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Esports Racing: What Athletes Should Know About Accounting & Taxes

There are several ways that an e-sports athlete who competes in racing tournaments may make money. These include winning tournaments, getting sponsorships, getting hired by teams, and generating revenue through streaming. When competing in e-sports goes from being a hobby and becomes a business, there are several esports racing athlete bookkeeping, tax planning, and accounting factors that must be considered.

How Can An Esports Racing Athlete Track Working Capital?

As an e-sports athlete, the concept of working capital and liquidity may impact the financial success of your business and your esports tax planning. Working capital is your current assets minus your current liabilities. You might have gaming consoles, gaming computers, expensive streaming cameras, security systems, vehicles, and other assets needed for your e-sports athlete business. You may also have liabilities, including credits, debt, and payments. An esports athlete financial adviser may recommend for you to improve or increase your working capital to include the sale of long-term assets, investments by owners, and improving the profitability of your business operations. Esports athlete CPAs may use factors such as how quickly you get paid from tournaments, streaming revenue, or advertisements to determine the amount of working capital you need. For example, if you are getting paid every week, you may not need as much working capital as if you were getting paid for your services every month or every few months.

Accounting For Esports Racing: Determining Liquidity

Liquidity is having the cash to pay your obligations when they are due. This usually requires you to take the assets that are recorded in your bookkeeping and turn them into cash. Without liquidity, your esports racing business may not operate efficiently. An esports athlete financial adviser might recommend increasing liquidity to include increasing working capital using some of the above-mentioned steps. Or converting your assets into cash quicker. Another option may be delaying the payment of long-term or current liabilities. You could have many assets, leading to a lot of working capital. However, if you are not able to convert that capital into liquidity, you may not pay your obligations on the agreed-upon dates. Similarly, if you have a contract with ad companies, for streaming revenue, or payments due for tournament winnings that you have not received, on paper you may be profitable, but you may not be able to cover your obligations. Fusion CPA has a team of esports athlete accountants offers practical advice based on your current financial standing that may help you improve your working capital and liquidity.

Using a Esports Athlete CFO Business Advisory Firm to Identify the Root Cause of Changes in Working Capital or Liquidity

Realizing that you have an issue with liquidity or working capital is one thing, but knowing why the issue exists is completely different. Here at Fusion CPA, our esports financial advisors are committed to helping you “drill down” and correct issues with liquidity and working capital. Our goal is to identify strategies you can take to get advertising firms, streaming companies, and others who owe you money to pay your invoices in a timely way. We also offer esports bookkeeping and tax planning services to help increase your reporting accuracy, minimize tax liability, and maximize the amount of cash you have left to cover other obligations. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!

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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.