When you start blogging, you may have the goal of trying to free yourself of debt or just have some money in your emergency savings. You will start enjoying blogging and as readers leave you comments, you will feel as though all of your hard work is paying off.
However, over time you may notice that your extra money turns into money to pay off car loans or even have a good amount of money saved for a down payment on a house. Advertisers purchasing banner ads on your blog, other bloggers contacting you to write paid posts for their blogs, or even people seeking consultation to start, may generate money.
After some time you may even decide to quit your full time job completely because you love your newly self-employed life. However, taxes still have to be paid and things may become a little tricky. Therefore, today we are discussing some tax tips for bloggers.
Decide How to Do Business
In order to do taxes you have to make sure that your business is registered correctly. New bloggers prefer to start out as a sole proprietor because it is easy and cheap. However, do not automatically go with this option because of its simplicity and budget friendly startup costs. Instead, you have to go with the option that is ideal for your work.
There are still other business entity options such as, Limited Liability Company, partnership, and corporation. To determine which option is ideal for you it is suggested that you look at both the legal and tax requirements of each entity. Usually, the limited liability company is a good option for most bloggers.
Pay Your Estimated Taxes
When you earn an income from your business, the IRS expects you to pay taxes frequently, instead of just once a year. This is known as estimated taxes. The due dates are listed below.
- 1st quarter – April 15th
- 2ND quarter – June 15th
- 3rd quarter – September 15th
- 4th quarter – January 15th
Note: Sometimes the dates may be different from the 15th depending on the day the 15th falls on (i.e. weekend or federal holiday). The good news is you can pay your quarterly taxes in a variety of ways.
- Phone (Individuals – 1-800-316-6541) (Businesses 1-800-555-4477)
Note: Usually the easiest and quickest way is to pay online. You will have to register the first time to do so and this can take a few weeks. So, if you plan to pay online make register before it is time for you to pay your taxes. Also, make sure you check your state tax requirements because they vary from state to state.
Blog Related Expenses
The expenses that you spend to keep your blog up and running to generate you income throughout the year can help you when it is time to file taxes. It is very important that you keep great records so you can deduct any of the qualifying business expenses that you may have when tax season rolls around. Below are some of the top business expenses for you to consider deducting. Keep in mind this is not the entire list, this is just some of the top options.
- Office Equipment – Office equipment is considered things such as, computers and printers. They depreciate over time yet they can be deducted on your taxes as long as you use them solely for business use.
- Office Supplies – Office supplies include things such as paper, ink, pens, etc.
- Subcontractors – If you pay subcontractors to do work for you make sure you keep their invoices and your payments so you can deduct it during tax time.
- Website Expenses- Your hosting, your domain name, email subscription service, and possibly privacy services can be deducted from your taxes too.
As your business grows your business expenses, will grow too. If you use software such as, Turbo Tax Home and Business it will allow you to easily make the deductions that are applicable to you, which results in you getting the largest refund possible or paying the IRS the least money possible.
If you are a blogger, you are going to have to pay taxes. However, good record keeping can save you hundreds of dollars, as you will be able to claim multiple deductions. Many bloggers are scared to take the home office deduction because they are afraid of being audited. However, if you qualify for it, do not be scared to deduct it. There is never any reason to pay more money in taxes than you have to.