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“I’m excited to do my taxes!” said no one...ever. Now before you shrug and look away, let’s remind ourselves why we need to do our taxes for our business. First of all, it is required. No, you can’t escape it if you want to run your business legally, you need to face it.
If you are in any kind of business, you are obligated to contribute to your country and pay your taxes. In our case as bloggers, we are considered as self-employed. We are entrepreneurs and we are our own bosses. To be able to pay taxes as a blogger, you would need to have a blogging income of at least $400 a year. Any less than $400 dollars then you can’t be officially called a business.
The good news about this is that you are eligible to get tax deductibles! This means that any form of expenses that is related to your business are deducted from your gross income and you will only pay taxes on your net income.
Now you can’t just say that everything you’ve spent this entire time is for your business. You need proof to back that up, which we will talk about later below. These are a few examples of what will qualify as tax deductibles.
1. Supplies and Equipment
Anything you purchased for your home office is tax deductible. Items such as printers, office supplies, craft supplies and even software can be counted. Furniture, computers, mobile phones, and cameras are included as well.
2. Professional Fees
If you decide to hire an assistant, lawyer or an accountant (which would definitely be a big help to do your taxes if you have money to spare), their professional fees are tax deductible. Whoever you have paid to help manage or grow your blog.
3. Travel and Transportation
If you’re one of the lucky ones who get to travel for their business, then these are tax deductible as well.
4. Advertising and Marketing Kits
Everything you paid for that involves marketing will be tax deductible. This includes freebies, giveaways, calling cards, posters, website fees, maintenance and other items. This is a mix of hard and soft copy marketing tools.
5. Home Office and Utilities
The rent space, realty taxes and utilities in your home office is eligible as well. Things like air conditioning, electricity, phone bill, internet bill, water, etc. are included. However, note that not the entirety of these are counted. Only the portion of your home that is exclusively dedicated to your business.
6. Ebooks and Courses
Your journey to be a better blogger might also include taking blogging courses. Whether they are online or on site, if they are related to your business then they are tax deductible too.
These examples are just a few ways to get back the money you had invested into your business. It’s important to know these because these deductions can save you a ton of money!
To be able to file your taxes properly and accurately, you would need to do some planning, some research, and lot of discipline. Here are some tips to help you with your taxes as pain and stress-free as possible.
1. Keep All your Receipts
Keeping receipts can be bothersome. Remembering to keep them can be annoying, but you have to do it! Just do it! All your receipts from business coffee meetings to purchasing paperclips, you need to file them. Make a copy of each of them and file them to make them last longer. These will all be needed when the time comes for you to make your annual report.
2. Start Doing your Taxes Now
Everything done last minute is always done haphazard. Of all things to do right and precisely, it should be your taxes. Start slowly throughout the year by compiling papers, files and knowing which expenses can have possible deductions. If you keep this habit then you won’t have any panic attacks when tax season arrives.
3. Hire a Professional
If and only if you have money to spare, by all means, hire a lawyer or an accountant. Either you can hire them to do all your taxes every time, or hire them to teach you how to do your taxes. If you feel more secure if you hire a professional then why not.
There are basically two ways to organize your taxes. You can do it the traditional way with folders, boxes, staplers etc, or do it digitally. Personally, I would go digital since this is quicker, cheaper in the long run and it won’t take up too much space in your home office.
There are many online programs that you can look into and see which one works best for you. Some of these are:
Freshbooks is specifically made for service-based businesses. You can keep your financial records and invoices on this online program.
Webexpenses is a cloud-based software that you can work on with any browser and mobile device. That means you can access your expenses and information wherever you go.
Wave is specifically for small businesses. You can do your accounting records here as well as invoices and payments.
Expensify helps you make and submit your expense reports in real time. They emphasize on saving you more time in doing the paperwork for you.
Blogging is a lot of fun and your profits can be great when done right, but bottom line is that it is a business. If you want to be a professional blogger then treat it like a business and be responsible for all the requirements.
Take time to associate yourself with the formalities, the legal terms and the different ways to make your taxes easier to do. Once you get used to it, you can file all your receipts with your eyes closed.