Are Social Media Influencers Independent Contractors?
Are social media influencers independent contractors? Previous jobs that an influencer has had are very likely employee W2 opportunities. Let’s just say you’re working in retail. You are an employee, meaning, the employer has complete control over you. They tell you where to work, when to work, how much you work, and what your duties are. And then, you’ll receive a W2 at the end of the year, you’ll have taxes withheld in your paychecks throughout the year. In that scenario, you’re an employee. Now, as an influencer, your job is different. You aren’t working full-time for any of these companies that you’re sponsoring. You’re doing a short-term burst of marketing, I guess, depending upon the relationship.
And for the most part, it’s up to you, maybe what the exact content that you post. I mean, obviously, there’ll be some bare bones. We want you to post this many times a month, we want you to do 90-second spots on your YouTube videos once every two months, whatever it is. But you’re not going into a nine to five job every day. And when the sponsor does not exert complete control over the influencer, that’s more of an independent contractor relationship. And so, at the end of the year, the independent contractor receives a 1099, and any compensation paid to the influencer has no taxes withheld. At the end of the year, the influencer is going to be the one that must pay the taxes on all of the compensation that they’ve received.
Is there an advantage to being an independent contractor versus an employee? Well, if you’re a smart independent contractor, you’re going to create an LLC and then you’re going to get a tax ID number, an EIN through the IRS, and then you’re going to create a bank account for that LLC. And then you’re going to run all compensation and expenses through that account. As an influencer, you can take many tax deductions as an independent contractor. Many of the things that go into being an influencer can be deducted like travel, maybe you’re in the fitness industry and you’re trying out new products, well, you can likely deduct the products that you bought as well, meals, gas, cars sometimes. There are a ton of things you can deduct when you are considered your own business as an independent contractor and self-employed. Other topics of interest include:
I’m not an accountant or tax attorney, so I’m certainly not a complete expert on this, but I would suggest that you reach out to an accountant, and they can assist you in setting up the LLC and then letting you know exactly the things that you can and cannot deduct. And that way, you can maximize your compensation and tax deductions at the end of the year. If you’re not doing that, you’re leaving a lot of money on the table. Now, there may be scenarios where you’re working so much for one sponsor or you’re doing so much work for them over the course of a week or a month or a year or whatever that you may be classified as an employee. It’s very rare that a scenario like that would exist, but there may be certain times where there’s so much activity between an influencer and a sponsor that they might be considered an employee.
If you’re concerned that you’re being misclassified, either as an employer or as an independent contractor, I would suggest you speak to the sponsor and let them know your concerns and talk through that. So, that’s a little bit about whether a social media influencer is an independent contractor. They very likely are, and you will receive 1099 at the end of the year.
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