Nate Coughran first got an insight into the world of social media through family members who were influencers and used his expertise in accounting to get financial advice. Interaction after interaction, it soon became evident that many accountants weren't equipped to assist social media influencers with their businesses, and some even took advantage of their lack of financial knowledge to provide low-quality services.
Using his past experience working in the auditing field at EY, Coughran then decided to create
As of now, those using Cookie Finance's services have 23 million followers and subscribers combined.
A third of Coughran's clients have sought assistance from a CPA or a bookkeeper in the past, but most of those tax professionals ended up not knowing how to take care of them. One of them was in the midst of changing from an LLC to an S corp but on March 12, three days before the tax filing deadline, her previous accountant dropped her as a client.
"I wanted to rectify that and create a firm that would really help these influencers and create some structure in this chaos," said Coughran. "It's kind of the Wild West right now, and I want to give these professionals someplace to go."
It's cases like this that made Coughran realize that older-generation CPAs rarely have a great understanding of social media outlets like TikTok, YouTube, Instagram and OnlyFans — the top platforms his 75-plus clients operate on. Additionally, other accountants often had difficulty reconciling influencers' bank accounts every month and filling their taxes on time, but the firm aims to help creators abide by their deadlines.
As for the rest of Coughran's clients, who never had formal training in finance nor sought accounting services, they often suffer from a lack of organization or discipline when it comes to handling their rise to fame. Some of them went from making no income to $200,000 or more in a matter of a year, but Coughran said working with one influencer at a time gives him the advantage of knowing exactly what their content is and where they need assistance.
However, this model also comes with its drawbacks, he noted: "All my clients are really busy growing their platform and it sometimes makes it challenging to get their attention, especially when they're making hundreds of thousands of dollars or when they work 14 to 16 hours a day," said Coughran. "Finalizing an LLC is often at the bottom of their to-do list, but what I notice is that they always want to do things right."
Sometimes, issues come from the fact that certain influencers struggle to separate their private lives from their professional lives, as most of them have been mixing the two for years. Coughran said that's why setting up an LLC is critical, to set up different bank accountants and teach creators to use separate credit cards to avoid last-minute surprises in terms of expenses. It generally takes months to go up this learning curve, but he said that ambitious clients strive to improve and always listen to recommendations.
Despite sharing the same problems, there are still several characteristics that separate clients from one another. It notably starts with the niche they choose to specialize in, whose uniqueness allows them to succeed and which results in very unique tax write-offs. For example, a YouTuber client who produces gaming content may write off expenses related to video game purchases for review or recording equipment bought for Twitch. Conversely, a lifestyle influencer can sometimes deduct expenses related to their work decor or specific outfits.
However, Coughran's job is also to debunk misconceptions when it comes to tax deductions, with much of the severe misinformation ironically coming from the rise of
"I help them navigate the financial side of their business, I don't act like an agent or anything like that," explained Coughran. "I can also help them understand whether things match what their agent is charging them and tell them, 'Hey, I've worked with dozens of people from TikTok and it's definitely not X percent, but Y percent.'"
For example, one of Coughran's clients, who's a famous chef on Instagram and TikTok, went from making money from brand sponsorship to selling individual products and diversifying his content. When his most successful clients grow their sources of revenue, Coughran helps them stay compliant and find the right processes and business structure to let them navigate new cash inflows.
It's generally when an influencer reaches that kind of notoriety that they regularly bring in more than $75,000 that Coughran thinks they should seek S corp status. After that, there's a need to set up payroll, which can sometimes be difficult, as there is little to no standard when it comes to an influencer's income.
For influencers, the recommendation is always to remain conservative and not to push the limits of the IRS, but as a whole, it all comes down to a client's willingness to build a legitimate business — which not everyone is interested in.
"There are plenty of influencers who are making great moves, building an amazing community that loves them, and doing everything by the book by working with professional CPAs," said Coughran. "Others, which I like to call fauxfluencers, only disguise themselves as creators so that they can get tax deductions. I never take them as clients, as they are very easy to sniff out."
A potential client, who had over 5,000 followers on Instagram, notably attempted to get $30,000 worth of travel and $15,000 worth of dinners written off, which Coughran considers to be a prime example of someone willing to take advantage of a developing industry and to undermine the work of passionate creators.
He believes the weight of social media is only going to get bigger in the future. Older generations sometimes underestimate how big of a market these influencers represent, amounting to billions of dollars. While Coughran doubts the Big Four will ever take a serious interest in the field, he thinks that more boutique firms like Cookie Finance are likely to emerge. And he welcomes that possibility with open arms.
"It's a single-person customer acquisition: You go after one creator and they're your entire client base," he said. "It's not a company, and it demands a very personalized touch, meaning that you must give more time to clients and that your client payout is going to be very low. However, it's a niche and a scenario that I love to be in."
This is the latest installment in our "Riches in Niches" series of accounting firms that are finding success in specific verticals. You can see other installments here:
