Many people wrongly believe that accountants are only for traditional businesses. In reality, accountants can assist various self-employed individuals and small businesses navigate the complex UK tax system. This includes social media influencers. Should influencers hire an accountant? This is the new debate in the market today.
Social media influence is a new market that has skyrocketed in recent years. Influencers who effectively brand themselves, such as the millions of highly-followed influencers generate impressive incomes. Yet, behind all that glitz and glam is a whole other side of influencer life most people don’t hear about; finances.
Therefore, today, numerous influencers use professional accounting services to manage their finances. While it’s not a legal requirement for influencers to have an accountant. However, doing so can save time and effort, and help them store their earnings after taxes.
We’ll look at the different services that professional accounting firms, like Reflex Accounting, offer to social media influencers. Our company emphasizes helping influencers and content creators with their financial management, while also providing real benefits that boost their businesses.
Let’s break it down why should influencers hire an accountant? By examining the pros and cons of seeking professional help.
The Pros of Hiring an Accountant for Influencers
1. Controlling Complex Income Streams
Since influencer income can be complex, one of the main reasons influencers hire an accountant is to untangle this mess. Their income future is not from one simple paycheck (a traditional job) but rather many revenue streams. Some of them are brand collaborations, affiliate commissions, YouTube AdSense, and product sales. All of these revenue streams come in different shapes and forms at varied times, creating the complication of maintaining a track.
A bookkeeper can help organize this income so that nothing is left out or missed and everything is noted down properly. Structure systems to monitor payments, generate invoices, and sort revenue by tax year.
2. Spend Your Time on Content Creation
Influencers are busy people. With all the time spent planning content, filming and editing it, and engaging with their audience, there’s little time left to worry about finances. Hiring an accountant gives them more time to do what they´re good at creating content. Accounting is where they do all the bookkeeping, tax filings, and expense tracking which can add up to hours/month. Influencers don’t have to stress about the timeline or expensive financial mistakes, that in a package with professional help.
3. Tax Planning and Savings
Hiring an accountant will you save a lot of money when it comes to tax planning. Influencer taxes can get a bit tricky, especially when accounting for international earnings and the various business write-offs possible. An accountant can help pinpoint some allowable deductions that an influencer may not otherwise consider e.g. travel, equipment purchased which is necessary to put in your work, home office expenses, and even wardrobe for shoots.
Such a move would help them reduce the amount of tax they owe and, most importantly, avoid penalties from tax authorities.
4. Staying Compliant with Laws
Tax law is a rapidly evolving landscape, and what applies to an influencer’s business this year may not next. An accountant stays up-to-date with the latest regulations and ensures that influencers remain compliant.
Having an accountant handle your tax responsibilities can provide a sense of security and comfort. It reduces the chances of errors and potential fines from HMRC.
Accountants have extensive experience in dealing with HMRC. They can manage all the tedious paperwork and communications for you. It means you can relax, knowing your taxes are submitted correctly and on time. You won’t have to spend hours waiting on hold to speak with someone at the HMRC call center.
5. Advice on Business Structure
Most influencers begin as sole proprietors, but these entrepreneurs often push the limits of their income and seek out more ways to grow, leading them to pursue a conducted business entity such as an LLC (Limited Liability Company) or even a corporation. They will guide them in structuring their business according to their income, risk, and future goals — accountants.
The business entity has many benefits including legal protection, tax savings, and cash management advantages for influencers. Consequently, an LLC setup would permit the influences to keep their personal and business accounts separately, limiting personal liability in case of legal issues.
The Cons of Hiring an Accountant for Influencers
Of course, there are many advantages to recruiting an accountant, but you also have to be aware of the potential cons. Pros: Now let us see some of the cons.
1. Cost of Professional Help
Should Influencers Hire an Accountant? The answer to this question is accountants do not work free of cost. The cost of accounting services for influencers can vary greatly. It depends on how complex their money matters are. Some might pay a few hundred dollars a year, while others could spend thousands. The final price depends on how much help they need with their finances.
Nonetheless, an accountant may sound like a luxury for baby influencers running on zero budget. In such cases, a social media influencer may feel that they do not earn enough to justify professional advice and would rather manage finances using budgeting apps or software.
2. Determining the Right Accountant
All accountants are equal, and finding someone skilled in the influencer industry can be a hassle. A person who can appreciate the specifics of their businesses such as dealing with royalties, international income, and how they make income on social media. This ultimately leads to no savings on the taxpayer side, mismanaged finances, or even bad financial planning.
Influencers need to do their research, read reviews, talk to other influencers, and interview more than one trusted accountant before deciding. However, this process can be time-consuming and labor-intensive.
3. Loss of Direct Control
For influencers who are more used to being deeply involved in every little part of their business, using the services of an accountant managing finances may appear as a loss of control attributively. Some people may have associated having an expert manage the financial side only as a relief: others might struggle with not having a clear day-to-day picture of their money.
It’s important to establish clear communication and trust with an accountant to ensure that influencers still feel involved in major financial decisions, even if they aren’t handling the daily details.
Should You Hire an Accountant as an Influencer?
Without much further ado, providing we know both sides of the argument now — should influencers hire an accountant? The correct answer is different depending on their situation. When you first start, some might be able to handle the finances on their own or choose a financial software solution. However, when you start making money and accumulating financial obligations it makes more sense to hire an accountant.
Influencers using different avenues for income or those seeking to expand their influence business might find getting an accountant not just helpful but vital. Accountants help provide peace of mind and save on taxes by doing proper tax planning and it allows influencers to keep their eyes set on their content without worrying about the financial side.
Registering as a Sole Trader for Online Influencers
Should Influencers Hire an Accountant? If you earn money as an online influencer, it becomes important to register with HMRC once your income reaches around £1,000. By this stage, you become an employed person so liable to declare anything above the annual £12,570 tax-free allowance. If you are new to being a sole trader, you can manage accounts on your own and only need professional assistance at tax return time.
Once you start making money and growing your brand, you might want to consider hiring an accountant. This includes freeing up more time so you can scale your business. At this stage, hiring an accountant can also be beneficial to help you transition to a limited company.
Whether you are at that stage where you want to expand your business quickly, or if it is becoming a necessity for the company; not necessarily be dictated by its size but more so by what vision.
If you’re creating content and building your brand as a hobby without expecting to make a living from it, you might be able to handle your tax return and accounts yourself.
However, if you are trying to build a substantial business, personal brand, or community and create products understanding that early might be worthwhile.
Becoming a Limited Company
If your business starts earning over £40k annually, it might be more tax-efficient to register as a limited company. Limited companies also offer the advantage of limited liability, meaning business owners aren’t personally responsible for company debts.
An accountant can guide you on when to make this transition and explain the pros and cons of each business structure.
They can also advise on VAT registration to claim back VAT on expenses and help you navigate rules on selling digital products in the EU. Running a limited company involves numerous legal responsibilities, so it’s best to have an accountant manage these obligations to avoid potential penalties.
Accounting Services for Influencers
Accounting firms like Reflex Accounting offer various services tailored to influencers’ needs:
1. Bookkeeping
Accountants can handle daily bookkeeping tasks, potentially spotting issues you might miss without proper training. They can set up cloud-based accounting software and provide apps for managing receipts and invoices.
2. Tax and VAT Management
Accountants offer valuable tax advice, helping you understand complex legislation and processes. They can help you save money through tax deductions and avoid penalties for late submissions or undeclared taxable gifts.
They also assist with financial planning, ensuring you set aside money for tax and VAT bills to avoid unexpected large payments.
3. Payroll
If you start employing people, accountants can manage your payroll, handle administration, accurate deductions, and timely payments.
4. Expense Claims
Influencers can claim tax back on business-related expenses. Accountants ensure you accurately log and claim expenses, maximizing your tax savings.
Specialized Accounting for Social Media Influencers
Working with a specialist accountant like Reflex Accounting can save influencers and content creators time, money, and stress.
They understand your business and can identify which services you need based on your circumstances. They typically offer an initial consultation and create a customized accounting package for each client.
Conclusion
Influencing has its financial obstacles, spanning multiple streams of income and navigating tax liabilities. In addition to the traditional benefits of using an accountant, support in terms of providing financial organization and ensuring you are operating tax efficiently whilst also planning for future growth as your earnings increase can be invaluable. But it is hard to balance the price with getting a professional who can meet those specific needs.
Ultimately, financial standing and long-term goals as an influencer will determine if it is mandatory to hire an accountant or not. However, for most, the pros of utilizing an accountant will outweigh the cons meaning that their accountancy services provider is helpful.
