Keeping track of income and expenses as a blogger can be a giant pain in the butt. But it's necessary that you're accurately keeping track of your income and expenses. You'll have to report it to the IRS come tax time. Today I wanted to share my tips on accounting for bloggers. I also have a tax checklist that you can download below.
Keep Track of it All
Any and all income and expenses HAS to be recorded. In the event that you get audited, you'll want to make sure you have accurate records.
Separate Account & Cards
Once you've begun making money from your blog, create a separate account just for your business. Not only is it easier to see how much money you're making and spending on your business, but it's that much easier to keep track of those business related expenses. And, you'll feel super fancy when you tell your friends, oh no, this credit card is only for business use.
There are tons of phone apps and web applications that will help you keep track of those pesky expenses and income. Wave and Quickbooks are two very popular accounting applications, varying in cost. MileIQ is something I've recently discovered and I love it. It automatically tracks your mileage and then you can go in and say yes this was a business trip or no this was personal, and then it will show how much money can be taken off as a deduction come tax time.
Whether it's big or small, keep track of every expense. It will certainly help you come tax time when you get to pay less in taxes, or if you're making quarterly payments, you may even get some back!
If you're a pretty small blogger who doesn't make a full-time income from your blog, you can probably find a calculator online that can help you estimate how much tax you'll pay the following spring. It's a good idea to take these monthly amounts out of your income each month and stick them into a savings account that you can't touch. This way, even if you put away more than you need for taxes, you'll have a cushion to fall back on during that lovely tax season.
Calculate your yearly income each month by taking the previous month(s) income and adding it all together and find the average. Then, times that by twelve and you've got your predicted income. Obviously, this may go up or down, but it will give you somewhat of an idea of how much you'll need to be putting away in taxes.
If you aren't great with numbers or don't want to mess anything up, it's a good idea to hire an accountant, preferably one that specializes in small businesses/self-employment taxes and accounting.
I've touched on this slightly in this post, but tax deductions are going to save. your. butt come tax time. You can pretty much take off anything you used in your business. This means, if you rent an office you can deduct that, but if you work from home you can also deduct some of your rent or mortgage payment. In addition, if your business requires internet or phone service, that can usually be a deduction as well.
Then there's the obvious deductions. Anything you spend getting your blog up and running, like domain, hosting, your theme/designer, etc. You can also deduct anything you buy specifically to use on your blog, like things for posts, or a background on Etsy that you'll use as your header.
Supplies like cameras, lights, a new computer etc can all be taken off as a deduction. And remember, you can still deduct things like charitable donations, health expenses and education expenses like any other person.
Get your free, downloadable tax checklist here:
Thanks for reading!