Making Money on Social Media? 8 Things Your Accountant Wants You to Know

Building an audience online can turn into a business faster than many creators expect. As brand deals multiply and platform revenue becomes more consistent, creators may also begin launching merchandise, hiring support, traveling for sponsored work or earning income from companies across the country.

The creative side may still feel familiar, but behind the scenes, there is suddenly a lot more to keep track of.

For influencers and content creators earning meaningful income online, working with an accountant should go beyond sending over a few 1099s at tax time. A good accountant can help you keep the business organized, plan for taxes as your income changes and flag issues you may not even realize need attention.

We spoke with Georgia Maskalunas, CPA, Senior Associate at CJBS, and Mitchell Johnson, Manager at CJBS, about what they are seeing with influencers, content creators and other professionals earning income through social media and sponsorships.

Here are eight things they recommend keeping in mind.

1. Treat Your Influencer or Content Creator Income Like a Business

You do not need millions of followers or even need to call yourself an influencer for your online activity to become a business.

Georgia’s definition is pretty simple:

“It’s really anyone who is monetizing off of social media,” Georgia said. “Now you can be very interactive with the people watching you, and there’s also this other piece where you’re monetizing that audience.”

For accounting purposes, an influencer or content creator can include someone earning money through:

• Sponsored content or brand partnerships
• Revenue directly from social media platforms
• Affiliate partnerships
• Appearance or promotional fees
• Merchandise
• Other revenue tied to their audience or content

Mitchell sees similarities with athletes and other self-employed professionals who receive 1099s or sponsorship income. The exact business may look different, but once money is coming in, so are tax and accounting responsibilities.

That is usually the point when it makes sense to stop treating your social media income like a side project and start building some basic financial systems around it.

2. Separate Your Business and Personal Finances Early

This is one of the simplest steps creators can take, and it can make everything that comes later much easier.

Georgia recommends opening a separate business checking account and business credit card once you know you are going to be monetizing your content. Use those accounts for expenses tied to the business rather than mixing everything into your personal spending.

That makes it easier to answer some pretty basic questions: How much did the business actually make? What did you spend to earn that money? What may be deductible? How profitable are you?

Don’t try to remember a year’s worth of expenses in March

Georgia says creators can miss out on legitimate expenses simply because they did not keep good records.

By tax time, they may vaguely remember buying equipment, paying for software, traveling for a project or spending money on something else related to their work, but they no longer have a clear record of it.

Good separation makes the bookkeeping easier and gives your accountant much better information to work with.

3. Use Bookkeeping Software Before the Transactions Pile Up

When there are only a few payments coming in each month, it may feel manageable to track everything yourself. That changes quickly when you add multiple brand deals, subscriptions, equipment, travel, production costs and contractors.

Georgia says QuickBooks Online is one of her go-to tools for clients with a larger volume of transactions because much of the process can be organized throughout the year rather than rebuilt after the fact. CJBS uses the platform for many of its clients, which makes it easier to review income, expenses and an up-to-date profit and loss statement.

That information is useful for more than filing a tax return.

When your accountant can see how the business is performing during the year, you can have much more useful conversations about estimated taxes, spending and upcoming decisions.

4. Plan for Quarterly Estimated Taxes Before You Get a Surprise

This is one of the biggest adjustments for creators who are used to having taxes automatically withheld from a traditional paycheck.

When you are self-employed, you may need to make estimated tax payments throughout the year. If your income takes off quickly, those payments can become significant just as quickly.

“You could have $500,000 in net income, it’s September and you haven’t paid anything in taxes,” Mitchell said. “You missed first quarter and second quarter, and then we get to March of the next year and you haven’t made any estimated payments. Now you’re behind, and getting hit with penalties as well, which can add up very quickly.”

A simple habit: give your tax money its own account

Mitchell recommends setting up a separate savings account and regularly moving money into it as income comes in. Instead of seeing every dollar in your business account as available to spend, you already know a portion has been set aside for taxes.

How much you should save depends on your individual situation, which is another reason quarterly check-ins with your accountant can be so helpful.

5. Keep Track of Where You Are Working Because Multistate Taxes Can Get Complicated

For influencers, “Where did you work?” can be a surprisingly important accounting question.

You might live in Illinois, have brand partners in New York and California, and spend several weeks traveling while still creating sponsored content.

Mitchell says that when revenue is tied to activity across different states, accountants may need to look at where income is coming from and whether certain state filing thresholds have been reached.

Where you physically perform the work may come into play as well.

Georgia gave the example of a creator who normally produces sponsored videos from home but then continues creating those videos during a three-week trip. Depending on the circumstances, the accountant may need to determine whether some of that income needs to be reported differently.

You do not need to figure out the tax rules yourself, but if you travel frequently for work, it is helpful to keep a record of where you were and what work you performed there.

6. Let Your Accountant Know About Major Brand Deals and Contracts

When a new sponsorship comes in, you are probably looking at how much the brand is paying, what content you have to deliver and when everything is due.

Your accountant may be looking at something different.

Georgia says the way a contract describes the work being performed can sometimes affect how income is treated for state tax purposes. In other words, wording that may not stand out to a creator could be important to an accountant or attorney.

That does not mean every creator needs to learn multistate tax law.

“You don’t need to know everything off the top of your head,” Georgia said. “You need to make sure you have the right people in your corner who do.”

Depending on the size of your business, that group might include your accountant, an attorney, a financial advisor and a manager or assistant who helps keep everyone connected.

7. Tell Your Accountant When Something Changes in Your Creator Business

Your accountant probably does not need an update every time you post a video. But they should hear from you when something significant changes financially.

Give your accountant a heads-up if you:

• Land a major sponsorship
• Have a big jump in income
• Sell an asset
• Start selling merchandise
• Launch another business
• Hire employees or contractors
• Begin doing substantial work in another state

“Even if you don’t think we need to know it, tell us,” Mitchell said. “If we don’t need to know, we can file it away. But a lot of the time, there is a taxable event there that the client may not realize is taxable.”

The earlier your accountant knows, the more opportunity there is to plan rather than discover the issue after the year is already over.

8. Revisit Your LLC, S Corporation and Business Structure as You Grow

The way you set up the business when you earn your first few thousand dollars may not be the way it should look after your income and opportunities grow.

When another business enters the picture

Maybe your original income came entirely from sponsored content, but now you are selling merchandise or launching another company based on the audience you built.

Georgia says that can be a good time to talk with your accountant and attorney about whether those activities belong in the same entity or whether another entity may make sense. Separating business activities can have implications for both taxes and liability.

When an S corporation may be worth discussing

An S corporation can make sense for some profitable creators, but Mitchell cautions against assuming it is automatically the right structure simply because you receive 1099 income.

Profitability, payroll, taxes and your broader situation all need to be considered.

The same idea applies when you start hiring people. If an employee lives in another state, for example, that could create additional payroll or state filing responsibilities.

As the business changes, it is worth revisiting the structure rather than assuming what worked two years ago still makes sense today.

Your Accountant Should Be Someone You Actually Talk To

Of all the advice Georgia and Mitchell shared, this may be one of the most important.

You should feel comfortable calling your accountant.

Georgia has spoken with business owners who hold back questions because they worry they are bothering their accountant. For someone running a creator business that can change quickly, that can leave a lot of important information on the table.

“If you feel like you’re bugging your accountant by asking a question, even if you think it’s a ‘stupid’ question, that shouldn’t be the case,” Georgia said. “You should feel comfortable being proactive, and they should also be transparent with you about what’s going on.”

You do not need to understand every line of your tax return or become an accounting expert yourself. You should understand the bigger picture: what your business is earning, what you need to put aside, what you are paying and when something changes enough that your accountant needs to know.

That becomes especially important for creators whose income grows quickly. Someone can go from earning a little extra money online to managing a very real business in a relatively short period of time.

Having good systems and the right people around you can make that transition a lot easier.

As always, CJBS is here to help.