5 Tips for Operating a Successful Gaming Business
When you were growing up, you dreamed of being able to one day play video games for a living – finding a way to make a career out of your favorite hobby. Technology has made it so that many gamers have turned that dream into a reality. However, gaming as a business is much more than simply playing video games; the business aspect is equally important. Here are some business tips for gamers that will help to ensure your passion can turn into a successful venture.
DIVERSIFY YOUR TALENTS
Earning money from gaming can extend well beyond simply playing video games on video or live stream. There are many other ways to use your video gaming expertise to make money. Consider creating additional revenue streams to increase your profits.
Advertising revenue from a YouTube, Twitch, or other gaming channel can be an ideal way to earn passive income.
Popular gamers can work with companies to help them promote their products. This can be done via endorsements on their gaming channel, using the company’s products, or appearing in company advertising among other alternatives.
Some gamers use their popularity to sell clothing, gaming paraphernalia, and other merchandise with their gaming brand to bring in additional revenue.
Social media advertising
Social media is hugely popular, and companies are willing to pay influencers to promote their products to their followers. This can provide an additional revenue stream as you grow your gaming business.
Video gaming tournaments have seen a rise in popularity over the past few years. Professional gamers can generate significant income from the prize money provided from participating and winning these tournaments.
These are just a few options to help to build and grow your gaming business.
CREATE A BUDGET
While this is not directly related to gaming, it is still an important part of running your business. Having your own business means that you will not have a consistent paycheck to cover your expenses. You will want to set a budget so that you can know where your money is going and set aside funds to cover those lean months.
PLAN FOR THE FUTURE
Working for yourself means that you will not have an employer retirement plan to set aside for the future. It is never too early to start saving. Consider working with a financial advisor who can help you to explore your options and create a plan that meets your needs.
In addition, you should consider setting up an emergency fund with at least 3 to 6 months of your living expenses in case things do not go as planned.
Health and Disability Insurance
As a gamer, keeping yourself healthy is a crucial part of running your business. Health and disability insurance will be helpful in not only helping you avoid financial disaster if you get sick, but also cover your needs should you experience an injury that prevents you from gaming.
DON’T FORGET ABOUT TAXES
As a business owner, you will be responsible for ensuring that Uncle Sam gets their cut.
As a part of your budget planning, you will need to ensure that you set enough aside to make estimated quarterly tax payments. Failure to make estimated payments can result in interest and penalties.
The Jock Tax
Keep in mind that as a professional video gamer, you “may be subject to tax obligations in all of the states and countries that they earn income from.” Athletes (including esports “athletes,” aka gamers) usually have to pay personal income tax to their state of residence on any income they make worldwide; however, in states outside their state of residence, “athletes increasingly find themselves subject to aggressive enforcement of ‘Jock Taxes,’ which look to tax athletes on income ‘earned’ in non-resident states.
Employee vs. Independent Contractor vs. Business Owner
How you choose to operate in terms of status will make a big difference in your taxes. Are you a part of an esports team? Whether you are classified as an independent contractor or employee will determine “which party is responsible for paying any associated taxes, including but not limited to any unemployment or federal and state withholding taxes.”
Starting a business for your gaming could give you the ability to deduct some expenses of running your operation. Talk to your accountant about the possibility of setting up a business entity.
ASK FOR HELP
Your passion is gaming. The business aspect of your gaming venture can be complicated. Consider working with our office to ensure that your financial plan will meet your lifestyle needs.
Owning a gaming business can turn a dream into a reality for passionate gamers, however, the business and tax considerations cannot be overlooked.
If you have any questions about running a gaming business, or you would like to learn more about our services, please feel free to contact us for more information.