B is for blogger but it is also for business owner. If you earn money from your blog and blogging isn't just a hobby for you, you need to keep track of your income and expenditures. The more organized you are up front, the easier your job will be at year-end when you have to pull it all together for income tax purposes.
This post is targeted to the sole proprietor who works from home in the U.S. and has no employees. Translation: It's you, only you, and nothing but you. In your PJ's. If you don't live in the U.S., most of the basics still apply so read on.
SET UP AN EASY-TO-USE SYSTEM
Step 1: Open a business checking account.
The easiest way to track your business income and expenses is to keep your business funds separate from your personal funds. For example, you may have a checking account, a PayPal account, and a credit card account that you use solely for business.
Step 2: Use personal financial software.
Financial software like Quicken and MSMoney make keeping track of your business and personal finances a breeze. They are designed for easy setup and the best part is that you can download your bank, investment, and credit card activity directly into your software. No more manual data entry. Later, as your business grows and you graduate to a bookkeeping
software (e.g. Quickbooks), these files easily import.
If you want to try your hand at preparing your own tax returns at year-end, there are also some great tax software programs like TurboTax and TaxCut that import your tax information from your financial software.
Step 3: Hire an accountant.
Why try to figure it all out for yourself when you'd rather be blogging? Pay a CPA to prepare your income tax returns and answer your bookkeeping questions. It will be money well spent. And you can deduct it.
KNOW WHAT YOU CAN DEDUCT
It is impossible to talk about bookkeeping without also talking about income taxes, at least in the U.S., because things you pay for aren't necessarily deductible as expenses. The money you earn from your blog is business income but the expenditures you make may be:
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Business expenses
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Business asset purchases
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Business loan repayments (someone actually loaned a blogger money?)
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Owner draws, or
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Personal expenditures (which are also classified as owner draws)
Tags: blogging, bookkeeping, record keeping, small business, taxes
GetSheila "Must Be A Liberal Democrat" - The Shame!
Ryan Ellis at Tax Playa recently wrote Child Care Credit: Subsidizing Working Mothers Instead of Homemakers. Does anyone else have a problem with that title or is it just me? So of course I had to click over and here is what I found:
Well, I couldn't resist:
Here is Ryan's email response, which by the way I completely agree with:
And then one of Ryan's readers felt the need to email me this. (What is with the emailing? Perhaps commenting is too public for people like this. If he emails me, he only runs the risk of one person disagreeing with him, as opposed to potential masses if he leaves his comment on a blog for all the world to see. I took care of that last part for him. I'm just thoughtful that way.)
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