Being a creator is a great gig. You set your own hours, choose the businesses you want to partner with, and let your creativity soar in new ways daily. But when tax time inevitably rolls around, it’s no longer all fun and games. Now, with news of the new $600 IRS threshold for platforms like Paypal and Zelle, your head might be spinning.
But don’t worry. While the updated threshold may sound confusing, it’s actually pretty straightforward. Lumanu’s app is perfect for helping creators get more organized with their payments and expenses, making tax time easier regardless of new thresholds and tax laws. By using Lumanu to track and submit projects and invoices to brands throughout the year, creators will be able to 100% match their earnings with the 1099s they receive from the brands at the end of the year.
New Creator Tax Challenges
No matter how many followers you have or the amount of traffic on your website, creators and freelancers face many challenges as they grow their business. The creative elements are fun, but learning the business side of things can be confusing. That becomes even more difficult with IRS changes, like the new threshold for reporting financial transactions on platforms like PayPal, Venmo, and Zelle.
As part of the American Rescue Plan Act, mobile payment apps now must report all commercial transactions over $600 starting in 2022. These apps will need to provide 1099-Ks to users collecting commercial income over $600 through these payment platforms. Users will then report this on their taxes.
Some creators and social media influencers would previously use the non-commercial payment options, which often didn’t have fees for receiving money, through third-party apps. But there are risks with using PayPal’s Friends and Family feature and other similar options. As a seller, this goes against PayPal’s user agreement and could lead to the platform blocking your account. These financial platforms now must report all commercial transactions over $600, and you could be in hot water if you’re accepting money under the false pretense of “friends and family.”
Lumanu’s invoicing tool allows brands to pay you in their preferred method, including PayPal, but you won’t be absorbing the fees, meaning less hassle and more money in your pocket.
Lumanu Is A No Fee Payment Solution
Lumanu’s creator invoicing app allows you to create and send professional invoices to clients. You can set the terms, like Net30 or Net60, then kick back, relax, and wait to get paid. The best part is that creators aren’t charged any fees when they collect payments via Lumanu!
You’re also not responsible for tracking down those payments. There’s no more emailing your clients to say, “Hello, just circling back on the invoice I submitted six weeks ago…” Instead, Lumanu’s Creator Protection means creators are guaranteed to get paid up to $10,000 when using Lumanu.
If you’re hoping to see that money sooner so you can go buy a new camera or upgrade your laptop, you can also use the EarlyPay feature to receive your money instantly for a small fee. Even if you don’t opt for EarlyPay, the money will transfer to your bank account quickly without additional fees that apps like PayPal or Zelle take for their services.
Lumanu’s Creator Tools Make Taxes Easier
As creators and freelancers know, organizing 1099s as they come in around January starts to get a little hectic. If you’ve been keeping all your paperwork and receipts in a shoebox at the top of your closet, it’s time to set aside a few hours to get organized.
Creators are required to keep track of the amount of taxes they need to pay the IRS each year. Fortunately, you can maximize savings and reduce the amount you owe by taking advantage of deductions. To do this, you’ll need to track business expenses, like office supplies or business-related meals and travel, which you can do quickly with Lumanu’s expense-tracking feature. We offer an awesome guide on how to maximize expenses as a creator, so be sure to take advantage of these tax saving options!
Not only does Lumanu help you keep track of your invoices, projects, and expenses throughout the year., we also handle 1099s from your clients when you work with brands that exclusively use Lumanu for project collaborations and payments. Lumanu offers free, unlimited storage, so you can even upload those 1099s and other important files to have them all in one place.
We’re also working on new features to make creator lives easier when working with brands. Soon, Lumanu will let you automatically include a way for brands and agencies to download W9s directly from the invoice you send. This makes the end of year 1099s tax form process a whole lot easier for everyone.
Get Prepared for Tax Time
Despite the IRS changes, tax time doesn’t have to be a headache. Using an invoicing tool like Lumanu means you can track expenses year-round to maximize tax savings, create and send invoices in minutes, and even get paid instantly with EarlyPay. Lumanu will also track down late payments for you, so you can get back to the creative side of your job. Ready to make tax time less taxing? Sign up or sign back into Lumanu, submit an invoice, and start tracking your expenses today.