As a YouTuber, it is important to consider the various tasks and responsibilities associated with running your business.
While you may be able to handle some of the day-to-day tasks such as creating invoices or tracking taxes, there are many benefits to hiring an accountant to manage your finances. Accountants can do these things much more efficiently, freeing up your time to focus on creating high-quality content for your audience.
For smaller businesses, it is not always necessary to hire an accountant. However, it is important to have basic accounting skills to properly manage your finances.
This can make it difficult for some entrepreneurs to figure out how to spend money and manage finances if they don’t have someone to help them who is more knowledgeable about financial concepts and practices.
What is accounting for YouTubers?
Accounting is the process of recording and summarizing financial information to ensure that a business is in good financial health and complies with accounting rules.
Accountants have a good understanding of bookkeeping, preparing tax returns, and verifying the accuracy of financial statements. It is important to have a basic understanding of accounting principles to ensure that your finances are properly managed.
Accounting for YouTubers in 7 steps
We will walk you through each step to understand the basic accounting process to properly manage your finances.
Find the right accounting software
Choosing the right accounting software is essential for managing your finances. Studies show that businesses that use accounting software are generally more profitable and have more cash flow. It also helps reduce the time spent on accounting tasks by 34%.
There are many options available to YouTubers, including Zoho Books and QuickBooks. It is important to choose the software that best suits your needs and budget.
Record entries as soon as they happen
Recording entries as soon as they happen is important to ensure that your records are accurate. Every time you do something on your computer, a record of that activity is created and stored in your computer’s memory.
The accounting program keeps track of the invoices you send and the payments you receive from customers. It also calculates your profit and creates financial statements based on your inputs. Record each transaction as it is completed to ensure accurate records.
Track cost of goods sold (COGS) to keep the business running smoothly
Tracking the cost of goods sold (COGS) is essential to understand the true costs associated with your business operations. COS is a metric used to measure the total cost of inventory sold, including the original cost plus any additional costs (like shipping and handling) involved in the sale.
When you add products and services to the accounting system, your main costs are calculated based on the invoices you create.
A chart of accounts helps you keep track of your finances
A chart of accounts is an important tool for tracking financial activities within a business. This document shows how much money has been spent on salaries, rent and other expenses, as well as what revenue the company has generated.
The chart of accounts in a YouTuber business would show how much money from ads and sponsors, what costs were incurred in getting equipment, how much was spent on rent and wages, what assets (such as cameras and computers) were acquired from the company, as well as the only money left.
Automate your accounting process to save more time
Accounting process automation can save time by automating cumbersome tasks, such as reconciling accounts, issuing invoices, and paying payroll. By automating the accounting process, companies can reduce their workload by up to 50%. It is important to choose the software that best suits your needs and budget.
Hire an accountant
Accountants can help you manage your business finances by setting up automated processes that will automatically collect and distribute funds. This eliminates the risk of fines or penalties, which can be costly in the long run. An accountant can help you keep your business finances accurate and organized, making it easier for you to manage them. It’s a good idea to have one on staff if you don’t have the time or inclination to do this yourself.
There are many accounting agencies that specialize in small businesses, such as 1-800Accountant and Accotax Accounting Agency. It is important to choose the agency that best suits your needs and budget.
Best 5 accounting tips for YouTubers
1-Use accrual-based accounting to record transactions.
2-Understand basic tax requirements.
3-Keep your business bills.
4-Reconcile your transactions.
5-Create a business bank account.
Use accrual accounting to track business transactions
Accrual accounting recognizes income and expenses when they actually occur, as opposed to when the money is transacted.
This way, companies can more accurately monitor their financial performance over time. Accounting using accrual-based principles helps companies understand their financial position over time, giving them a more accurate picture of how much money they are likely to spend in the future.
Learn the basics of taxation
Businesses often need to file forms such as 1120S and 990T to report income and expenses. It is important to consider any credits or deductions that could reduce the amount of tax you owe, as these returns can be complex.
Taxpayers can deduct various expenses from their taxes, such as mortgage interest payments, charitable donations, and medical bills. It is important to list all sources of taxable income on your tax return, as you could be subject to the IRS subsequently audited fines.
Keep your corporate accounts
As an entrepreneur, it is essential to open a business account with the bank. A separate account helps you track your income and expenses and ensures that you pay your taxes correctly.
The company’s insurance policy protects it from any financial liability in the event of a problem. Before opening a business bank account, consider the necessary steps:
- Decide what type of business you want your business to be (sole proprietorship, partnership, or corporation).
- Research different banks to find the one that best suits your needs by gathering all the required documentation (articles of incorporation or DBA forms, proof of identity, etc.).
- Make an initial deposit on new accounts, so they can be activated immediately.
Setting up a dedicated small business banking solution is quick and easy, and will help ensure that all funds associated with the business are tracked efficiently and avoid potential legal issues down the line.
Reconcile your transactions
Reconciliation helps you ensure that all financial data in your accounting system is accurate and up to date. It also lets you identify any discrepancies or errors, so someone can fix them quickly before they become a problem later.
Create a business bank account
As an entrepreneur, it is essential to open a business account with the bank. A separate account helps you track your income and expenses and ensures that you pay your taxes correctly. Setting up a dedicated small business banking solution is quick and easy, and will help ensure that all funds associated with the business are tracked efficiently and avoid potential legal issues down the line.
Accounting FAQs for YouTubers
How often should I review my financial books and records to keep them accurate and current?
It is important to regularly review financial books and records so that you remain accurate and up-to-date. Monthly reviews include financial statements, balance sheets, cash flow statements, and all other finance-related documents. If your business is changing rapidly, you may need more frequent reviews to make sure everything is in order.