The social and financial impact e-sports are having on the world is undeniable. The money earned from tournaments, team salaries, endorsements, and prizes are helping top e-sports athletes earn millions of dollars each year. If you are an NBA 2K tournament player or if you are aspiring to get into the industry, you may benefit by having a basic understanding of NBA 2K esports bookkeeping, accounting, and tax planning.
How Can Cash Basis and Accrual Basis Accounting Affect Your NBA 2K Esports Tax Planning?
If your NBA 2K esports bookkeeping follows cash basis accounting, you will adhere to two principles.
1. Revenue will be reported on your income statement based on when the cash is received from tournament winnings, streaming revenue payments, endorsements, etc.
2. Expenses are reported on your income statement when you pay them.
If you will have your 2K esports CPA use the accrual basis accounting method, they will follow these two principles.
1. Revenue is reported on your income statement when it is earned. If you win a tournament on the first of the month, that revenue is counted even if you don’t get paid for 30 days, 60 days, 90 days or more.
2. Expenses are recorded on your income statement so that they match up with related revenues when they occur or when they expire. For example, you receive an invoice for a tournament that you will pay in two months. The invoice should be recorded as an expense on the day you receive it.
You may opt to use the accrual method because it may give a better picture of your financial position at the end of the accounting year. This is because you or your NBA 2K esports accountant should have recorded all the assets that are earned and all the liabilities that were incurred during the year on your balance sheet.
There are other factors you should consider when determining if an accrual basis or cash basis accounting is best for your tax planning. We generally recommend talking to an NBA 2K esports accountant who can help you look at your current financial situation and your future goals to help you determine which accounting method may be right for you.
What Is a Balance Sheet? Why Do You Need One?
As you talk to your NBA 2K esports financial adviser, you may hear them refer to a balance sheet. A balance sheet is one of the five major financial statements accountants and business owners use. It shows the financial position of your company as of a certain date.
A financial statement usually gives a snapshot of how your e-sports business is doing in a particular moment of time. Your financial adviser might use your balance sheet to show you, or creditors, what your company owns and what it owes others as of the date on the heading. Banks, lending institutions, and suppliers might use the information on your balance sheet to determine if you are creditworthy or if they should invest with you.
Helpful Guidance from Experts
We at Fusion CPA are proud to offer our services as NBA 2K esports financial advisers to established and aspiring NBA 2K Esport athletes. Our goal is to work with you to create a business and financial strategy using best practices and high-quality accounting technology. We are here to help you identify key accounting financial and operating indicators to help you improve profit and cash flow. Our seasoned accountants understand that for you competing in NBA 2K tournaments is more than just playing games – it’s your business. So if you are looking to improve financial planning and tax strategies – lets talk. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.