Tax Mistakes Creators Make | Karat Blog

Tax Mistakes Creators Make

The costliest tax mistakes creators make: skipping expense tracking, missing quarterly payments, and how to avoid them all.

Tax Mistakes Creators Make

This week in the Discord, we had a CPA cover the most common and costly tax mistakes creators make. Missed the conversation? Join the Discord to watch the replay.

Most Common Tax Mistakes:

• • Not tracking expenses throughout the year. Most creators scramble at tax time because they didn’t track anything. Use an app or spreadsheet from day one.
• • Not paying quarterly estimated taxes. If you’re self-employed, you likely owe taxes quarterly. Missing these payments leads to penalties.
• • Mixing personal and business finances. Open a separate business bank account. It makes bookkeeping infinitely easier.
• • Not deducting legitimate business expenses. Creators leave thousands on the table by not claiming all their deductions.
• • Ignoring 1099s. Platforms and brands are required to send 1099s for payments over $600. Make sure you’ve received all of yours.
• • Not working with a CPA who understands creators. A general CPA may not know about creator-specific deductions. Find one who specializes in creators or self-employed individuals.

How to Fix These Mistakes:

• • Set up a business bank account today. Keep all business income and expenses separate.
• • Use accounting software like QuickBooks, FreshBooks, or Karat to automate bookkeeping.
• • Set aside 25-30% of every payment you receive for taxes. Put it in a separate savings account.
• • Pay quarterly estimated taxes in April, June, September, and January.