Kickstarter and the Tax Bill
If you’re planning on raising capital for your project or startup you might have considered creating a Kickstarter campaign; it’s an easy way to hit the jackpot and get started, right? But what about the tax implications of crowdfundng?
Crowdfunding is not comparable to a lottery win; it isn’t a tax free jackpot or a pot of gold exempt from the normal business, legal, and financial regulations. Rather, crowdfunding and Kickstarter campaigns should be viewed in the same way as any other type of income; you will be liable for tax and you should seek financial advice (read Kickstarter’s official advice here).
For example, a startup sending their backers/contributors some sort of reward, or goodies in return for their backing, will more than likely be viewed as a traditional business selling goods and services, and therefore the usual rules on tax will apply.
We would always encourage you to try new things and test your ideas, and Kickstarter is a great platform for raising money for your project or startup; that being said, if you are going to generate your income in this way, be prepared to factor in the tax bill which will inevitably arrive at your door. Take financial advice, be clued up on the reality of raising a “quick buck” and work out a realistic financial plan.