As the world comes to grips with the changes a global pandemic is bringing about, many have tried to find a semblance of normalcy by enjoying virtual forms of activities they took part in or watched live. Sports are no different. You can’t just hop on ESPN and watch your favorite NHL game. However, there are several e-sports athletes feverishly competing for fans and earning sponsorships and a sizable income.
For these e-sports athletes, the growing popularity of their sport and the money they are earning could mean increased tax liability. However, by learning a few simple principles of NHL esports bookkeeping, tax planning, and accounting, they may minimize their tax liability and hold onto more of their winnings.
What Is a Balance Sheet? How Is It Used in NHL Esports Tax Planning?
A NHL esports accountant uses a balance sheet to record three key pieces of information.
A balance sheet is an NHL esports bookkeeping tool designed to give the e-sports athlete a snapshot of their financial position at a specific point in time. For example, a balance sheet with the date March 1 will show the balance in the accounts after all transactions predating March 1 have been recorded. A balance sheet is usually a major key in tax planning. It helps identify what assets and liabilities a business has during the tax year.
What Might a NHL Esports CPA Consider an Asset On a Balance Sheet?
An e-sports athlete may have assets that include cash in the bank, gaming consoles, gaming computers, monitors, cameras used for streaming, vehicles used for work, etc. Accounts receivable is money that has not been paid to the e-sports athlete for tournaments won, advertisements done, or streaming revenue.
There are other less commonly thought of assets, such as depreciation. The NHL esports accountants here at Fusion CPA offer services to help e-sports athletes identify the assets they have, making sure they are accurately recorded in their bookkeeping and reflected in their NHL esports tax planning.
How Would a NHL Esports CPA Record Liabilities on a Balance Sheet?
Liabilities or obligations that an e-sports player or his company has include loans, debts, or credits for items received but not yet paid for. Another liability could be the money that an e-sports athlete is paid $600 before he earns the money.
Let’s say an athlete gets paid to make an appearance. The appearance is scheduled in March, but he gets paid in February. The e-sports athlete would have a cash receipt for the amount paid, but he does not have revenue until he earned it by fulfilling his appearance obligation. In February the athlete's business will show that their cash asset increased by $600, but they will also have a liability of $600. They have the liability to show up at the appearance or to return the money.
Getting Practical Financial Advice
A balance sheet is just one of five principal financial documents most businesses need. There may be other accounting and tax planning documents or processes you need to manage or create. Here at Fusion CPA we offer a wide range of financial services that may help you prepare these financial documents. We understand the impact the information on them has on your cash flow, tax liability, and profitability. We are also skilled in helping professionals like you hone financial operations. Fusion CPA has a team of NHL esports financial advisers who are keyed into the unique accounting and tax challenges e-sports athletes face. We want to help you grow your business and grow your brand financially. 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.