The mismanagement of a business’s finances can cost millions. Juggling money is challenging for the most experienced business owner, but for those who find themselves suddenly in the throes of success within a brand new industry, it can prove a minefield.
Here at Champion Accountants, our specialist tax advisors were referred to a family with a huge social media following. A hobby for one member of the family quickly turned into a career for the whole household, as they transformed their day to day lives into a lucrative social media business. With millions of subscribers across their channels, profits were streaming in from advertising revenue.
In year one, with earnings of around £250,000, the family called in help from a local, high street accountant. They had no business experience and needed support with their self assessments, together with advice on avoiding unnecessary taxes.
By year two, profits had leapt to £2.3m, meaning the social media influencers were paying a considerable amount of higher rate tax. They decided to seek support from expert tax planners who could better cope with the ever-increasing scale of their business.
We consulted with the family and immediately identified several ways in which their finances could be better handled. Significantly, they were paying VAT on what should have been zero-rated supplies.
Once on board as a Champion Accountants’ client, we recommended the family incorporate as a Limited Company and address its unnecessary VAT payments. Not only did this drastically reduce tax payments – and will continue going forwards – it also resulted in a £1million VAT rebate from HMRC.
Many online influencers don’t realise that they are in fact running a business. It’s so important for them to be savvy with the right tax planning activities to maximise their earnings and ensure they’re operating in the most tax efficient way, both now, and in the future.
This is where Champion Accountants steps in, using our expertise to save on unnecessary tax through careful, responsible and experienced planning. For more information on choosing the right accountancy service and tax advisor as a social media influencer, contact David Herd on David.Herd@championgroup.co.uk or 0161 703 2500.