The Madden Esports league is seeing steady growth. The Madden 2020 championship tournament held in December 2019 gave out more than $700,000 to its top players. As an e-sports athlete, you may compete in or plan to compete in tournaments offering prizes of this sort. If so, you may benefit by having a basic understanding of NFL esports tax planning, bookkeeping, and accounting.
What Role Does an Income Statement Play in Your NFL Esports Bookkeeping?
Your income statement will help you and your NFL esports CPA see how profitable your e-sports business is during a certain time interval. You can compare your 2020 profitability to how profitable you were in 2019. Or you can compare how profitable you were this month as opposed to last month.
Reporting profitability in your NFL esports bookkeeping involves two things.
1. The amount of revenue you earned
2. The expenses needed to earn said revenue
Sounds simple. However, revenue is not the same as receipts, and expenses don’t necessarily only mean paying bills.
What Is Revenue?
Your NFL esports CPA may record revenue in your bookkeeping when you earn money from winning tournaments, you get paid for streaming your games, or you get endorsements from EA Sports, the NFL, or other merchandising companies. If your accountant is using the accrual accounting method, they should be recording this money as soon as it is earned.
For example, if you win a tournament in March, the money should be recorded in March, even if you don't get the money until May. Later, expenses are matched to the revenue, and this is the income statement for March. However, when you get the check for the tournament in May, the receipt will be recorded in May as a reduction in accounts receivable, but it will not be considered part of May’s revenue because it was already recorded as revenue for March.
What Are Expenses?
Expenses represent other information that your NFL esports accountant will record in your income statement. Sticking with the accrual basis accounting method, expenses that were incurred during the month of March will be recorded in March, even if you don’t pay for them until sometime in the future.
For example, you have a tournament in Florida, so you will book a hotel. You won’t pay for the hotel until you get to Florida in May. However, since the expense was incurred in March, you record it on your March income statement. This is because of the tax planning principal known as the matching principle.
Accuracy is usually the key to the success of your income statement. At Fusion CPA our NFL esports financial advisers can help you prepare not only your income statement but also the other important financial documents needed to run a successful business.
Practical Guidance from Experienced NFL Esports Financial Advisers
Fusion CPA is an Atlanta-based firm. Our focus is helping small to medium-size businesses like yours get the NFL esports CFO business advisory they need. We want to be your partners toward financial success. This means helping you find the right capital structure for your business, identifying growth strategies, improving cash flow, and providing options for debt financing our goal is to help monitor and evaluate the effectiveness of your financial initiatives and work with you to adjust them to enhance your business. Would you benefit from strategic tax and financial planning tailored toward the e-sports industry? If so, let’s get started. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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