As I was reading Yakezie Member posts months ago, I realized that many started off like myself as bloggers looking towards reaching a personal goal. Some of us saw blogging as an opportunity to get more educated on our finances and take responsibility for our futures. Along the way, we noticed that it also became a legitimate and alternative source of income.
With January here and many people thinking about their taxes, I thought it would be a perfect time to go ahead and share some tax tips for bloggers.
Blogging as a Business, Not a Hobby
One of the best thing you can do for yourself financially is develop an alternative income stream. As you know, blogging can be a viable source of income, especially if you treat it like a real business instead of just a hobby.
Keep Your Paperwork Organized
You have a responsibility to report to the IRS all your blogging income. The easiest way to mess that up is by keeping shoddy records for your blogging work. You have to be on top of your paperwork. When I say paperwork, I also mean any digital receipts you may have as well. I use Evernote to help me keep my receipts in order and as a backup to some of my paper records. There is also DropBox if you need a backup for all your business files.
Business Expenses in Blogging
Running a successful website isn’t always cheap, but the good news is that your business expenses can help you come tax time. What can you include as business expenses? Here’s a list to get you started along with some relevant questions and comments.
- Subcontractors – Do have a staff writer on board for your website? Make sure you have an invoice to be able to deduct this expense.
- Depreciation of Office Equipment – If you’re like me you have a devoted business computer which you can take depreciation on.
- Legal and Other Professional Services – Do you have someone handle your bookkeeping or taxes? These important services are legitimate business expenses.
- Office Supplies and Expenses – Do you have a dedicated location where you work? Have you been keeping receipts for the office supplies you’ve needed through out the year?
- Business Travel – If you attended a blogger or industry related conference, make sure you’ve kept all your receipts for lodging, meals, and travel expenses. Ever year I go up to my Lake Tahoe vacation rental for a board meeting. This is legit business travel.
- Advertising– Getting the word out on your blog is more than just placing ads on other sites. Did you know that you can count blog contest prizes as an expense? It’s a form of promotion and advertising for your site.
- Website Expenses – Your web hosting, domain costs, and other site fees are considered business expenses. If you pay stock photography fees for pictures on your site, that’s also another expense to track.
- Continuous Education – If you bought books or have subscriptions that you’ve used to improve your blogging business like magazine and education sites, that’s a business expense.
My last piece of advice is have a professional review your taxes to make sure you have it done properly, especially if you’re new to blogging as a business. It may cost money upfront, but it’s well worth the investment.
Be on Top of Estimated Taxes
Don’t wait until April 15th (or the 18th this year) to pay taxes. Your estimated taxes are due through out the year. Staying on top of them is important so set aside a certain percentage of your income to be dedicated to paying your taxes. Here are the general deadlines for estimated taxes through out the year.
- April 15th
- June 15th
- September 15th
- January 15th (of the following year)
Other Tax Tips and Ideas on Blogging
I know there is a wealth of information and personal experience from the blogging community. If you have any tips, stories, or ideas to share, please do. I think it’ll help everyone immensely. Please keep in mind that these are tips and you should check with a financial professional to make sure your business can take certain deduction and expenses.
Updated on 2/10/2015
Great tips.
I didn’t plan on making money with my blog the first year, but I did and it is a good problem to have. I have all my information in a spreadsheet and such, but I will have to tackle the task of reporting ‘non-job income’ for the first time this year, which will be a learning experience.
Are you incorporated?
Congrats on the little-one-to-be! Kids are a wonderful thing!
I have an LLC set up for our business. It’s a learning process and we’re hoping to getting a bookkeeper soon.
Did you setup the LLC yourself or did you have someone assist? I’ve not yet looked into it, but I’d think it would be manageable to do without assistance. Please let me know your personal experience with it. And thanks for the great tips!
I decided to do two things to make my life easier when it comes to my blogging income: Use Quickbooks, and I also opened a business checking and savings, along with a business credit card. I declined the credit card, but the bank somehow decided to give me one anyway. I also converted my Premium PayPal account to Business (I kept my Personal PayPal account personal so I don’t have to mix expenses). I’ve already been using Quickbooks for my husband’s two businesses, so I have already somewhat mastered the software. Now it’s just a matter of making sure I enter transactions as the year goes by. It will make 2011 taxes much easier.
I’m using spreadsheets right now to track my expenses, so far business income and expenses are easy to track That may change and right now Quickbooks looks like the way to go.
I think you can also use GNUCash, or an equivalent to do it. The only thing is they tend to not be as polished, and can sometimes be more difficult. Quickbooks has a very pretty interface.
Great article Elle. That’s a great point about using invoices for staff writers and other subcontractors.
Did you set up your LLC right out of the gate or did you wait until your earnings reached a certain level?
We waited a bit until income was consistent and came from a bigger variety of sources. It’s a learning process. SCORE has some great resources online and at local chapters.
I’ll need to look into finding an advisor once we’re ready to take the leap. They offer lots of seminars around us, they’re just too early for me to get to in time after work.
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Hey Elle, Those are some great tips! Making money for your work is when it really gets fun!
Another spin on the office expenses is if you have a dedicated room in your home (the home office), you can even take deductions on your mortgage and utilities for that % of your home (if it’s only used for business/blogging purposes). Also, with side income, you can make tax deductible contributinos to a SEP plan for retirement which is a nice bonus as well.
I’m also curious at what income threshold (or other factor) you decided it made sense to become an LLC (if you don’t mind sharing).
We kept going back and forth on this. When I was making more than $1,000/month from blogging related work (writing/ads) on average is when we moved from SP to LLC, give or take a few months. We’re not experts by any means, but we decided to go ahead and get more serious about it.
Great tips Elle. I am terrible at book keeping. :(
I’ll at least try to put all the receipts in one spot though.
I am also interested in LLC. Can you write up cost/benefit? Maybe post it at your site.
That would be extremely educational to see. Thanks for sharing the thresh hold that you both chose. The more information the better!
Those are great tips! I’m like Mrs. Accountability and use Quickbooks to keep track of all my income and expenses. I’ve been using it for a while for a prior business, and found it easy to use for blogging.
Great tips! I have just been using an excel spreadsheet but as I start to expand it may make sense to use quickbook (although I have NO idea what it is lol) – and even incorporate/create an LLC
Thanks for sharing. I have a brother and son who are CPA’s so I have a lot of help with these issues.
Keeping up, and keeping personal and business income/expenses separately are most important!
If you get some tips from them on blogging as a business, please share!
Wow, you DO have excellent tax planning resources, don’t you, lol! :)
What forms are typical to fill out? I am clueless on how to proceed with this.
Each state has their own paperwork- please check your state’s Dept of Commerce for details on what you’d need. There are companies that offer to do all the paperwork for a flat fee, but you may find the paperwork easy enough for you to take care of yourself.
That’s what we’ll probably do as well. I can’t imagine that the paperwork will be much worse than a 501 C 3 application which I’ve been helping my church work on.
Great article. Wow do all corporate entities have to pay/file taxes 4 times a year??
not necessarily. this depends on the revenues you are generating. there are ways to get exemptions. the idea behind paying taxes 4 times a year is so that at year end uncle SAM has 100% of what he is owed. employees do it too, except much often – every month!
It’s funny because you really don’t think of it in those terms, but many employees do have it drafted out 12-24 times a year!
It’s actually pretty easy to pay quarterly once you’re registered with EFTPS.It’s no different than paying a bill through our bank.
[…] was a great post on Yakezie (written by Elle from Couple Money) talking about how to pay taxes on your blogging income. I make a small amount from this site, and am very happy to have the guidance. The only things […]
Thanks for the information. I just started blogging so hopefully I can use this information this time next year :)
You can grow a lot in a year. Keep looking forward and working hard! :)
Great tips. I currently use Mint.com for personal finance tracking. I think I can add an additional category for business related items. Have a ways to go before switching to LLC, but always interested in learning. Thanks! :)
Same here. It will be some time before we actually can justify incorporating, or setting up the LLC. We use Mint for personal finances and it is amazing.
I use Quickbooks and an excel spreadsheet to track my blogging income. Since I’m just beginning to generate consistent income through blogging, I didn’t send in estimated taxes last year. I’m guessing I might have to do that this year for 2011 taxes. Oh, taxes, who likes them?
I generally don’t like them either, but I’d be lying if I said I wanted to offroad my commute to work in by subcompact! lol!
[…] Like to Buy a $75,000 Ford Expedition?Elle from Couple Money guest posts on Yakezie and gives us blogging tax tips for 2011Over at Own the Dollar, we learn how to get interest working for you instead of others 30 Year […]
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Quickbooks is great. I have a spreadsheet I compiled compatible for Quicbooks which my VA updates for me monthly. It has all the vendors on the left along with their logins, and across the sheet each column represents a month. She simply logins to each account every month and records the payment on the spreadsheet. All payments are through paypal and direct deposit (with a handful of checks) come to me so there are adequate segregation of duties in place :)
How much does your VA cost per hour if you don’t mind me asking? I’ve been on a VA information binge lately because I imagine we will be needing one in the future. I know it depends on the duties, but I’m just curious. If it is too private then I understand that as well :)
Thanks for the tips! They will come in handy in a month or two.
Hello Elle!
Timely article. I have not been paying the quarterly estimated taxes, but this year is really the first year that I began to make money (woohoo!). Next year I will try to be more diligent…but next week?!? Eek:).
Depending on other sources of income you may not have to worry about quarterly taxes. If say, your spouse works or you have a full-time job outside of your site you may be paying enough taxes to cover your blog taxes. Of course, it’s best to check with a professional in that area.
That’s neat to know. I’ll need to look into that possibility. I’d hate to be paying out too much interest free!
It always sneaks up! I try to get it done early, but it always seems like it is around the corner.
Great article! As of yet my blogging income is not nearly enough to worry about, but I definitely will check our SCORE for more information. Thanks
SCORE has been amazing in the past. I need to start bothering mine again too.
I just thought of something else… if you do have a staff writer (subcontractor), and paid that person over $600 in 2010, you need to issue a 1099-MISC by January 31, 2011. You should also consider getting a W9 from your subcontractors. Also, one reason that prompted me to finally get Quickbooks set up is because I like the idea of setting up an invoice for customers, then the invoice is sitting there unpaid. I could easily forget that payment is pending, but with outstanding invoices I won’t. I found that Quickbooks had quite a learning curve, I needed the help of an experienced user for questions that weren’t answered by “dummy” books. I also would not recommend Simple Start QB, I was sorry I bought that and started with it. When I converted to QB Pro, it was difficult. I have a friend who loves the online version of QB. I’m still on the fence as to whether I’m totally happy with Quickbooks as they do force you to upgrade eventually. But for now since I’m using it for my husband’s businesses, figured I may as well use it for mine, too.
You make good points about the invoicing. I’ve never worked with an invoicing software but I can definitely see the advantages to it!
[…] babies. Got to admit I like sleeping on my flights. Elle also writes a helpful post on “Blogging Tax Tips” which I, and many of my peers will need […]
Great tips and I need to take a look at Evernote.
I’ve got it pulled up right now. I’m tryign to figure out if I want to sign up for their service. There are so many neat programs out there, but I don’t use many of them because I don’t have the time to be logging into all of these different systems and fragmenting the data. I like to use Mozilla Thunderbird for a lot of my notes right now. (xnote addon)
Great advice on Evernote, I have been using it for my blog ideas but not for my finances. i have some small income to report for last year, but not too much (this will change for 2011). I have been going back and forth about establishing an LLC as currently i live outside the US so I can claim exemptions on income up to about $96,000. I’m used to dealing with this in my main job but have no idea how this will relate the blogging world yet.
Do you mainly like evernote because it makes information available on the cloud, or are there additional features that you really like to use with them? I’ve been thinking of the best way to keep track of ideas, plans, etc.
Another good software for bloggers to use to keep track of income and expenses is outright.com small business accounting software. It’s free, and it works great for tracking all of this stuff for tax purposes. Also it integrates with a lot of banks, and with paypal.
As far as estimated taxes, if you don’t want to make estimated tax payments, you can always increase your withholding at your day job as well – if you have one. Personally, I make the estimated tax payments – which it should be noted – aren’t exactly quarterly. They are spaced out – sometimes two months, sometimes more.
As far as business structure, mike at obliviousinvestor.com has a good easy to read book on the topic. http://www.obliviousinvestor.com/llc-vs-s-corp-vs-c-corp/
I’ve been using outright.com for two years and just learned that they are experimenting with the idea of charging. New members get a 30 day FREE Trial and pay $9.99 after that. I can’t remember if it was monthly or annually.
Wow, this comment had a ton of great information! Now, looking at outright.com, it appears that it costs money. Has this changed since you last posted this, or am I missing something important? Thank you in advance for your help :).
This is great advice. I’m hoping to incorporate soon. I’ve been doing taxes for the 1099 jobs that I work for the past couple of years and I’d like to make it more legitimate.
I have used Outright for the past three years to manage my business income and expenses. They make keeping my documents organized and easy to pull together at tax time.
One of my goals for this year is to make my business an LLC and set up a separate business account for my earnings.
Do you have to pay a 9.95 a month fee for it? MoneySmarts said it was free, and I’m wondering if this has changed in the last 3 months.
Great helpful info from everyone. One question I have is doing my taxes. I typically do my own taxes but now that I have some income (and expenses) from my blog, I want to take these to an accountant or tax professional. Have you found that most can handle a blogger or do you need to find someone that’s more experienced with working with bloggers/writers? thx
[…] babies. Got to admit I like sleeping on my flights. Elle also writes a helpful post on “Blogging Tax Tips” which I, and many of my peers will need […]
[…] it was pretty much stagnant there on out. After finishing my income (with some great tips from Elle over at yakezie on my blog income). I came to deductions. There were quite a few deductions available, but […]
I’m using gnuCash — it’s a little painful to do the data entry but once you get used to the interface it’s pretty straightforward. I like how you can setup scheduled transactions, and the way I handle my hosting now is I amortize the expense over the months — that way I can see what my real gain/loss is. It’s also free, unlike QuickBooks ;)
Glad to see someone else uses GNUCash, I’m considering using this to start with. I’ve used it for personal finances, and that was a bit painful. Hopefully Blog income will be easier.
I’m doing my taxes now and googled “Blogging Tax Tips” and here this article was! lol. Thanks for highlighting these tips. Very helpful. I just created an income statement, balance sheet, and cash flow statement! Kinda fun! Makes things much more real when you actually have numbers to input.
Best, Sam
That’s got to be cool to see Yakezie popping up at the top! What software are you using Sam?
Hey great minds think alike! I just scheduled a post for tomorrow re: tax deductions for blogging as a business (but geared towards Canadian taxes) :)
Those are great tips. haha, my business spreadsheet consists of a calender (one of those free ones you get from banks) with my income and expenses at the bottom! I need to step it up and be a bit more organized ;)
If it makes you feel better, you’re probably still ahead of the curve with your current system, lol! :)
Really useful tips. I am definitely deducting every expense associated with blogging!
These are some great tips. I was interested in reading what was considered a business expense for blogging, so this is very helpful!
Yes sir. Sam found this site by googling, so google clearly knows this is the best resource. :)
Thanks for the tips. I need to do a better job keeping track of everything and staying more organized b/c that makes things so much easier come tax time. Congrats on your pregnancy, that’s awesome!
I forgot to say congratulations! Boy, girl, or surprise?
Great info! I know taxes for blogging has been so confusing for me! I track everything on a spreadsheet…
I’m using a spreadsheet as well, but I would definitely like to step it up a bit so I don’t have to learn a whole new system when things get really busy!
Those are some useful and timely tips with the tax deadline looming. I always deduct as much as I can myself.
It’s only the right thing to do. As long as you don’t try to deduct the Jet Ski as a company vehicle, that is!
Great tips, Elle! Very useful, indeed. Will keep them in mind always.
[…] business tax breaks. Elle, who writes at Couple Money, posted at the Yakezie Network, wrote about Blogging Tax Tips for 2011. Great information here, but i’d like to add a tidbit our friend Young & Thrifty gave us […]
[…] your business involves blogging, I have a list of tax tips for bloggers that may […]
Great tips, and I like how you added the estimated tax payments. Those are a must for a self-employed individuals.
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