Don't Make These Money Mistakes as a Content Creator

As a content creator, you’re probably busy managing content across many platforms, embracing any opportunities coming along your way. You may take sponsorship deals and pull in ad revenue while enjoying life as a content creator. However, here are some mistakes to watch out for that could cost you financially.

Mistake #1 - Value Added Tax (VAT) Rules

A common mistake many creators make is not knowing about VAT and when it applies. You should be aware of where your customer is to ensure your business has the correct tax treatment.

Not knowing the difference between a digital service supply and a normal supply can lead to ramifications. Essentially, a digital service supply is classed as a supply without human interaction, e.g. an e-book, webinar, or selling a course online.

The VAT threshold in the UK is £90,000 of turnover, so VAT must be added to any courses or services you provide when you reach that threshold.

However, if you are selling abroad the VAT rules may be different, so you need to check depending on the countries your customers are located. For example, selling a course in the EU, an e-book, webinar or downloadable would require you to put VAT on each sale.

Check with your accountant to ensure you are abiding by VAT rules.

To learn more about VAT for content creators, have a read of our VAT guide.

Mistake #2 - Poor Record Keeping

Another key mistake content creators make is poor record keeping or not keeping records at all. The admin work behind your business isn’t glamorous at all, but, it's crucial to understand where your business is at and how you could invest to continue growing.

Content creation can be volatile, so understanding your funds, cash flow, and what you can claim against tax can keep you at ease. Ensuring you are claiming for enough of your expenses will also keep your tax bill down. 

The way to understand the taxes you are due will be based on the records you keep. Having a separate bank account for your business can help track how your business is doing, allowing you to plan for growth and make smarter decisions.

Additionally, it will be much easier for you (or your accountant) to find the expenses you incurred over the year. This will ensure you are claiming enough but most importantly not overpaying in tax!

Mistake #3 - Overlooking expenses

You may need an extensive list of equipment or just a smartphone to create content. The good thing is that you can claim these as expenses. An expense often overlooked is your mobile phone bill. A business contract for your phone can bring big tax savings on the one widely used item to create content. Think about all the things you buy for content, such as cameras and lighting. These can all be expenses you can claim.

Another expense that is often overlooked is the home studio or set-up for content creation. If you do have this set-up then you can claim a proportion of the running costs of your property, including utility bills and internet costs. 

A less obvious expense is if you travel for content creation, which could be a deductible expense too.

One thing that you must do is to keep track of all your expenses. Keep any receipts and use a spreadsheet or app to log all your expenses. Your future self will be grateful, and so will your accountant!

Mistake #4 - Not claiming for Withholding Tax

The US brought in a digital tax on digital service supplies, mainly on Google, Meta, etc. This will apply if you have US viewership on your content. For example, if you have US viewership on YouTube, you will receive a 30% deduction at source for AdSense earnings. However, the US and the UK have strong tax treaties that allow you to claim a 0% withholding tax, which involves submitting forms to the Internal Revenue Service (IRS).

This is often missed, so once you incur the deduction, you then have to claim for the tax credit later. Instead, you could submit the forms initially to have that extra 30% in your pocket, to put towards creating your next piece of content or to invest as you please. 

Mistake #5 - Thinking short-term

Many people don’t think about how long they will continue creating content. You might be enjoying the thrill of life as an influencer. However, thinking about the future can safeguard you and put you in a better place once you decide to stop being a creator. The average influencer career is unlike a traditional corporate job, so it's wise to think about how you will use your money to best prepare for your future.

Consider diversifying your income streams. While your YouTube channel may be the priority, having multiple income streams can provide financial stability and protect you from the algorithms and fluctuations in income.

Whether you want to invest your money or keep contributing to your pension, there are plenty of ways to reduce your current tax bill and benefit in the future.

The Bottom Line

Being a content creator is awesome, but it comes with financial challenges. Avoid these common money mistakes and set yourself up for long-term success. Remember, it’s not just about making money, but also managing it wisely!

If you need help with your finances, Capture Accounting is here to help. We’re specialist accountants for content creators, so we know what you’re dealing with. If you'd like to chat about your finances and see how we can help, book a call with us today.