You don’t need a lot of followers to be a professional social media influencer and if you’re producing content with the intention of making a profit, congratulations, you’re SELF-EMPLOYED!
What started as fun has turned into a business, so now you have to make sure that you are managing your business, and dealing with your taxes, properly and taking advantage of any potential benefits for you.
You’re great on screen, your tips are fantastic, and you have many people who follow your channel, wow, you’re officially, a YouTube (or Instagram) sensation. Many people are making a name (and face) for themselves by showcasing what they can do on YouTube (or Instagram). In YouTube terms, let’s “unbox” this concept of being a social media influencer, and go through tax rules, and benefits, you should know when it comes to dealing with business taxes in Canada. It’s tax time, GRWM! If you would prefer to have an expert help walk you through your tax situation then TurboTax Live Self-Employed would be right for you!!
Income: all the money you receive as a result of your social media presence/business, is most likely taxable income and will need to be reported on the T2125 form, the Statement of Business Activities, when filing your taxes. Though there are minimum earning amounts, federally and provincially, before you will have to pay tax, filing allows you to take advantage of potential credits and benefits as well. What type of income might you have?
- Impression based Ad revenue
- Honorariums or fees for attending or speaking at events
- Selling the products you are making & talking about
- Redirecting and selling premium video content on your web-site
- Directing traffic to affiliate links
- Sponsorship from being an “Influencer”
Expenses: when you earn money selling a product or service, you most likely have expenses. Many of these will be allowable expenses that you will report on your T2125 (as above), that will help lower your taxable income (pay less tax). Some common expenses a Social Media Influencer might have:
- Computer and internet – the key staple of your business. The computer is a capital asset (we can only expense part of it each year) and the internet is a current expense and can be expensed right away.
- Advertising – are you trying to boost your own presence elsewhere on the web to draw more people to your channel? That’s advertising and without it, you couldn’t earn money, so it is likely an expense for your business.
- Product supplies and other sales costs – if you are making a product that you are selling as part of this business, the money you spend to create that product, is often an allowable expense, whether it is a raw material you turn into something, or a product you buy and then resell.
- Business Use of Home – if you are working out of your house, a portion of the costs to maintain your home, can be considered a business expense. Track all the expenses you pay, and follow the guidelines of the T2125 for what you’re allowed to claim.
Over the course of the year, track your income and expenses to make it easier for you come tax time, and for simple cash flow management. Consider the QuickBooks Self-Employed App (QBSE) for managing it all, which will fit great into your online, digital lifestyle and is made for business owners just like you.
Filing Your Taxes: now that you know the income you should declare and the expenses to deduct, what’s next? As a sole-proprietorship (non-incorporated business), you will report your income and expenses on the T2125, as a part of your regular personal income tax return. You and your business are one in the same.
With your receipts in hand and your details from QBSE (or excel), you’re ready to get started. TurboTax Self-Employed will get you through the process with ease. If you’re feeling a bit overwhelmed, consider TurboTax Live Assist & Review; unlimited help and advice as you complete your taxes, plus a final review before you file. This is where you can AMA (or ask “us” anything)! Or, choose TurboTax Live Full Service and have one of our tax experts do the return from start to finish.
For some more helpful tips & tricks, check out our community site.
Accounting educator, business strategist, and advisor.
Turbo Tax Canada blog editor and writer.
Susan has been an accounting professional for over 20 years and has been working with businesses and individuals and their taxes for the past 13. Education is a passion for Susan, and when not writing or talking about tax for TurboTax Canada, she can be found speaking at events, teaching at Mohawk College, and working with many businesses, bookkeepers and accounting firms as part of her education offerings and her Find Our Bookkeeper™ recruitment program. Susan is known to be approachable but pulls no punches when it comes to the reality of business finance, taxes, and the importance of education.