Have you ever wondered just how much money you can make through social media? Influencers have been making a legitimate income off popular platforms like Instagram for years. The amount to be made as an Instagram influencer is based on several important criteria.
If you’re thinking about taking a deep dive into the Instagram platform, then here is everything you need to know about earning a profit from this social media giant:
Follower Count
The first and most important factor regarding how much you can make as an Instagram influencer relates to the number of followers you have. Generally speaking, a company is willing to pay you more if you have a larger following. The best thing you can do to boost your chances of making money through the platform is to focus on the organic growth of your following.
However, there are times when a large following may not be necessary. Micro-influencers are still quite popular on Instagram. In this category, you may have anywhere from 6,000 to 10,000 very loyal and dedicated followers for a specific niche. Expect to earn around $100 per post for a following of this size.
When you have a following between 10,000 and 100,000, you can earn a bit more. This is the level where companies are more apt to send out free products for you to try and review on your platform. You might earn around $200 for a sponsored post with a following of this size.
If you’re lucky enough to develop a following of 1,000,000, then you might make close to $700 for a sponsored post or score some more expensive freebies like vacations and trips.
Engagement
Not only are brands looking at the number of followers you have, but they also want to see that your followers are engaged with you. They are looking to see if you have lots of comments, likes, and shares. Influencers who have a large following but very low engagement rates may not come to the top of the list for companies who want to get their brand out there.
Low engagement rates lead to lesser payment rates, so be sure to do what you can to keep your audience engaged!
Free Products
While some people find their niche and do sponsored posts from major brands, others are more interested in working for free or discounted products. Many influencers choose this method of making money because it saves them from spending on items they would have purchased anyway.
Some mistakenly believe that they don’t have to claim these items on their taxes. If you’re taking advantage of the free products that are offered to you in exchange for your review, then you need to be tracking how much those products are worth with your accountant.
While you may not bring in any extra money to your bank account, getting free products or trips can save you money if you are planning to make a purchase regardless. This can be a huge source of income for Instagram influencers.
Affiliate Commission
While some companies will offer a flat-rate fee for an influencer who does a sponsored post for them, others will treat them as affiliates. In this situation, the influencer will advertise the service or product on their social media channels. They’ll receive a custom link that their followers can use to purchase the product for themselves.
The link tracks where the traffic comes from. If a follower clicks on the link and makes a purchase, then you would earn some money from that sale.
There are different ways that affiliate income can be organized. For example, you might be paid a flat-rate per sale for certain services. Alternatively, you could be paid a percentage of the sales price from what your follower purchased. This is great for the brands that hire you to promote their products because they’ll only have to pay if you get results from the post.
There are no hard and fast rules about how affiliate income works, so it can be difficult to pinpoint how much money influencers make from this type of revenue. However, influencers with a loyal following that engage with their content can stand to earn quite a bit from this. This is especially true if you are advertising more expensive products.
Why Influencers Need Accounting Services
As you can see, influencers can make a pretty hefty salary if they play their cards right with the followers on their platform. Many are still surprised to learn that the Canada Revenue Agency will require them to pay taxes on this income. Even items that you received for free in exchange for a social media mention must be considered as income.
At the same time, you can also write off any expenses that are directly related to your income in this way. An experienced accountant knows what influencer tax write-offs you can claim to avoid paying taxes on all of the income that came in over the course of the year.
Being an Instagram influencer essentially means that you’re running your own business, and this is how it is treated by the CRA. This is why many influencers enlist the help of an accountant to help them get organized around tax time. It can save them a great deal of money, making this investment a worthwhile one.
Hiring an Accountant
Are you convinced that you need to hire an accountant to help out with the income and expenses of your Instagram influencer business? Don’t take the chance that you’re doing your taxes the wrong way. Let an experienced accountant in Winnipeg look over your books and determine how you can save more money this year. Compass Accounting is ready and waiting to help you with your taxes!