Are you starting to create content?
It’s not a hobby anymore - are you now in business?
Chances are you started creating content just for fun, and then things took off and you started to build an audience and get some real traction.
That opened up possibilities for you to start generating some income from your following. The money then started to flow. Small initially but it quickly began to increase.
Watch out - You need to start to keep track of income and expenses.
Don’t put this on the do later list. Your income is only likely to grow, which will only make the problem worse.
When you start making money, and then you start investing in equipment such as cameras, microphones, props, lighting and so on, it’s intent and purpose of making a profit, a commercial endeavour.
Still unsure if you are a business? Ask yourself these questions:
1. Do I make a profit from my channel, or intend to in the future?
2. Do I repeat activities regularly to grow my channel and following?
3. Do I engage in planned or organised administrative activity for my channel such as keeping accounting records?
4. Do I purchase items for my channel that I intend to claim as a tax deduction?
If you answer yes to any of these, the ATO would likely classify you as a business.
Then, there is GST…
You do not need to register for GST as a sole trader, but that means you cannot claim GST credits on any business-related purchases.
If you intend to claim GST credits for purchases related to your channel, or if you earn over $75,000 per year from YouTube, then you must register for GST.
Hmm, and what about business expenses?
Any items that are directly related to producing your YouTube channel may be deductible. However, it’s important to make sure that you ONLY deduct the business-related amount of your purchases. For example, if you buy a new computer primarily for your business, but also use it for personal web browsing, social media etc, you cannot claim the whole expense as a business deduction, it needs to be proportioned between private and business usage.
And that’s not all…
YouTube is required by law to collect your tax information, and may withhold on your earnings. As a creator outside of the US, you may be required to fill out form W-8BEN to complete for the US tax authorities.