Blogging has changed so much throughout the years. When I first started blogging six years ago it was much more of an online diary than what my blog is today. Pictures were grainy, thoughts were off the cuff, and monetization was still pretty rare.
Fast forward to 2017, and blogs are full-fledged businesses. Online diaries have turned into editorial features and everyday people have turned into social media celebrities with major marketing clout. The best of the best bloggers are making seven figures, and even those who are in the middle of the heap can do pretty dang well for themselves in the digital space.
While I’m not quitting my job and jetting off to Tahiti anytime soon, blogging has turned into quite a nice side hustle for me over the years. What started off as a fun college hobby morphed into something that’s been able to help us pay off our student loan debt and grow a nest egg for our future.
What’s not so fun? Taxes. When Josh saw sporadic blog paychecks start turning into consistent monthly income, he sat me down and told me I needed to get serious about treating my blog like a business for our sanity’s sake come tax time. While I’m all about business at work, my blog has always been a source of fun for me. I didn’t want to turn it into a chore. As Josh argued, chores are necessary, and much more fun when they’re profitable. 😉 And so, roughly 3 years ago, Her Heartland Soul started operating as a business. It has been a learning curve full of ups and downs, but the experience and knowledge I’ve gained have been invaluable. As tax season approaches, I wanted to share some of my biggest lessons with you.
5 Tax Tips for Bloggers
1. Open a separate checking and savings account just for your blog
Blogging is about your life so it’s easy for the lines to blur between what’s your business and what’s your personal life. For taxes though, it’s imperative that you keep your business and personal life separate. The easiest way to do this is by opening a separate bank account (with checking and savings) for your blog. All business transactions go through that account. No exceptions.
2. Keep track of your income and expenses
I think sometimes people are shocked at how much running a blog costs. For as many streams of income as there are, there are an equal number of expenses to make it all happen. Write them all down, and keep records of emails, receipts, and invoices in real time, in one place. Come tax time, you need to know how much you had coming in and how much you had going out and have written proof of it all. Clean, accurate records will save you hours of headaches and frustration.
3. Know what expenses you can and can’t deduct
Operating a business allows you to deduct business expenses from your blog income. Do your research to find out what items related to your business are considered business expenses. For instance, if you have an office for your business, or use a cell phone for your business, you are allowed to deduct those expenses. If you’re creating a recipe for your blog you can write off the cost of the ingredients. If you’re traveling for work your food, gas, and hotel/airfare are tax deductible. For as many things that are deductible, there are a lot of things that aren’t. Like clothes other than a standard uniform. Make sure to do your research so you’re in compliance with the law.
4. Set up your bank account so that 25% of your deposits automatically go to savings
There is nothing like getting an email that a company has just deposited a large sum into your bank account. That number can be a little misleading though as no taxes were taken out on that amount. You’re expected to pay them yourself come tax time. Save yourself the worry of owing by having 25% of every deposit automatically moved from your checking to your savings account. This will be your tax nest egg and what you will use to pay any taxes you owe. Josh and I are so risk-averse we actually transfer 50% of all deposits into savings just to be safe.
5. Pay quarterly taxes
As you start making more money from blogging paying quarterly taxes goes from being optional to required, and not doing it can cause the government to fine you. Basically, if you are expected to owe the government more than $1,000 in taxes from your business you need to pay quarterly taxes. This ensures that they are getting their money as you’re making it. While it’s great for them it’s also good for you as you can pay your taxes as you’re earning the money so you don’t have any big surprises come April.
All of these tips will help take you from amateur blogger to pro blogger when it comes tax time. I was so worried as my blog became a business that we would need to pay a hefty fee to have our taxes done professionally. With a little extra planning and early preparation, there is no reason why you can’t file your own taxes and feel confident in doing so. 1040.com makes online filing fast and simple. They help you every step of the way, making sure you’re taking advantage of every tax break you possibly can, and storing and saving your data in case you need the information later. They offer Federal and State filing and will even file a basic 1040EZ for free.
Best of all, they’re a company with a heart. For every tax return filed with them, 1040.com donates $2 to Healing Waters International, a non-profit company that works directly with communities to establish sustainable water filtration systems – even on the 1040 EZ tax returns which they make no money off of. Each donation translates to two months of clean water for someone in a developing country. This is their second year of participating in this initiative. Last year they raised enough money to fund 2.5 million gallons. That’s a whole year of clean water for almost 15,000 people!
Questions of the Day: When did you take your blog from hobby to business? Do you have any other tax tips to share? Do you use 1040.com to file your taxes?
Thanks to 1040.com for sponsoring this post!