Accounting 101 for Bloggers
When we start blogs, accounting, finance and expenses are often the last things on our minds. We think about the design of our blog, what we want to write about and how we want to portray ourselves online. We spend time on social media promoting our blogs and getting to know other bloggers. We may have distant dreams of becoming professional bloggers, making money and getting amazing opportunities and there’s no room in our overexcited minds for something as dull as accounting.
But, eventually, it’s something that you need to consider. As soon as your blog makes money, whether that’s $2 from a year’s advertising or $500 from brand work, you are self-employed, and you need to start doing things right. When you set up your blog, one of the best things to do is learn about accounting for bloggers. Even if you don’t plan on making big money and see your blog as a hobby, you don’t want to risk a fine from the tax man at the end of the year because you earned unexpectedly and didn’t know what to do. Nor do you want to be forced into saying no to an excellent opportunity because you have no idea what you need to do with your income. Here’s a quick accounting 101 to get you started
Register as Self-Employed
As soon as your blog makes money, it’s important to register as self-employed. You should do this as soon as your blog is established so you are ready and can’t forget later. It’s also very important to note that you need to register as self-employed, even if you have another source of employment. This is often where people go wrong. They see their blog as a hobby, which makes a little pocket money around their job and think that they don’t need to, or can’t register as self-employed if they are also an employee. You can, and you need to.
You also need to keep track of any earnings that you make. However small. It all counts. A spreadsheet is a fantastic way to keep track of everything. All you need to include is the dates, amounts and who the payment is from. You may also want to give each transaction an invoice number so that you can’t find specific payments and invoices easily if you ever need to. It can also be useful to use a Pay stub generator to help you to keep things organized. This not only helps you to record your income, but it can also be helpful if you ever need to prove your income to apply for a loan or mortgage.
Image Credit: Her Creative Studio
Bloggers often forget their expenses. They assume they don’t matter or won’t make a difference because they don’t earn enough to meet the tax threshold. Even if this is true, it’s still a good idea to get into the right habits. What you can and can’t claim as a tax-deductible can be complicated, but as a basis, anything that you buy to help your business, in this case, your blog, is deductible. If you work from home, this can include utility bills and your internet service.