Twitch Streaming as a Profession: Business Essentials
December 20, 2022
As you continue to grow and evolve as a Twitch streamer, it's important to understand the business side of managing a money-making Twitch stream.From setting up a company to support your streams to taking advantage of tax benefits and legal protection, there are several steps you can take to ensure the success of your Twitch business.
One of the first steps in setting up a business to support your streams is choosing the right corporate structure. This important decision can have significant implications for your personal liability, tax obligations, and overall business operations.
There are several options to consider when it comes to choosing a corporate structure for your Twitch business. A limited liability company (LLC) is often a good choice for streamers, as it provides personal liability protection and flexible tax options. An LLC can be taxed as a sole proprietorship, a partnership, or a corporation, depending on the number and type of owners.
In some cases, an S corporation (S corp) or C corporation (C corp) may also be suitable for a streaming business. An S corp is a hybrid business structure that combines the liability protection of a corporation with the tax benefits of a partnership. A C corp, on the other hand, is a traditional corporation that is taxed as an entity separately from its owners.
It's important to consult with a legal professional or accountant to determine the best structure for your business, taking into account factors such as your personal liability needs, tax obligations, and business goals. Services like Doola and Stripe Atlas can get you started with a business fairly quickly and for very little cost!
Once you’ve established your business, you’ll receive your Employer Identification Number (EIN), which you can use to open business banking accounts, apply for business credit cards, file taxes as a business, and protect yourself from liability. Opening a business bank account is important for many reasons, including: • Separating business and personal finances: A business bank account helps to separate your personal and business finances, making it easier to track and manage your business expenses. This can be especially important for tax purposes, as it allows you to clearly see the income and expenses of your business. • Building business credit: By using a business bank account, you can build credit for your business. This can make it easier to secure loans or other forms of financing in the future. • Professional image: Using a business bank account can help give your business a more professional image that may be more attractive to sponsors. Sponsorships are a great way to maximize your revenue.
Once your business bank accounts are set up, you should switch all your earnings and expense channels to those accounts. That way, you can immediately start building business credit and track expenses for tax purposes.
At this stage, you should look for an accountant or accounting service to help you file your taxes. An accountant can help you navigate the complex world of business taxes and ensure that you’re taking advantage of all available tax benefits. They can also help you identify ways to save money and minimize your tax liability.
Then you can start exploring platforms that require an EIN to operate on and switching all of your social media accounts to business accounts. This will grant you access to in-depth analytics, ad campaigns for growth, and many other enterprise-only features that will help you grow as a creator.
Tax write-offs are a valuable tool for businesses of all sizes, and they can provide significant savings on your tax bill. In general, tax write-offs are expenses that are incurred in the course of operating your business and can be deducted from your taxable income. This effectively reduces your tax liability by lowering the amount of income that is subject to taxation.
Many types of expenses may be eligible for tax write-offs, depending on your business and industry. Some common examples for Twitch streamers include: • Equipment purchases: If you purchase equipment such as computers, cameras, or lighting for your streams, you may be able to claim these purchases as tax write-offs. • Marketing expenses: Marketing expenses such as advertising, sponsorships, and social media campaigns can be deductible as business expenses.
• Travel costs: If you travel for work-related purposes, you may be able to claim travel expenses such as airfare, hotel accommodations, and meals as tax write-offs. For example, traveling to TwitchCon could be claimed as a business trip.
• Home office expenses: If you operate your Twitch business from a home office, you may be able to claim a portion of your home-related expenses, such as rent or mortgage interest, as tax write-offs.
It's important to keep good records of all your business expenses, as you’ll need to provide documentation to claim tax write-offs. It's also a good idea to consult with a tax professional or accountant to ensure that you’re claiming all eligible tax write-offs, and for help navigating the complex world of business taxes. You should seriously consider using professional accounting tools to make this a bit easier. The cost is very low when you consider the potential savings!
Overall, tax write-offs can be a powerful tool for maximizing your income and minimizing your tax liability as a Twitch streamer. By taking advantage of these tax benefits, you can reinvest more of your earnings back into your business and continue to grow and succeed as a professional streamer.
Registering a business that shares the name of your brand will make it much more difficult for someone to steal your brand image. It’s still important to seek proper trademarking for your brand. A registered trademark gives you the legal right to prevent others from using a similar mark in connection with similar goods or services. This can help protect the investment you’ve made in your content and brand. When you register a trademark under a business, you have the legal standing to enforce your rights and take legal action if necessary. As an individual, you may not have the same legal standing or resources to do so.
However, it’s important to note that both businesses and individuals can take legal action for trademark infringement, and the specific circumstances of the case will determine the course of action. It’s always wise to seek the advice of a qualified legal professional if you believe your trademark rights have been infringed. Sponsors are also much more likely to take you seriously when you’re able to furnish formal business proposals linked to a company. And they’re much less likely to take advantage of you or offer lopsided or unfair deals.
Having a business can offer a much higher level of privacy for your financial details and personal information, such as your home address and phone number. A streamer’s personal information can be used by bad actors to hurt them. Having a business allows you to keep your financial information separate from your personal life. By operating a business, a streamer can keep their finances private and only share that information with people who need to know, such as their accountant or tax preparer.
As your profile and income as a streamer grow, treating your activities on Twitch as a business can have long- and short-term benefits. Keep in mind, though, that every situation is different. As a disclaimer, this post is not intended to be legal or financial advice — before making decisions about your Twitch business, you should always consult with a professional to figure out what will work best for you.