As a blogger, one thing that many of us eventually aim to do, if we aren’t doing it already, is to monetize it. And when we begin getting those sponsored posts and affiliate pay outs, it feels good. Our blog then turns into a business and then that’s when taxes start to become a factor and budgeting. For me, it took some time to begin understanding how to manage blogger finances and how to handle all of the accounting and taxation that inevitably comes every year. But through some trial and error, I discovered the right tools and methods to manage my bookkeeping and make sure taxes are paid and up to date
I want to first start off by saying that in NO WAY am I an expert at taxes for bloggers. I am learning new things every year and I don’t file my taxes on my own, but I do handle my own bookkeeping. Additionally, certain things, especially taxes, may be handled differently in your state or local area, so when you get to that portion of the post, make sure to verify information with your local and state tax laws.
Managing YOUR BLOG FINANCES
Accounting is a serious thing. I have ran into some bloggers who have began monetizing their blogs and social media and have openly admitted that they just enjoy all of the income and do nothing about the blogger taxes and bookkeeping. While the IRS is not after them just yet, it’s still not a good habit to have and, eventually, it will catch up to them. When it comes to bookkeeping and managing your finances as a blogger, it is best to get the right tools to track all of your income and expenses. Some key tips to keep in mind:
Mileage is an expenseSo if you travel anywhere for your blog using your own car, whether it be an event, to a photoshoot, or to the airport for a trip you a blogging about, you need to log that mileage so that you can add it to your expenses come tax time. Note: If you use Uber or any other rideshare, a taxi, or public transportation, you cannot log that as your mileage, your expense is what you pay for the transportation.
You need a 1099 for tax time.Make sure to ask brands/companies to send you a 1099 come tax time if they paid you $600 or more in the tax year. This is something they have to send all independent contractors, and that includes bloggers/influencers, for their tax purposes and yours.
Accounting Tools FOR BLOGGERS
If you want to run your blog as a full time business then you want to make sure that you have the essential tools and resources for your blog business. There are so many creator resources out there that are hard to sort through, but when it comes to one that works for managing your finances, you want to make sure that it fits with your systems, your business requirements, and it is easy to navigate for you. Here is a list of some of the accounting tools out there that many small businesses use including bloggers:
I will admit that I have not used Quickbooks and from my research it is not necessarily free. But many people swear by it, especially because it allows you to track mileage. The lowest price for a package – self-employed – is $7 a month and allows you to send invoices, manage transactions, organize receipts, and estimate quarterly taxes. So if this is something that you’re interested in, you can put that fee on your transaction history for your expenses!
2. Wave Apps
This free tool is what I use and makes everything so much easier. WaveApps also offers the ability to have representatives take care of your bookkeeping and represent you when it comes to taxes for a fee. But if you don’t want to do that, there are so many other free options that this allows.
Keeps record of your receipts. Have a hard copy? Use the app and take a picture and it records. Have a digital one? Just forward it to the email provided and it automatically adds it to your transaction history
Make invoices and receive payments. The service allows you to create your own invoices to send out and gives you the option to accept credit card payments through the system or turn that option off. Just note that if you opt to allow credit card payments, they will take a small fee away. Personally, I have the service turned off and when the invoice is paid, I mark it manually so that the automatic reminders that the system sends out turns off.
Print out reports for your taxes. The transaction history allows you to categorize all of your expenses and income with pre-filled categories or ones that you make on your own.
Connect bank accounts. Even if you forget to record a receipt, you can connect your account so that it automatically registers to your transaction history
Basic Tips ON BLOGGER TAXES
When it comes to taxes, it is very important to have them filed on time and that accurate bookkeeping is kept. You’ll want to make sure that you are keeping record of all of your income and expenses. So the tools above will come in handy. My recommendation when it comes to handling taxes is to let a CPA do the work. They’ll help you file an Schedule C so that all of your taxes are paid up to date so that no back filing has to occur in the future. BUT, if you don’t want to pay the fee for the CPA, you can try using TurboTax.
There are many bloggers who use TurboTax to file their small business taxes and it does guide you through each step to make sure everything is filed correctly. The only catch is that, often times, Turbo Tax doesn’t catch deductions that you may be able to use to decrease the amount you owe like a CPA would.My advice – if you’re net income is under $5000 a year, I would probably use Turbo Tax, but once you start making larger amount (especially 5 figures), you’ll want to go for a CPA because you my end up causing yourself to have to pay more than you think.
Blogger Taxes You’ll Pay:
Federal TaxesYour taxes will be based on your gross income because you weren’t taxed on the money that you were paid from various brand partnerships, affiliate revenue, and other streams of revenue in your blogger business.
Local TaxesThese taxes will vary in amount depending on where you live. Most local taxes can be paid ahead of time with quarterly tax payment. The tools mentioned above have the ability to help you pay those taxes or you can request a form or the link to the online payment system to record them from your local tax bureau and they will bill you directly.
Social SecurityIf you have employees, you’ll have to pay the taxes for having them as employees and then even if you don’t, you’re technically an employee even though you own your business and will have to pay towards social security.
Depending on your location, there may be other taxes that you have to pay which is why it is important to make sure that you are keeping record of all of your taxes. Last year, my husband and I filed our taxes together and looped in the business. We ended up owing money from the income from the blog business because I did not pay quarterly taxes upfront and the other taxes needed to be paid as well. My CPA did everything that he could to get me every dedication possible so that I wouldn’t have to pay too much, but at the end of it all, taxes are required to be paid on the income.
Quick Tip: You’ll most likely end up owing money if you made a good amount during the year, so don’t blow all of that extra blog income on clothes or unnecessary things. I always recommend keeping AT LEAST 15% in your account come tax time to pay taxes, but you may need more depending on how much you made.