So you want to be a content creator? You’ve seen Ninja and Shroud rank in mega dollars by playing video games all day and you want a piece of that pie. You go off and create your twitch account, set up OBS and start streaming. You gain some followers, some people even give you some money. Does this mean you can you start treating your twitch stream as a business? It depends!
The following article will help guide you through those baby steps you need to take in order to progress your Twitch stream to the next level, becoming a money-making side hustle (or even a profitable business).
Before you start earning any income from your stream you need to start taking the rights steps to ensure you are making a legal profit in your country. Just because you have a Paypal account and a few subs doesn’t mean you are following the taxation and reporting laws in regards to your income! Make sure that you have contacted the right tax consultants/agents and gotten the correct advice from them.
Practical Business Setup as a Twitch Streamer
This post will help you determine the steps that you need to take in order to successfully set yourself and your stream up as a business. Please remember, this is only advice on how to get yourself up and running as a business. If you are unsure on taxes and other requirements (401K or superannuation) that are applicable and a legal requirement in your country, make sure you’re taking the right steps (with the advice of a professional).
Not all of these steps will be applicable to you, so please read carefully.
For Australian Residents
Are you a business or a hobby?
The difference between a business or a hobby is important; this is because the benefits of being a hobby are very different to those of operating as a business. It is important to know the difference for tax, legal and insurance purposes. Take a look at the following scenarios:
- Are you engaged in Twitch streaming with the intention to make money? Then you are a business.
- Are you engaging in Twitch streaming for leisure and recreation purposes? Then it is considered a hobby.
- Are you engaging in Twitch streamer for leisure and making money? This could be either a hobby or a business
If you can not determine whether or not you’re a business or a hobby you will need to contact the Australian Tax Office (ATO) for them to determine whether your Twitch streaming activity is considered a hobby or a business. This is not a decision you can make on your own. Visit the ATO website here to find more information and ways to get in touch.
So you’ve been determined a business by the ATO
There are a few benefits to operating your Twitch stream as a business:
- You can register a website as .com.au if you have an ABN
- You’ll have access to government information, services and concessions
- You can claim tax deductions for business expenses (yes this includes that new HD 8K monitor that you just purchased!).
- It gives you the flexibility to work your own hours and be your own BOSS!
Do I need an ABN (Australian Business Number)?
If you are to operate as a sole trader in order to report your taxable income you definitely need an ABN. This will give you a few benefits and any government concessions that you may be entitled to.
It is recommended that you apply under a sole trader as this is the most simple and cheapest option for a business structure. You are a sole trader if:
- You are the only owner of the business
- Legally responsible for all aspects of the business
Applying for the ABN as a sole trader means you will be able to lodge your tax return under your individual Tax File Number, pay tax at the same income tax rate as individual taxpayers, and you may be eligible for the small business tax offset. We all have to pay tax on our income, regardless of what industry we work in or what we do for our job! Check out this video from Wild4Games who explains how tax and income works in the Twitch world.
However, it is strongly advised that you seek the advice of a trained professional as this article only outlines the benefits of the practice. A trained professional will be able to help you with your super contributions, tax lodgement and your insurance.
For American residents
Due to the fact that we are based in Australia and know nothing about American taxation law and requirements, we have put together a list of helpful resources that you can check out regarding your tax requirements:
- Streamer Square – Tax Basics for US Streamers
- Amazon Tax Information and IRS Annual Reporting
- Wild4Games – Twitch Taxes – What You Need To Know!
For all other countries, we highly recommend seeking information and advice from tax professionals in your area.
Business Plans for Twitch Streamers
Once you have chosen your business structure (sole trader etc) it’s time to put into place your business plan. A business plan is a document that outlines your business objectives and the strategies you will use to reach them.
Things you need to include in your business plan
- Overview of your business
- The goal of your business
- The feasibility of your business
- Your target market
- Your competitors
- How you will make money
- Your expenses
As you’re not (yet) a huge corporation, you will not need a full-fledged business plan with all the bells and whistles. For the time being, we recommend you use a lean business plan as your official document. A lean business plan places focus on the essentials for the business and more often than not can be simplified into one-page documents. We’ve created a lean business plan template to get you started. There is a link to download it at the bottom of this article.
Your business plan is not set in stone. It’ll change over time. However, it’s good to have this plan in place to keep you on track while you grow your business.
Marketing Plans for Twitch Streamers
A marketing plan is a plan that you will use in order to grow your Twitch stream as a business. It’s true when they say marketing makes the world go round. Regardless of who you are or what your business is the 4 Ps will help point you in the right direction. The 4 Ps allows you to look at the marketing side of your business from 4 main perspectives. Product, Price, Place and Promotion.
As you can see in the image above we have noted what you as a Twitch streamer will need to consider under each of the 4 Ps when making a marketing plan.
Marketing plans can be quite daunting with all the situational analysis, goals, strategies and the list goes on and on. To make things easier on yourself free to use the image above as a nice template to get you started.
But wait – there’s more!
We’ve gone through a lot of information in this post and there is a lot to let sink in. We’ll leave it here today and will go into more detail in future posts.
Being a streamer can be stressful enough. You need to decide what content your audience wants, ensure that all your equipment is working, making sure your software is up to date, checking that your overlays look okay and making sure all your socials media content is done! After all that there the additional stress of being a business. We hope that these tips have helped you out with things you need to think about when thinking about your stream as a business. If you need any help or have any questions, we’re here to give you the support you need. Reach out to us and we will see what we can do for you and your business!
Is there anything above that you would like more information on? Let us know in the comments below. Or let us know on Twitter @Player2HQ