When I first started blogging, I had NO idea that taxes would be an issue. But that’s because I didn’t know you could make money from blogging! I started my blog as something creative to do in the evenings after my full-time job and learned pretty quickly that some people were making some real money from this whole blogging thing.
It wasn’t until a year after I started my blog that I started making a few dollars here and there. And then when tax season came around, I realized I was going to have to figure out pretty quickly what to do about my blogging finances!
I hadn’t set up a separate bank account for my blog and hadn’t been tracking my expenses and income, so it was a huge pain going back and figuring all of that out.
Things got even more complicated when my income increased enough so that I was earning a full-time income from my business.
Now I have systems set up in my business that makes dealing with finances and taxes as a blogger SO much easier. You can save yourself the pain of going through what I did by following these tax tips for bloggers!
Tax Tips For Bloggers & How I Manage My Blog Finances
There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.
Set Up a Separate Bank Account
First things first, if you’ve decided to start making money from your blog or any other online business, set up a separate bank account ASAP.
When you are making money from your blog, you have to track every single dollar of income you get. And since you report and pay taxes on your income, you’ll also get to deduct your expenses (meaning you need to track those too). The best way to do this is by keeping your blogging income separate. If you have your blogging income going to your personal bank account, you’re sifting through WAY more transactions to figure out which were and were not blog related.
Aside from making it easier to track, it also helps with budgeting. I like investing in myself and my business with tools and education. However, I want to make sure the amount I’m investing in the business isn’t excessive compared to the amount I’m bringing in. Having a bank account with JUST my blogging income shows me exactly how much I’ve made from my blog so I can get a look at the big-picture of my business finances.
It also helps when it comes to paying quarterly taxes. QuickBooks (the tool I use to manage my blog finances) keeps track of how much I’m likely to be paying in estimated quarterly taxes. I keep an eye on that number and make sure I ALWAYS have enough set aside to cover that number.
Then, when I have money left after the amount I need for quarterly taxes and the amount I plan to reinvest in the business, I can transfer that money into my personal bank account.
Track All Income and Expenses
Track every dollar you make from or spend on your blog. That way when it comes time to file taxes, you’re ready to go. As I mentioned above, setting up a separate bank account makes it way easier to do this. So does using an accounting tool like QuickBooks.
As you’re tracking your expenses, make sure you save all of your receipts so you can deduct them on your taxes. Without receipts to prove your expenses, you might run into trouble with the IRS down the road.
And when it comes to income, the money you make isn’t the only thing you count as income. If you get free products from companies in exchange for a review, that counts as income and you need to claim the price of the product. The same goes for affiliate credits you might get.
Report ALL of Your Income
The bottom line is that you need to report every dollar you make from your blog. I read articles or Facebook posts occasionally where someone says you don’t have to pay income unless you make a certain amount of money, or you only have to report income you have a 1099 form for. That’s just false.
The IRS wants to know about and tax every dollar that you’re bringing in. Yes, you may get 1099 forms from some companies you work for. But that is NOT the only income you have to report.
The pain of having to pay taxes on your blog income is a lot less than the pain of the fine you could be facing down the road if you don’t report your income.
Know What You Can Deduct
Having to report and pay income on your blogging income is a bummer, but the good news is that your blogging expenses are tax-deductible! The general rule is that you can deduct any expenses that are considered reasonable and necessary for your profession.
You can find a really good list of common tax deductions for bloggers here.
Learn About Quarterly Taxes
Do you know how at your full-time job there is money taken out of every paycheck for taxes? Yeah, that’s because the IRS wants you to be paying taxes on your money as you’re earning it. Meaning if you’re making money from your blog, they don’t want you to wait until the following April to be making good on that tax bill.
That is where quarterly taxes come in. Every quarter (on April 15, June 15, September 15, and January 15) you will pay your quarterly taxes. I can’t stress enough how important it is to have an accounting tool for your business, because this tool will estimate your quarterly taxes for you and coordinate the payment (my go-to accounting tool is QuickBooks).
Don’t start freaking out now – this rule probably doesn’t apply to you if you’re a beginner. Generally, you won’t have to do this if you didn’t have a tax liability the following year OR if you don’t owe more than $1,000 in taxes for your blog. If you’re concerned about it though, I would definitely talk to an accountant.
Find the Right Tools to Help You
Finances and taxes can be complicated. There’s a reason we pay accountants so much money to do this for us. And if you’re new to the whole blogging thing, this probably all seems pretty overwhelming to you. The best advice I can offer you is to find tools that help you to implement these tax and finance tips. Here are my favorites:
- QuickBooks: This is the tool I use to do my business accounting. I’ve tried a couple of other tools, and this one is hands down my favorite so far. It connects to my business bank account and PayPal account to track all of my income and expenses. It also tracks my estimated quarterly income. Finally, it connects with TurboTax (the tool I use to file my taxes) so I can just import ALL of my blog income and expenses for the year.
- TurboTax: As I mentioned, this is the tool I use to file my taxes. It makes it SO easy to file. You just follow the prompts and answer the questions as it prepares your taxes for you. As a bonus, TurboTax and QuickBooks are owned by the same company, meaning they work together pretty seamlessly. When it’s time to pay my quarterly taxes, I can do that through TurboTax with the help of QuickBooks. And at the end of the year when it’s time to file my taxes, I just import all of my financial information from QuickBooks.
Note: There’s another benefit to the partnership between QuickBooks and TurboTax. Every year that you use TurboTax Self-Employed to file your taxes, you get a free year of QuickBooks Self-Employed!
Learning to deal with taxes and finances is definitely one of the most daunting parts of blogging. Even after four years of doing this, I still get nervous that I’ve made a mistake! Just do your research and when in doubt, talk to an accountant. And if you already hire an accountant to do your taxes, then they’ll be able to help you through all of this!