I’m going to go through some overlooked esports roles for the next few posts. We’ve spoken about consulting a lawyer in esports and why you need one, being a project manager in esports and now i’ll speak about a very complex and needed role, accounting & taxes!
For the record, please do not take this as official tax advice. ALWAYS consult a professional. These are my personal experiences in esports from a Canadian perspective dealing with companies in multiple countries. If you need to talk an accountant please inquire and I will send you a referral.
Some questions you may have about accounting & taxes could be the following:
- Do I need an accountant in esports?
- The honest answer is yes and it depends on your activities. Example, if you run a beer league with your buddies and they’re all in Canada, probably not.
- If you’re beginning to run a tournament series and get paid in multiple currencies from different companies in different continents, absolutely.
- Accountants & tax specialists can find ways of savings regardless. It’s important to consult them to see where efficiencies can be found.
- Do I need to worry about international tax regulations?
- This depends on the activities that you are going through. For example, imagine this scenario. You’re a tournament organizer in Canada who needs to pay prizes for top 3 teams located in three different countries and continents.
- Team A is from Europe and wants to be paid by wire transfer
- Team B is from the US and wants to be paid by Paypal
- Team C is from South America and wants to be paid by Western Union (yes, I’ve had this request)
- The tax scenarios can get VERY complex and your accountant would need to ensure that you are following the tax law in Canada & in the other country. Some countries have treaties (IE the USA & Canada) but some do not. It is very important to understand the tax ramifications when paying out prize pools in different countries.
- This depends on the activities that you are going through. For example, imagine this scenario. You’re a tournament organizer in Canada who needs to pay prizes for top 3 teams located in three different countries and continents.
- What if I get paid from the USA? Is there anything I should fill out.
- Yes, most companies will require that you fill out a w8ben and also require something called an ITIN. I am not an expert at this but an accountant who understands US tax laws and treaties can help you with it. There are different tax withholding rules depending on what type of income you’re earning and what you fill out. Sometimes it’s 30% if you don’t fill out anything and it can be 0% if you do. Talk to an accountant on this!
- My revenue isn’t that high yet, do I need to incorporate & file corporate taxes?
- There are legal benefits to incorporating rather than being a sole proprietor. I would strongly suggest even just from a legal standpoint to incorporate!
- There are certain write-offs you can have as you have a corporation, lower taxes and a separate legal presence rather than yourself. An accountant can walk you through some of the benefits if needed.
- What about taxes? How much do accountants cost.
- Depending on how much leg work they’re doing (ie records keeping) it may cost anywhere from $1200 – $3000 depending on the scope of what you want them to do.
- I pay monthly to quickbooks to manage records and my accountant finalizes the tax return when I need to. It’s one of the more popular accounting software tools out there. It helps offset some of the costs if you can remember to input everything and keep records of expenses.
- Can I expense anything?
- No, generally not. It has to be related to the business but an accountant who is a professional can walk you through it.
- What about tax specialists? Why do you need them?
- Going beyond general accounting, there are tax specialists which charge a considerable amount of money for their vast knowledge in the tax space. For example, selling your business in the public markets and creating tax sheltering is important and you should consult a tax specialist and not just a regular accountant for this. An accountant can help with quite a bit but there are some really specific scenarios that require a dedicated tax specialist.
- This sounds expensive
- Yes, it can be. However, what’s worse? Finding out you’ve violated a multitude of international tax laws and Canadian regulations or paying an invoice for some advice. You be the judge on this but it’s always better to consult with a pro!
If you have any other questions with accounting in esports, let me know and leave a comment or contact me.