Now that you have started blogging and earning some cash from your efforts, it is time for you to start thinking about tax time. Many bloggers get into the business without even thinking about the fact that they may ultimately have to pay taxes on their earnings. Yet, if you fail to report the money you have earned from your blog, you could potentially find yourself in a lot of trouble with the IRS. Therefore, if you haven’t already, you should start taking these steps in order to prepare yourself for tax time.
Keep Track of Your Earnings
The first thing you need to do in order to prep for tax time is to keep accurate track of your earnings. If you have affiliate links on your blog that are earning you some cash, for example, you need to keep track of the money you earn each month from these links. If you are selling a product such as an ebook, you need to keep track of these sales as well.
Fortunately, many affiliate programs will provide you with monthly statements and annual statements that summarize your earnings. In addition, if your customers use a company such as Paypal to purchase products from your site, you can make it easier to keep track of your sales by setting up separate Paypal accounts for each product or blog you own. Not only will this help you keep better track of your income, it will also make it easier for you to monitor the success of a particular product or blog.
Taking Advantage of Deductibles
As a business owner, there are also many deductibles that you may be able to take advantage of. Be certain to keep track of all of your business expenses in order to keep your overall tax burden down. You may be surprised by all of the items you may be able to deduct from your taxes. Some possible deductions include:
Business expenses for the use of your home if you do your work from home
A portion of your utilities if you do your work from home
Expenses related to travel associated with your blogging business (i.e. for attending conventions)
The cost of purchasing equipment associated with your blog, such as your computer, your printer and printer paper
Of course, it is best to consult with an accountant in order to be clear on what can and cannot be deducted from your business expenses. This way, you can be certain you are filing an accurate return that you can stand behind if you happen to be audited. And, remember, if you are filing your taxes as a sole proprietor, you and your business are not considered to be separate entities. Therefore, your business tax burden is your personal tax burden as well. In addition, your income will be taxed as a small business as well as part of your personal income, so you want to take advantage of every deduction possible!