As a blogger, one of the last things you want to think about is your taxes. Unfortunately, the IRS doesn’t care if you’re a blogger or the CEO of a Fortune 500 company. If you earn revenue in any form or fashion, then you have to report it to the IRS and pay taxes.
Five Things You Need to Know
Whether you’ve filed your own taxes in the past or this is your first year, there are certain things every blogger should know. Here are a few key concepts, suggestions, and techniques worth noting.
Organization is Paramount
“Small business owners are notorious for mixing their personal and business finances, especially at the start of a new venture,” explains Bond Street, a leader in online small business financing. “The problem with overlapping accounts is that they can cause huge headaches when it’s time to file taxes or apply for a small business loan. Establishing business accounts early also gives you the chance to build a credit history. It also prevents personal issues from affecting your business credit score and vice versa.”
In other words, organization is extremely important. Be meticulous in how you organize your business accounts and don’t ever let them mix with personal expenses. This takes extra time on the front end but will save you from preventable headaches in the future.
Save All Receipts
Do you want a receipt with that? The answer to this question – at least in the context of blogging expenses – should always be yes. If the IRS pulls your tax return and decides to scrutinize it, you’ll need to have proof of purchases for any deductions you take. Otherwise, you could end up facing additional fines.
“Lots of people have folders or boxes that they toss their receipts into, but don’t forget to print out receipts and invoices for purchases made online, too,” says blogger Melyssa Griffin. “You could even scan your paper receipts and keep them, along with your online invoices, in a folder on your computer for easy organization.”
Hire an Accountant
With some of the tools on the market – such as TurboTax – that allow you to self-file your own taxes without any experience, many bloggers are turning to these cost-effective DIY alternatives. However, be wary of filing your own taxes.
There’s a reason why accountants exist. They understand tax codes, can answer questions, and know how to deal with complicated deductions, credits, and forms. While you may spend a few hundred dollars more, hiring an accountant reduces the chances of filing an erroneous return (and gives you someone to turn to if the IRS decides to audit you).
Take the Right Deductions
Understanding which deductions you can take is very important. For example, as a
blogger you can claim a home office deduction for your business. This means you can take a flat-rate deduction or actually calculate the square footage and deduct the appropriate percentage of utility bills for the year. Either way, this provides some helpful savings.
Pay Estimated Quarterly Taxes
The final suggestion is to pay accurate estimated quarterly taxes. While the IRS requires that you pay estimated taxes, it’s not enough to simply match last year’s payments. You should track changes in income and pay accordingly. There’s no sense in underpaying (which can incur fees) or overpaying.
Putting it All Together
At the end of the day, you need to be organized and cautious. Always be conservative in everything you do. It’s better to spend more time preparing something that isn’t needed than to avoid doing something that’s necessary. Even though you’re just a blogger, the IRS still cares about your money.