Would you believe me if I told you I have a degree in accounting? Aced accounting 101 and Corporate Taxes? Okay so I had to beg to pass Accounting Information Systems (aka Microsoft Access for Accounting which is basically the worst class ever). Truth be told, I somehow passed these classes, never got my CPA, took a job in revenue accounting and wanted to kill myself. That didn’t last long… Now that I have a blog that’s turned into a full blown business, I’m finally using the few things I do remember from school. So I’m kind of an expert, deal with it. Since so many people seem to not be as interested in accounting as I am, I thought it would be great to write a post about the best accounting tips for bloggers that I’ve found come up time and time again with fellow blog friends. And a small warning, this may be the most boring post to you non bloggers. Sorry. Back to our regular fashion programming tomorrow. Promise.
One of the most common questions I get from new bloggers about the blog is how do you make money how do you keep track of it and why? All valid questions and I’ve got all valid answers for them.
Blogging can be a business for some people and when it does turn into a money makin machine (shake your money maker??) you have to start getting smart and organized. The first thing you want to do is create a revenue and expense spreadsheet. For the revenue sheet, you want to keep track of any payments you receive as a blogger from sponsored posts, affiliate revenue, events, stipends and so on. Anytime someone pays you in cash (i.e. PayPal, check or straight cash), it’s revenue. We’ll get to bartering in a moment, but let’s stick to straight dolla billz (woah this is turning into a good rap song fast). I like to keep track of the check # or how the money was received (PayPal, venmo etc) that way I can easily reference if I need to. I have my sheet broken out into several columns so I can see where I’m at YTD in terms of sponsored posts and affiliate commission. It’s a great way to analyze your business as well.
Bartering is technically a form of revenue. So if a brand says to you and it is a clear agreement, that you will receive XYZ in exchange for a post, you must note the dollar value of the items as revenue. This is why it’s important to have clear contracts and expectations with brands. And another great reason why you should charge for your work!
Now that you’ve made some money on the blog (which you should and if you don’t know how much to charge, you can check it out this great post), you probably also have spent some money on it as well. I keep a separate tab of just expenses again with a column for each type of category so I can see where I’m at in the year. If I notice I’m spending too much on photography, I may analyze what I can do to be more cost effective. Below are a list of general categories your expenses may fall under with a few examples in each.
Advertising & Marketing– Taking an ad out on Facebook, buying an ad on another blog/site, Mailchimp monty memberships, BoardBooster monthly membership (tips on this site here)
Meals, Entertainment and Travel – Yes you can deduct that cocktail with your blogging friend IF you had full intentions of meeting up to discuss blogging work, also attending conferences like #TBScon or any other industry event count. If you’re traveling to NYFW to build relationships and network, that trip is deductible as well. If you have a personal and business related trip, you can actually deduct the travel to and from the location and any expenses related to that day’s business. For example, I went to Coachella for fun, but had a blog project I had to complete out there during one of the days. Lucky for me, this meant I can deduct the flight, the Uber’s to get to and from the blog project, etc.
Supplies – Tripod, thank you cards, business cards and that cute Coca-Cola bottle in your latest outfit post as a prop. If a brand asks you to buy something (and they should be providing you a stipend which you will record the stipend as revenue) that’s an expense! For larger items that are investments like a DSLR or upgraded MacBook, these are considered assets that will be used well over the tax year that they were purchased in and can be depreciated over time. My CPA father says, just depreciate it all in one year. Why, I dunno, ask him.
Legal & Professional fees – Your annual LLC dues, lawyer fees for contracts, photography fees.
Dues and Subscriptions to Professional Publications and Organizations – if you’re a member of The Blog Societies and paid a $35 membership fee, deductible! Same goes for any industry memberships or subscriptions.
Other – Website maintenance, url registration
In addition to my expense tab I have two other tabs, mileage and monthly recurring expenses. If you work from home for your blog and have a dedicated work space, you’ll want to deduct the % of square footage to your entire home square footage in expenses. So if your office takes up 10% of your total homes square footage, you can deduct 10% of your household expenses like rent, power and internet. As for mileage, anytime you drive to a photoshoot, a blog event or to the airport to attend NYFW or a blog event, you want to keep track of those miles so you can potentially expense them (sometimes just taking the standard deduction is more than your yearly mileage, but still keep track!).
A few common questions are, can I deduct the clothing I buy, my hair, makeup and so on? No you sure can’t. Why? Because these are basic grooming necessities that all people are expected to do. Things can only be deducted when they are 100% used for the business. If it has any personal use, it can not be deducted. If you purchase a pair of jeans to only wear for blog posts and you NEVER wear them any other time, ever, then yes, you can deduct them.
This is just the beginning. There’s tons of other things that can be listed under here. But this is why it’s super important to save your receipts and stay organized. Wonder why we need to do this? It’s simple, all that revenue you made, you have to pay taxes on it. Tracking these expenses and using them when it comes to tax time will help to decrease your taxable income so that you don’t have to pay as much in taxes.
For me, my blog is my full time business so I am very conscious of the fact that I’m going to owe money to the IRS. At the end of every month I take a look at my spreadsheets and figure out roughly 30% of my net income and put that away into savings so I can pay my quarterly taxes. I also put anywhere from 5-10% of my net income for that month into a SEP IRA account. These accounts are great if your self employed as you can contribute up to 25% of your net income and deduct dollar for dollar on your taxes. This can help save you some money come tax time. Plus, planning for your retirement is important!
Some of the professional fees may add up to over $600 in a year and if that’s the case, you’ll want to obtain a W9 from them as they’ll be considered an Independent Contractor for your business. This way come tax time, your accountant can easily file the necessary 1099s. I prefer to get a W9 from any and all professionals that I work with to have on file even if we have’t hit the $600 mark yet.
Have another blogging question? I want to hear them! Let me know in the comments below or send me an email.
*Please note I am not a tax professional. Do not quote me to the IRS, please and thank you.