Substack has become a popular platform for writers and publishers to monetize their content and build a loyal subscriber base. While the platform offers a variety of features to help creators earn money, one of the most important aspects is understanding how payouts work.
Substack payouts are processed through Stripe, a third-party payment processor. The platform offers a straightforward payout process that allows creators to receive their earnings directly in their bank account within 48 hours of each transaction. However, it is important to note that there are fees associated with payouts, and creators must set up their payment information correctly to avoid any issues.
Understanding Substack’s payout methods is crucial for creators looking to maximize their earnings. In this article, we’ll provide an overview of Substack’s payout process, including how to set up payment information, the frequency and timing of payouts, handling fees and charges, tax implications, and troubleshooting common issues. By the end of this article, creators will have a better understanding of how to earn money on Substack and what best practices to follow for maximizing their earnings.
- Substack offers a straightforward payout process that allows creators to receive their earnings directly in their bank account within 48 hours of each transaction.
- Creators must set up their payment information correctly to avoid any issues and understand the fees associated with payouts.
- Understanding Substack’s payout methods is crucial for creators looking to maximize their earnings.
Understanding Substack’s Monetization Model
Substack provides a unique monetization model that allows writers to earn money directly from their audience. The primary revenue stream on Substack is through paid subscriptions. However, there are several other ways to generate income on the platform, including sponsored content, affiliate marketing, and leveraging your audience.
Substack monetization is primarily based on paid subscriptions, where readers pay a monthly or annual fee to access exclusive content. This model of monetization offers a sustainable income for content creators by providing a steady stream of revenue, which is not reliant on advertising or sponsorship. Substack’s platform fee is 10%, and Stripe is their payment processor, charging a credit card fee of 2.9% + $0.30 per transaction fee and a billion fee for recurring subscriptions of 0.5%. Subscription plans, such as monthly and annual, are set by writers.
Donations and Tips
Substack also allows writers to receive donations and tips from their readers. This feature enables readers to support their favorite writers by making a one-time or recurring donation. The donations and tips feature is an excellent way to supplement subscription revenue and generate additional income. However, it’s worth noting that this feature is entirely optional, and writers can choose to disable it if they prefer not to receive donations.
In conclusion, Substack’s monetization model offers writers a unique opportunity to earn money directly from their readers. By providing a platform that allows writers to monetize their content through paid subscriptions, donations, and tips, Substack offers a sustainable income stream that is not reliant on advertising or sponsorship.
Payout Methods Overview
Substack offers three payout methods for its writers: Direct Deposit, PayPal, and Stripe.
Direct Deposit is the most popular payout method used by Substack writers. It is a convenient and secure way to receive payouts directly to your bank account. To set up Direct Deposit, writers need to provide their bank account and routing number. Payments usually arrive in your bank account within 48 hours of each transaction.
PayPal is another payout method available to Substack writers. PayPal is a popular payment service that allows you to receive payments from anywhere in the world. To set up PayPal as your payout method, you need to provide your PayPal email address. Payments are usually processed within 48 hours of each transaction.
Stripe is Substack’s payment processor and is used to process all payments made through the platform. Stripe charges a credit card fee of 2.9% + $0.30 per transaction fee and a billion fee for recurring subscriptions of 0.5%. Subscription plans, such as monthly and annual, are set by writers.
In conclusion, Substack provides three payout methods for its writers: Direct Deposit, PayPal, and Stripe. Each payout method has its own advantages and disadvantages, so writers should choose the one that best suits their needs.
Setting Up Payment Information
Setting up payment information is an essential step to start receiving payouts on Substack. In this section, we’ll cover the two subsections related to setting up payment information: Account Verification and Tax Information.
Before setting up payment information, users need to verify their Substack account. Verification is necessary to ensure that the user is a legitimate entity and not a fraudulent one. To verify the account, users need to provide their name, address, and bank account information. Once verified, users can proceed to set up payment information.
Substack requires users to provide tax information to comply with US tax laws. Users need to provide their tax identification number (TIN) or social security number (SSN). If the user is not a US resident, they need to provide a foreign tax identification number (FTIN) instead. Substack also requires users to fill out a tax form to determine the tax rate that applies to their payouts.
Users can set up payment information by clicking on “Payments” in the left-hand menu of their Substack dashboard. From there, they can connect their Stripe account to receive payouts. Substack uses Stripe as its payment processor, which is a secure and reliable platform for online payments.
In conclusion, setting up payment information on Substack is a straightforward process that requires users to verify their account and provide tax information. Once completed, users can connect their Stripe account and start receiving payouts.
Frequency and Timing of Payouts
Substack offers a simple and transparent payout system for its writers. As a writer, you can receive payments for your published content on a monthly basis. However, there are certain criteria that must be met before the payout is made.
The payout for your Substack content is made on a monthly basis. Substack pays its writers on the first day of every month for the previous month’s earnings. For example, if you earned $500 in the month of January, you will receive the payout on February 1st.
Thresholds for Payouts
To receive a payout for your content, you must meet certain thresholds. The minimum payout threshold for Substack is $5. This means that you must earn at least $5 in a month to receive a payout. If you earn less than $5 in a month, the earnings will be carried forward to the next month until the minimum threshold is met.
It is important to note that Substack charges a fee of 10% on payouts. This means that if you earn $100 in a month, you will receive $90 as the payout. The fee is automatically deducted from the payout amount.
In conclusion, Substack offers a simple and transparent payout system for its writers. The payout is made on a monthly basis for the previous month’s earnings, and the minimum payout threshold is $5. As a writer, it is important to keep track of your earnings and ensure that you meet the minimum threshold to receive a payout.
Handling Fees and Charges
When it comes to handling fees and charges on Substack, there are a few things to keep in mind. First, Substack does not charge any additional fees for paid subscriptions. However, Stripe, the payment processor used by Substack, does charge fees for credit card transactions and recurring payments.
For credit card transactions, Stripe charges a fee of 2.9% + $0.30 per transaction. For recurring payments, Stripe charges a billing fee of 0.5%. Additionally, if currency conversion is required, Stripe may apply a fee of 1% to 2%.
Currency Conversion Fees
If a reader is paying for a subscription using a non-credit card payment method, such as direct debit, they may see the option to pay using a local currency. If currency conversion is required, Stripe may apply a fee of 1% to 2%.
It’s important to note that Substack does not have control over these fees, as they are set by Stripe. However, Substack does provide detailed information on fees and charges on their website, so writers and readers can make informed decisions about payment methods.
Overall, while there are some fees and charges associated with handling payments on Substack, they are standard for online transactions and are clearly outlined by the payment processor.
For US-based creators, Substack payments are treated as income and are subject to federal income tax. Additionally, state income tax may also apply depending on the state where the creator resides. It is important for creators to keep track of their earnings and report them accurately on their tax returns. Substack provides creators with a 1099 form at the end of each year, which summarizes their earnings for tax purposes.
Creators who earn more than $20,000 and have more than 200 transactions in a year are also subject to 1099-K reporting requirements. This means that Substack will report the creator’s earnings to the IRS and the creator will receive a copy of the 1099-K form.
For international creators, the tax implications of Substack payments vary depending on the country where the creator resides. Some countries have specific tax laws for online income, while others treat Substack payments as regular income. Creators should consult with a tax professional in their country to determine their tax obligations.
In some cases, Substack may be required to withhold taxes from payments to international creators. This depends on the tax laws of the creator’s country and the tax treaty between that country and the United States. If Substack is required to withhold taxes, the creator will receive a reduced payment and a withholding statement for their tax records.
It is important for international creators to keep accurate records of their earnings and any taxes paid to avoid double taxation. Substack provides creators with a payment history that includes the amount paid and any taxes withheld, which can be used for tax purposes.
Troubleshooting Common Issues
If a writer has not received their payment within 48 hours of a transaction, there may be a delay in processing. In such cases, writers can contact Substack support to inquire about the status of their payment.
There may be several reasons why a payment is delayed, including issues with the payment processor or the writer’s bank account. To avoid any further delays, writers should ensure that their payment information is up-to-date and accurate.
If a subscriber’s payment fails, Substack automatically retries the payment and sends an email to the subscriber requesting them to update their payment information. Stripe, Substack’s payment processor, will generally retry payments three times before canceling a paid subscription.
To avoid failed transactions, writers should encourage subscribers to keep their payment information up-to-date. Additionally, writers can use Substack’s “Payment Retry” feature to manually retry a failed payment.
In the event that a payment cannot be processed, writers should contact Substack support for assistance.
Best Practices for Maximizing Earnings
Engaging Content Strategies
To maximize earnings on Substack, creators need to focus on creating engaging content that resonates with their audience. This means taking the time to understand their readers and what they are looking for in a newsletter. Creators should strive to create content that is informative, entertaining, and valuable to their subscribers.
One way to create engaging content is by using storytelling. By weaving stories into their newsletters, creators can capture their readers’ attention and keep them engaged. Additionally, creators should use a conversational tone and avoid being too formal or academic.
Another way to create engaging content is by including multimedia elements such as images, videos, and audio clips. This can help break up the text and make the newsletter more visually appealing.
To attract more subscribers and increase earnings, creators need to promote their newsletters effectively. One way to do this is by leveraging social media platforms such as Twitter, Facebook, and Instagram. Creators should share their newsletter links on these platforms and encourage their followers to subscribe.
Another way to promote newsletters is by collaborating with other creators. This can help expose their newsletter to a wider audience and attract new subscribers.
Lastly, creators should consider offering exclusive content to their paid subscribers. This can include access to premium content, early access to new content, or exclusive merchandise. By offering these perks, creators can incentivize their readers to upgrade to a paid subscription and increase their earnings.