Should I set up a social media business?

I have been posting and sharing content across social media channels for a few years. Over the past 12 months my followers have increased rapidly and I now have more than 50,000 followers on Instagram and a growing number on TikTok. It is generating a considerable income and I would like to turn it into something that is more than just a hobby. Do I need to set it up as a business? Do I need an agent to manage commercial arrangements? Do I need to tell the tax authorities? And what might go wrong?

Antony Smith, a director at chartered accountants Hillier Hopkins, says it is not uncommon for a hobby to turn into a successful business. It is important to get the basics right to avoid potential future issues. This means operating as either a limited company or a sole trader. There are benefits to each, but a limited company offers more protection, which is helpful if you wish to grow and diversify your work.

VAT causes real headaches for many social media influencers and those using platforms where individuals can subscribe to your content. If annual turnover is going to exceed £85,000 you must register with HM Revenue & Customs and submit VAT returns. It’s important to understand when VAT should be charged on a transaction, so specialist accounting advice might be needed.

How you receive payments needs consideration as many platforms and businesses may wish to pay you in local currencies and it’s not uncommon to see influencers paid in cryptocurrency, which should be treated with additional care. 

Taxation depends on the structure of the business. If you set yourself up as a limited company, you will be a director, usually paying yourself via a mix of salary and dividends, so keep the company bank account separate from your own bank account.

Certain expenses of your business are tax deductible, such as cameras, ring lights and microphones. However, you should be careful when it comes to clothing worn during your shoots. HMRC can view these as primarily worn for “warmth and decency” and thereby not a business expense. Costumes on the other hand might be a business expense. 

As a business, you’ll want your following to grow and diversify and an agent can play a valuable role in this. But check contracts carefully as their terms will vary. Expect an agent to take a 20 per cent share of any work they secure for you. 

Ultimately, your success depends on how you maintain, increase and entertain your followers. Be wary about posts or activities that could lead to your account being suspended by a platform or that will damage any lucrative commercial tie-ins you may have. Getting the basics right, such as making it clear if content is sponsored, is important to avoid contractual breaches.

Be wary about your content being used without your permission and fake accounts. It can be time consuming and expensive to trace and shut down fake accounts.

Finally, don’t forget to think about yourself and the toll “trolls” can have on your mental health and wellbeing. Take time offline to keep all things in perspective.

Ex-husband refuses to be vaccinated

My ex-husband is a little over 50, and he is a frontline worker. He’s been adamant that he doesn’t want to get a vaccine and I fear he could spread the virus to me and my vulnerable parents who haven’t been vaccinated yet, through our children (aged 14 and 11) who he sees weekly. Do I have a legal right to refuse him to see the children?

Susi Gillespie, head of family law at Thomas Mansfield Solicitors, says courts may well sympathise with one parent’s belief that it would be unreasonable for the other parent to refuse the coronavirus vaccination given how highly contagious and deadly the disease can be.

However, the non-resident parent may have an acceptable reason for refusing the vaccine, such as an allergy. Furthermore, vaccination is not mandatory, and we do not yet have evidence that you cannot transmit the virus after being vaccinated. 

If the weekly child arrangements are pursuant to a court order, then the parent refusing to abide will be in breach of that order, and enforcement proceedings could be brought against them. Sanctions include a fine, imprisonment or undertaking unpaid work. The court can decide not to enforce if it is satisfied that the person in breach had a “reasonable excuse”. 

If the parent living with the child also lives with elderly parents, the court may find that until all family and extended family members have received both doses of the vaccine it may not be safe for the non-resident parent to have direct contact with the children. Instead, indirect contact including video and phone calls could be ordered.

Given the current national lockdown, if the parent with care does not live with elderly parents, there will be no immediate risk for the elderly. Also, if the parent with care does not have any underlying health issues rendering them more vulnerable to the virus, the court may well consider the cessation of contact to be unreasonable.

If there is no court order, the parents will need to discuss between them the effect of the non-resident parent’s decision. The parent with care could exercise their parental responsibility and cease contact, varying the arrangements to limit contact only to video communication pending reaching an agreement. Parents should consider consulting an expert mediator to help them determine this issue.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to money@ft.com