Crowdfunding: How to make the most out of your deductions

Crowdfunding has become extremely popular over recent years, thanks to online apps and forums like Kickstarter, GoFundMe and Indiegogo.

As the name suggests, crowdfunding is a process where people can donate their own money towards a project or cause. In recent times, we’ve seen crowdfunding help get a considerable number of small businesses or entrepreneurial ventures off the ground.

So if you have already delved into crowdfunding or are looking to do so, be mindful that sometimes crowdfunding can affect your taxes.

What you need to know

In some cases, you can claim a deduction for your contribution if you provide crowdfunding to a project or cause that will increase your business’ revenue.

In order to make the most out of your deductions, you need to keep records of all income and expenses related to crowdfunding.

Also, you will also need to consider if monies received through crowdfunding or in return for your contribution classify as assessable income, which you will then need to include on your income tax return.

Crowdfunding can be a great way to not only receive donations towards a cause but also build an online community that will follow your venture and see where their generous donation will go.

If you are looking at starting a crowdfunding campaign, get in touch with the SWAG Bookkeeping team to help get your new venture – and finances – on the right track.