{"id":243529,"date":"2021-11-09T21:53:10","date_gmt":"2021-11-10T04:53:10","guid":{"rendered":"https:\/\/gamesync.consulting\/?p=243529"},"modified":"2023-02-10T22:34:42","modified_gmt":"2023-02-11T05:34:42","slug":"tax-tips-for-esports-center-owners-event-organizers","status":"publish","type":"post","link":"https:\/\/gamesync.consulting\/tax-tips-for-esports-center-owners-event-organizers\/","title":{"rendered":"Tax Tips for Esports Center Owners & Event Organizers"},"content":{"rendered":"[et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.19.1″ _module_preset=”default” text_font_size=”18px” text_line_height=”1.8em” header_2_font=”Poppins|700|||||||” header_2_font_size=”32px” header_2_line_height=”54px” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″]\n

Want to learn more about starting a gaming center? Get a free consultation<\/a>.<\/p>\n

Our consulting business has received various questions over the years regarding how to deal with business setup, tax preparation and filing. We\u2019ve learned through our own experiences and wanted to pass along information that we think will be helpful to you.<\/p>\n

Ten Valuable Tax Tips<\/h2>\n
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Here are ten valuable tax tips for a retail video game entertainment and esports center business:<\/p>\n

1. Keep track of all business expenses: It is important to keep track of all business expenses in order to claim them as deductions on your tax return. This includes things like rent, utilities, and supplies.<\/p>\n

2. Take advantage of small business tax credits: There are a number of small business tax credits available that can help offset taxes, such as the small business health care tax credit, the energy efficient commercial buildings deduction, and the research and development tax credit.<\/p>\n

3. Deduct business use of your home: If you use a portion of your home exclusively for business purposes, you may be able to deduct a portion of your mortgage interest, insurance, and utility costs.<\/p>\n

4. Depreciate your assets: Business assets such as computers, furniture, and equipment can be depreciated over time, which can reduce your tax burden in the short term.<\/p>\n

5. Use the cash method of accounting: The cash method of accounting allows you to recognize income and expenses when they are received or paid, rather than when they are earned or incurred. This can be simpler for a small business and may result in a lower tax burden.<\/p>\n

6. Consider hiring family members: Hiring family members can help reduce your tax burden by allowing you to take advantage of the family employment tax credit.<\/p>\n

7. Take advantage of the home office deduction: If you use a portion of your home exclusively for business purposes, you may be able to claim the home office deduction, which allows you to deduct a portion of your mortgage interest, insurance, and utility costs.<\/p>\n

8. Use a tax-advantaged retirement plan: Setting up a tax-advantaged retirement plan, such as a SEP-IRA or Solo 401(k), can help reduce your tax burden by allowing you to contribute a portion of your income to a retirement account on a tax-deferred basis.<\/p>\n

9. Keep good records: Good record keeping is essential for small businesses. It can help you claim deductions and credits, and it can also help you prepare accurate tax returns.<\/p>\n

10. Work with a tax professional: Working with a tax professional, such as an accountant or tax attorney, can be helpful in navigating the tax rules and regulations that apply to your business. They can provide guidance on tax planning strategies and help you prepare accurate tax returns.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Your Tournament Winners Must Pay Taxes<\/h2>\n

It\u2019s important to understand that the Internal Revenue Service (I.R.S.) requires an individual who accumulates over $600 in a calendar year from tournament winnings to be reported by the person who paid them. This is done via a \u201c1099-Misc\u201d form. The same provision applies to independent contractors who are hired for services. If you learn nothing else from this post, this essential tax tip should be taken to heart: if you run tournaments and your customers win over $600 in a year, their accumulated earnings are subject to tax. Here in California, if you get audited by the State, they will not allow a deduction for it. So if the State sees the payouts and there are no 1099s to go with it, they disallow it.<\/p>\n

The IRS is worse, they will hit you up for the 30% backup withholding that you should have taken out for any $600+ winner that didn\u2019t get a 1099.<\/p>\n

Solution: keep track of winners and once they\u2019re about to hit $600, hand them form W-9 (request for taxpayer ID number). To make things easy, pre-fill out forms with your info (on the space next to line 5 and 6, you put requester\u2019s name and address). Keep the forms ready to go in a drawer and train your employees to track winners and distribute forms as needed.<\/p>\n

Gamers may not be into this. If winners refuse, you are then required to withhold 30% of their prize money. If they ask why, the answer is simple: it\u2019s the law. There is an education process involved here, but once they understand this (and especially when they see a big withholding staring them in the face), they should be more than happy to comply. And as more and more esports players are taxed nationwide due to the spotlight that\u2019s being put on the sector due to it\u2019s explosive growth, it\u2019s really the best practice way to go for everyone.<\/p>\n

Your Tournament Organizers Should Be 1099\u2019ed, Preferably As Business Entities<\/h2>\n

The State of California now has very strict rules about who can and cannot be an independent contractor. But even if you\u2019re not in California, the basic premise remains the same: your non-employee tournament organizer (TO), who comes in once a week or once a month to execute on the event side and run a tournament at your center, needs to be given a 1099 for over $600 earned over the course of a calendar year. It\u2019s due by January 31 \u2013 we advise clients to ensure their TO\u2019s are legitimate business owners with a company name and Employment Identification Number (EIN). Get that information to your CPA, or if you do your own tax prep, ensure you file a 1099 for them by the deadline.<\/p>\n

Invoicing<\/h2>\n

Throughout the year, any time your provider runs an event at your venue and bills you for their time, make sure you receive invoices, even if you pay them cash. (Note: the best practice method in this case is to have them sign a cash receipt at the time they get paid). There are free invoicing tools and websites available for them to send you invoices (have them mark it paid once they\u2019ve been paid).<\/p>\n

If the TO is confused as to why he should set up a small business, in addition to the aforementioned legal reasons, you can explain to the TO that he will also be able to take on other customers who would likely demand the same information, plus there are numerous tax benefits to owning a small business, including the ability to deduct for legitimate expenses. If the TO needs help with the process, you may want to consider offering them some assistance if they\u2019re inexperienced in these areas. This may cost you some time and money up front, but the peace of mind knowing that things are set up right going forward will be well worth it.<\/p>\n

You Can Become a Corporation and Hire TO\u2019s as Employees<\/h2>\n

Another option to explore is moving your business into a corporation (if it\u2019s not already) and hiring your tournament organizers, effectively making them employees of your company. They would then track their hours and be paid a salary accordingly. This is the best way to avoid independent contractor issues or disputes, but it may not make sense if the person is rarely on-site or is paid based on attendance and for small events.<\/p>\n

Want to learn more about starting a gaming center? Get a free consultation<\/a>.<\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]\n","protected":false},"excerpt":{"rendered":"

Our consulting business has received various questions over the years regarding how to deal with business setup, tax preparation and filing. We\u2019ve learned through our own experiences…<\/p>\n","protected":false},"author":5,"featured_media":1115,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[9],"tags":[],"yoast_head":"\nTax Tips for Esports Center Owners & Event Organizers - GameSync Consulting<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/gamesync.consulting\/tax-tips-for-esports-center-owners-event-organizers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax Tips for Esports Center Owners & Event Organizers - GameSync Consulting\" \/>\n<meta property=\"og:description\" content=\"Our consulting business has received various questions over the years regarding how to deal with business setup, tax preparation and filing. 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