Understanding Taxes for Self-Employed YouTubers

BattleGeekPlus said:
I have a question since my channel actually involves multiple people.

My channel is run by me and 3 other friends which is 4 people in total and since we all equally contribute, we've agreed to split any income we get 4 ways.

However, the W9 with our network is under my name and SSN since I don't have a business yet. Since we don't get a lot of traffic on our channel just yet, I haven't thought about taxes too much.

Let's say we start getting bigger and begin making $600+ a year. Would it be more beneficial to start a business like an LLC in order to split the wages among the 4 of us for tax purposes? I know it's a terrible idea to split the income under my name and I'm the one who's eating all the taxes.

My channel isn't getting anywhere near enough traffic to get a decent amount of money, but I want to be prepared for the future. Let's just say a really big opportunity might be heading our way and *if* we get it, then we'll definitely start getting more traffic and making more money.
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I would recommend you form a multi-partner LLC, in which case all partners are equally liable for taxes, and naturally should equally earn from the revenue generated. If your friends don't want to equally share the tax burden, then I honestly would drop them from your business. If your channel eventually got big enough, it would breed a lot of resentment if you kept shouldering 100% of the tax burden.

Also once you have an LLC, you can change your AdSense to be in the LLC's name, and use your business EIN, instead of your SSN.[DOUBLEPOST=1399925170,1399924928][/DOUBLEPOST]
WeiseGamer said:
I have an FEIN as a sole proprietor, and would move to LLC depending on income.

As for internet costs, I use like 500GB of bandwidth a month on average (proven through comcast account history) and I can easily show my channel has a lot of HD videos which is the majority of this. Running under a home office, I believe I can take the sq footage of my actual office as a write off from my rent paid as well, no?

As for cell phones, maybe I got a bit hasty, but I use my smart phone to track analytics and keep up on social media advertising (my twitter/facebook accounts).

Come on government :)
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You can take the sq. footage if you have a dedicated office space. If your "office" is a corner in your bedroom/living room/etc. then it's iffy at best. If you have a dedicated desk / computer space you could do the sq. ft. around that space, but at that point it really doesn't impact your taxes *that much*.

For my business, I have a 170sq. ft. dedicated office space at home (I use it both for my actual business - web analytics consulting - and for my YouTube studio).
 
Yeah, our spare bedroom has storage and is 100% just used for my office with my desk and all. Separated by its own four walls and a door, so I think I can do that :D

So you can only get a credit up to what you paid in taxes right? No point writing off $100,000 (not that I can get that much written off at this point) if I only paid $5,000 in taxes, correct?
 
WeiseGamer said:
Yeah, our spare bedroom has storage and is 100% just used for my office with my desk and all. Separated by its own four walls and a door, so I think I can do that :D

So you can only get a credit up to what you paid in taxes right? No point writing off $100,000 (not that I can get that much written off at this point) if I only paid $5,000 in taxes, correct?
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You can, and should write-off all legit business expenses. If you spend more than you earn, you're operating the business at a loss, which can get you some tax refund and tax credits. Always report all income and business expenses.
 
I don't know if this was mentioned earlier in the thread, but how does Freedom's tax thing work. They say you don't need to file at all because of something with China. I'm not sure how shady this is?
 
Katie Hull said:
I don't know if this was mentioned earlier in the thread, but how does Freedom's tax thing work. They say you don't need to file at all because of something with China. I'm not sure how shady this is?
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Regardless of the network you are in if you are in a country where by law you are required to pay taxes which is most countries then you must file for them as per your countries requirements for filing :)
 
Michael said:
Regardless of the network you are in if you are in a country where by law you are required to pay taxes which is most countries then you must file for them as per your countries requirements for filing :)
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What confused me was this statement on their FAQ : "We do not withhold any taxes! Other networks may withhold 30% of your earnings due to USA tax laws, but Freedom! chose to incorporate in Hong Kong for its tax efficient laws.

Do not worry, we are not a sketchy Chinese company. Our CEO and founder, George Vanous, is a Canadian citizen and our staff is in North America, Europe and the Philippines. The primary reason we chose to incorporate in Hong Kong was so you can earn more.

This means we pay you 100% of everything you earn - nothing is withheld - and there are no tax forms to fill out. Simple.

Is this legal? Yes, because Hong Kong law does not require us to submit tax forms on your behalf. USA law does require it, so companies incorporated in the USA may need to withhold 30% of your earnings and collect tax forms."
 
Katie Hull said:
What confused me was this statement on their FAQ : "We do not withhold any taxes! Other networks may withhold 30% of your earnings due to USA tax laws, but Freedom! chose to incorporate in Hong Kong for its tax efficient laws.

Do not worry, we are not a sketchy Chinese company. Our CEO and founder, George Vanous, is a Canadian citizen and our staff is in North America, Europe and the Philippines. The primary reason we chose to incorporate in Hong Kong was so you can earn more.

This means we pay you 100% of everything you earn - nothing is withheld - and there are no tax forms to fill out. Simple.

Is this legal? Yes, because Hong Kong law does not require us to submit tax forms on your behalf. USA law does require it, so companies incorporated in the USA may need to withhold 30% of your earnings and collect tax forms."
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Yes this is legal. Hong Kong has a tax treaty agreement with the US, and because of that you don't need to pay the additional 30% international tax (which would be required for any company out side of the US that is based in a country that has no current tax treaty with the US). I've had to deal with this because I have a subcontractor in Canada. Canada also has a tax treaty with the US, and she has incorporated her business, so I am not obligated to deduct the 30% international tax.
 
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