If you run a blog, and have started to make money off your blog, you are essentially running a small business. Here are a few bookkeeping tips that you should implement as your blog transitions from a hobby into a small business.
#1 Open A Banking Account Just For Your Blog
The first thing you should do is open a banking account just for your blog. This will allow you to accurately keep track of the money that you invest into your blog and the money that you make off your blog.
Change all your accounts that pay you money for your blog, such as an affiliate link programs you belong to as well as advertising programs you participate in, so that they pay into your new blog bank account instead of your personal account.
Next, change an automatic accounts you have set up to pay for your blog. For example, if you host your blog somewhere or pay a yearly fee for the domain name of your blog, you are going to want those payments to all come out of your blog bank account.
Finally, when you need to purchase anything related to your blog, do so out of your blog account. That way, you will be able to clearly see the amount of money that you are bringing in and spending in relation to your blog. Your bank account records will also serve to back up and validate all of your business income and expenses come tax time.
#2 Set Aside Money For Your Taxes
If you are making money off your blog, that means you should also be paying taxes on the money that your blog brings in. You will be required to pay federal income taxes, self-employment taxes as well as state and even local city taxes on your income. As a general rule of thumb, set aside 25% of the income that your blog generates for taxes. You may want to deposit that money into a savings account associated with your blog's bank account.
You should also sit down with a tax professional and figure out exactly what you need to put aside for taxes each month. If you are working a regular salaried or hourly job, you may be able to increase your tax contributes their instead of paying extra for your blog to the government. If you are solely depending on your income from your blog though, you may need to make quarterly tax payments on your income. A tax professional can help you figure out the details of your particular situation; until then though, make sure you are putting aside money for your future tax bill.
#3 Don't Just Depend On Your Email
When running a blog, it can be easy to just depend on your email receipts for expenses and income from affiliate links, advertising and the sale of products. You need to keep detailed and accurate records of all money that you spend running your blog and all money that you make from your blog.
If your receipts are emailed to you, make sure that you save all the receipts as PDF files or take screenshots of them. From there, create organized folders so you can keep track of all income and expenses. You should also back up all your digital files so if something happens to your primary device, you have another way of accessing your business information. The IRS doesn't care that water was spilled on your computer or that a hacker got into your email account; they care that you pay your taxes and present your information correctly.
You can back up your files on a USB thumb drive, external hard drive, CD, or on the cloud. Just make sure that you have more than one copy of all of your records.
If you are making money off your blog, it is vital that you realize that you are essentially running a business. You need to keep track of all your expenses and income; you will need this information when tax time rolls around. As your blog transitions from a hobby into a small business, make sure that you take some time to sit down with an accountant like one from Tony Tiani & Co Inc accountants and get your business affairs in order.Share
4 May 2016
Over 10 years ago, I graduated college with a graduate degree in accounting. After my college graduation, I planned to become a public accountant. However, fate quickly changed my career path. Instead of pursuing a career in public accounting, I began teaching accounting at my alma mater. I immediately fell in love with instructing. And, I’ve never looked back. During my college years, I learned the characteristics of a qualified accountant. If you need to hire this type of professional, you should look for someone who is experienced and certified. On this blog, you will discover the types of certifications accountants can obtain.