As a creative entrepreneur, whether you’re running a clothing brand, modeling, or streaming on Twitch, taxes play a big role in your financial success. Every time you make a sale, book a gig, or get a brand sponsorship, some form of tax is involved. Understanding the different types of taxes that affect your business can help you stay compliant, protect your profits, and keep the government out of your pockets more than necessary.

Taxes in the U.S. fall into two main categories: direct and indirect. Let’s break down what they mean for you.

Direct Taxes: What You Pay Straight to the Government

These are taxes based on what you earn, own, or operate, and they’re your responsibility—no passing them off to anyone else.

• Income Tax – If you're an influencer earning money from brand deals, a model booking gigs, or a clothing brand owner making sales, the IRS expects a cut of your earnings. The type of business structure you choose (LLC, sole proprietorship, S-corp) determines how you’re taxed.
• Self-Employment Tax – If you’re your own boss, you’re on the hook for 15.3% in self-employment tax (as of 2024). This covers your Social Security and Medicare contributions. Unlike W-2 employees, no employer is splitting this cost with you, so it’s all on you.
• Property Tax – Own a storefront or a studio space? You might owe property taxes on your real estate or even equipment used for your business.
• Franchise Tax – In some states, just having an LLC or corporation means you owe an annual franchise tax, even if you didn’t make a dime.

And if you have employees, you’ll also need to deal with employment taxes, meaning you’re responsible for withholding their income tax, Social Security, and Medicare contributions.

Indirect Taxes: What You Collect from Customers

These taxes don’t come out of your pocket directly, but you’re responsible for collecting and submitting them to the government.

• Sales Tax – If you own a clothing brand selling hoodies online, depending on the state, you might need to charge customers sales tax and send it to the government. But here’s the catch: sales tax laws change based on where you sell and how much revenue you make in each state.
• Excise Tax – If you sell certain products like alcohol, tobacco, or even digital goods, you might be required to collect an extra tax. If you’re a Twitch streamer getting revenue from subscriptions, some states now tax digital entertainment services.

Why This Matters for Your Creative Business

Every dollar counts, and if you don’t plan for taxes, they can drain your profits fast. Many creative entrepreneurs get caught up in growing their brands, landing deals, and creating content, only to be blindsided when tax season hits.

For example:

• If you’re a model or influencer earning money from brand deals, you’re considered self-employed, meaning you need to set aside money for taxes because no one is withholding it for you.
• If you own a clothing brand, collecting and properly reporting sales tax is crucial. Failing to do so can lead to penalties, audits, and even getting shut down.
• If you're a Twitch streamer or content creator, some of your income might be subject to state or local taxes that you didn’t even know about.

How to Stay Tax-Ready

The key is to understand what applies to you and plan accordingly:

Track your income and expenses – Keep records of all your earnings, write-offs, and receipts.

Set aside money for taxes – If you’re self-employed, a good rule of thumb is to save at least 25-30% of your incomefor taxes.

Stay compliant with sales tax laws – If you sell products, check what states require you to collect sales tax.

Work with a tax professional – Taxes get complicated fast. Having an expert in your corner can help you maximize deductions, stay compliant, and avoid unnecessary headaches.

Taxes aren’t just about cutting checks to the IRS—they’re a key part of keeping your creative business open, profitable, and protected. The more you know, the better you can structure your business to work in your favor.

If you need accounting and tax help for yourself or your business, we’ve got you covered. Thanks to our strategic alliance with Carson Creative Solutions, led by accounting and tax pro Asia Hill, we’ve built the Tax Ready by Design™ program to help creatives stay compliant and financially sound.

Need guidance? Reach out, and let’s talk.

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