Everyone can’t make a living with TikTok, but it’s definitely worth trying. Young, media-savvy influencers find it relatively easy to build a large following. This is essential for making a career out of the various social media platforms like TikTok, YouTube, and Instagram.
Getting Started as a TikTok Influencer
Many influencers start out with the goal of making it big. Others have a more casual start. They realize after they started that they established an audience. From there, they discover ways to generate income using the platform they built. No matter where you are in your journey to social media success, there are a few things to grab hold of when it comes to finances as an influencer. No matter what means were used to earn your first dollar, you are earning an income. It may have come through ads, sponsorships, or gifts. But if you are earning an income, it means you are operating an independent small business, even if you don’t realize it. It’s important to plan for the future by taking care of the financial side by treating your influencer platform as a business.
Are TikTokers required to pay taxes?
Any money you earn through any streaming platform, including TikTok, is considered income. All forms of income are subject to taxation. However, most TikTokers don’t earn more than a few hundred dollars each year. So, even though it is taxable, it’s not likely you will owe money. On the other hand, if your primary job is as an influencer, or in some way provides you with a steady income stream, then it is fully subject to being taxed. Then, there’s more to it than just submitting an annual tax return.
Income taxes are a pay-as-you-go setup. That means you’ll owe taxes on the income you make from social media throughout the year. If you have a place of primary employment, and your employer withholds federal taxes from your income, you should be okay. You may just want to consider using an IRS form W-4 to request that your employer withholds extra amounts from your income. This can help balance out your extra TikTok income.
However, if most of your income comes through working independently through social media or other streaming platforms, you will need to pay estimated quarterly taxes. You’ll estimate your income and the taxes you would owe and pay them four times a year. Payments on quarterly taxes are due four times a year:
- First-quarter taxes are due by April 15
- Second-quarter tax payments are due June 15
- Third-quarter tax payments are due September 15
- Fourth-quarter tax payments are due by January 15
Should you consider your TikTok account a business?
If you use TikTok to earn a significant amount of income, you are considered a business owner. Your TikTok account is part of your business. Legally, you are a freelancer or a self-employed individual operating your own sole proprietorship. You are the sole owner and representative of the business.
Benefits of Registering Your Business
Whether you are particularly fond of the idea or not, you are a business owner. It takes careful consideration to operate a business. You can automatically take the sole proprietorship option, but that’s not always the best choice. There is also the option of registering your business. You may reap numerous benefits from doing so such as:
- Having a legal title to use for your business instead of just your name
- You can organize your business to optimize and create opportunities (LLC, Partnership, S-corporation)
- Open a business banking account and apply for loans more easily
- You have the option of hiring employees
- Streamlining of taxes and other governmental compliance-related activities
Self-Employment Taxes for TikTok Businesses
As a business owner, you are responsible for several types of taxes. If you work for another company, they must pay Medicare taxes and Social Security on your behalf. Half of these are paid by withholding them out of your income. They are responsible for paying the other half. The responsibility for all of the taxes lies with you, as a self-employed individual. This 15% of your income that goes into FICA is the self-employment tax.
Do TikTokers get to write off business expenses?
If your TikTok is providing you with a business income, then you can write off eligible business-related expenses. Using at least some of your taxable income for the upkeep of your business makes it deductible. You can claim eligible expenses as deductions.
What kinds of tax deductions are available?
There are a wide variety of tax deductions available to write off as expenses. This helps reduce the amount of taxes you owe and can save you quite a lot on your final tax bill. Here are some of the main tax deductions freelancers and small business owners often claim:
- Premiums for health insurance
- Half of your self-employment taxes are even deductible
- Contributions to retirement savings
- Expenses related to a home office
- Supplies and equipment used solely for the business
- Business travel expenses
There is a lot at stake for influencers, just like with other types of businesses or jobs. Disregarding tax responsibilities can put you at risk. An accountant can be useful for helping you plan your tax obligations and other financial responsibilities as a business owner.