their tax position to avoid penalties from HMRC. If you don’t register for tax purposes and declare your earnings correctly, you could face a fine. Those who persistently evade tax can face legal action.
It’s not smart to think you can’t be caught – HMRC has access to many third parties from which they can detect any income you haven’t declared. If they suspect you, you could receive a nudge letter, to which you must respond.
It is smart to hire an accountant who can ensure you pay the right amount of tax. They can also help you avoid paying too much tax by advising on your business structure and identifying expenses and reliefs to lower your tax bill.
Stay compliant and maximise your influencer earnings with expert tax guidance from a down to earth accountant at Capture Accounting. Contact us today to make sure you’re on the right side of the law and how to legally avoid tax whilst keeping HMRC happy!
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Content creation and influencing has become a profitable industry, but a lot of famous faces started by creating content as a fun new hobby in their spare time. Perhaps that’s where you are now, or maybe things have already started to take off.
If you’ve built a significant following and have started making money, chances are your hobby has, or will soon become a business. And as a business owner, you must pay tax on your profit.
When your content creator income, e.g. from Google AdSense, exceeds £1,000 in a single tax year, you must register with HMRC and file an annual self-assessment tax return. If your combined income exceeds your tax-free allowance, you must start paying tax. If you don’t, you may be penalised by HMRC.
If you’re reading this, you’re obviously pondering your tax position and wondering whether you need to pay income tax. Read on for Capture Accounting’s helpful guide to find out whether your hobby or side hustle has turned into a business and, if so, what to do next.
For personalised advice on accounting for your income, contact Capture Accounting. We specialise in helping content creators and all sorts of online entrepreneurs manage their finances, fulfil their tax obligations and maximise their profits.
What differentiates a content creation hobby from a business?
Lots of people use social media to document their lives and amass a following, many of whom are probably friends and family. This is obviously not a business. But if you start to dedicate yourself to content creation and grow your influence enough to monetise your channels – that’s when you need to become aware of the rules on income tax.
If you make income from Google AdSense on YouTube, promote brands and products on Instagram, sell content, tutorials or products to customers, sell large volumes of items on Vinted, or generate any other income related to your online activity, this applies to you.
If we’re talking a few hundred pounds a year, then there’s nothing to panic about, but have it on your radar as your income increases. Once you get to £1,000 per year, HM Revenue & Customs (AKA HMRC, AKA the Taxman) will expect you to register for tax purposes. You will then be considered a sole trader, which is the simplest kind of business structure in the UK.
It’s important to take control of your professional life as soon as you start earning a self-employed income. It’s by no means something to stress about. You’re clearly thriving online, so this is not beyond your capability! But if you are in doubt and need help, reach out to a specialist content creator accountant like Capture.
What are the new HMRC tax rules for hobbies, especially on online marketplaces
There’s been a lot of talk online from outraged sellers about the ‘new’ so-called ‘side hustle tax’. There’s no such thing. It’s come about after a recent crackdown by HMRC to ensure that people who sell online and regularly exceed the trading allowance of £1,000 are registered for tax purposes and paying income tax, as the law dictates.
From now on, online marketplaces like eBay, Etsy and Vinted have to provide sales information directly to the tax authorities. This flags up anyone making serious money who may have ‘forgotten’ to register for income tax.
Of course, many people are simply unaware that they owe tax on what they earn through side hustles. This is why, at Capture Accounting, we’re dedicated to helping online entrepreneurs understand and meet their tax liabilities.
How much income tax will have to be paid?
First of all, it’s important to understand that HMRC looks at your income as a whole. If you have a regular 9-5 and a side hustle, they will consider the sum of both for tax purposes.
Your salary from employment is automatically reported to HMRC by your employer, but you are responsible for declaring your hobby earnings through the self-assessment system.
Everyone in the UK gets a tax-free personal allowance of £12,570 in a single tax year. If, when combined, your employed salary and hobby income falls under this, you don’t pay tax.
You also get a tax-free trading allowance of £1,000 for hobby income. That’s on top of your personal allowance, meaning that your combined income is free of taxes up to £13,570.
Once your self-employed hobby income goes past £1,000 a year, then you need to register and report it to HMRC.
Income tax is paid as a percentage of your earnings at either 20%, 40% or 45%, depending on how much money you make. See the latest tax rates and bands at Gov.uk. You pay tax at the corresponding rate for the portion of your income that falls in a particular bracket.
When do you do a self-assessment tax return?
The self-employment tax year begins on 6 April and ends on 5 April of the following year. You must file your self-assessment tax return and pay any taxes and National Insurance owed by midnight on 31 January after the tax year ends.
You should set aside at least an hour to complete your tax return. The online form asks you to declare the sum of all of your earnings, including employment, self-employment and any other income (say, income from a property you rent, your dog-sitting side hustle, anything that people pay you for, basically). This determines how much income tax you owe.
Crucially, you can reduce your gross income by the total of your business or hobby expenses, which in turn reduces your income tax bill. This includes everything you pay out for to be able to run your business, including equipment, travel and subscriptions. The rule is that the cost must be wholly for the business, not for personal use.
Read our guide to expenses for influencers for more info.
It’s really important that you take control of your business accounts early on and log every last allowable expense. The help of a specialist content creator accountant can be very valuable, as they can guide you on how to keep financial records and make sure you don’t miss out on any tax deductions.
How to register your content creation hobby as a business
Here is the process you should follow to register for self-assessment once your hobby earnings or side hustles go past the £1,000 a year mark.
- Register with HMRC as a self-employed sole trader via the government gateway. You will be allocated a UTR (Unique Tax Reference), and from then on, you’ll receive regular reminders to file your tax return.
- Establish good accounting processes to keep track of your income and expenses throughout the year. An accountant can help you get up and running with smart cloud accounting software like Xero.
- Prepare and submit a self-assessment tax return and pay the tax owed every year no later than 31st January.
- Keep records of your business expenses for at least seven years.
- If your earnings are likely to exceed £90,000 per year in the near future, you must also register for VAT.
If you’ve been on your content creating journey for some time, you may have already completed these steps. Don’t forget the last one – it often trips people up.
What happens if I don’t declare my hobby income to HMRC?
If you are earning £1,000 per year or more from your online activities and you haven’t done any of the above, you need to act now. If you don’t, you’re falling foul of UK tax law and could be subject to penalties and interest equal to 100% of the tax you owe if HMRC gets to you first.
The tax system is highly sophisticated and uses supercomputers to gather data from multiple sources, such as YouTube and Instagram. If HMRC uncovers evidence of influencers with big followings it can’t match to tax records, they can open an investigation.
So don’t put this on the back burner. If you need advice or help, reach out to a specialist accountant like Capture.
Should I turn my content creation hobby into a business?
If you are serious about making your content creation hobby your full-time job and confident you can fulfil what’s required of you as a business owner, then go for it!
Tax can seem scary at first, but if you get advice, keep good accounting records and follow the rules, there’s nothing to stop you from following your dream.
Get advice on managing your influencer earnings from Capture Accounting
Reach out to Capture Accounting today for specialist advice on managing income from influencing and content creation. We help many leading influencers and content creators manage their finances, so we know your business inside out.
If you invest in our services, we’ll make sure you stay compliant while keeping as much of your profit as possible. We can also offer business advice and register your business as a limited company when the time is right.
Contact us today for a discovery call.
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