Yes, taxes are uber boring (even blogging taxes).
But you know what’s NOT boring?
Saving money. 💰
- Bad news = any income your blog produces is taxable
- Good news = you can TOTALLY offset that income with your blog-related expenses!
But the best news of all?
All the money-saving & blogging tax tips in this post do NOT just apply to those making $100k/month from their blogs! I’d argue these strategies are actually more important for those of us not earning ANYTHING yet.
Today we’re going to dive into:
- What blogging expenses can/should you deduct?
- How non-accountants can organize your businessy-stuff year-round without wanting to scream.
- LLC? Sole-proprietor? S-corp? What should you do and why?
- and more.
Let’s blog like a business.
Disclaimer: All tips, tactics, strategies, advice, etc that appear in this blog post and podcast–are MY OPINION, not professional legal or accounting advice. Consult your lawyer and CPA, please. I can’t be held responsible 😉
I also have a podcast on blogging taxes, featuring another accountant, Eric Nisall!or listen on Apple Podcasts \\ Google Podcasts
What blogging expenses can I deduct come tax time?
Anything that you have to spend in order to make money.
Here’s a more specific list of stuff I know that you probably spend money on.
Deduct the basics for starting up a blog:
- Domain name
- Hosting (lol)
- Premium WordPress themes
- Paid plugins
- Logos you had designed
If your blog makes any money, or you plan on it making money in the near future–you can deduct these expenses!
Deduct educational expenses:
If your learning expenses are related to your business, deduct.
Deduct blog marketing expenses:
- Your paid SEO software
- Facebook ads
- Social Media software (Buffer, SmarterQueue, Tailwind, etc)
- Your ESP (Mailchimp, ConvertKit, Drip)
- Anything other product you pay for to run the blog
As long as these things are “directly related to your business” and you plan on making money from your blog–deduct ’em.
Sell stuff? Deduct processing fees and CC interest:
- PayPal fees
- Stripe fees
- Interest incurred on your business credit card
Misc. deductions for bloggers, contractors, freelancers, solo entrepreneurs:
Note: Calculating the following can be a bit tricky. Again, we suggest speaking to your accountant officially and reading up on the “work-at-home” specifics here from Turbotax.
- Home office expense (proceed carefully here. Further tips)
- Daycare or storage expenses (see above link for more)
- business cards
- conference expenses (coming to FinCon? Deduct the tickets, as well as travel and meal expenses
- Podcasting mic. DSLR & Laptop (if NEEDED for your business, etc)
Does the IRS want me to prove that my blog is a “legit” business? Yes.
The IRS will disallow your tax deductions if your blogging business is categorized as a hobby. To claim your deductions, you must demonstrate to the IRS that you are running a bona fide business. The most obvious way to prove this is to earn a profit. If you have a profit in at least three of the most recent five tax years, you can usually qualify your business as legitimate.
Other things the IRS may consider are the time and activity you put into the business, whether or not you depend on income from it and if you can reasonably expect to make a profit in future years.
The bottom line?
Yes, you should be prepared to prove that your business is legitimate–and this is done via demonstrating profits, as well as how much time you spend on your blog!
And also demonstrate that you can reasonably expect profits in the future (as your site grows).
So I can deduct stuff. How do I organize these expenses and receipts?
You could pay for fancy-pancy receipt software like ShoeBoxed, but I personally don’t think it’s needed for most bloggers.
Here’s what I’d recommend:
- A separate Google Drive folder
- A separate Dropbox folder
- A separate label/inbox in Gmail
Notice how I used “separate” 3 times? Hint hint. That’s key to this process!
Choose your “one stop” to house all your receipts–digitally–and make it a routine to automatically send your receipts there throughout the year. Come tax time–double-back and add them up!
Here’s my process over here at DYEB:
I house everything in a separate label within my personal Gmail.
- Physical receipt? Snap a photo with my phone and email to email@example.com
- Digital receipt? Email to the same address, or drag-n-drop to that RECEIPTS label if already in the inbox.
- Wait until tax season
- Create a Google Sheets and list every expense out, 1 by 1 (doesn’t take that long surprisingly)
- Categorize expenses (marketing, advertising, processing fees, software expenses, education)
- Calculate home office and travel expenses
- File taxes
Gmail Pro Tip: Set-up a “skip the inbox” filter for receipts:
Watch the gif below:
This allows me to email receipts, etc, to “firstname.lastname@example.org” and Gmail will have them skip the inbox and move straight to my little “folder,” i.e. Label.
You can also add to Dropbox and Google Drive folders from just about anywhere as well (including from inside Gmail for emailed receipts).
Should you incorporate your blog? What business entity should you choose?
The short answer?
Consult a lawyer! This is mainly a legal decision, not a tax and money-saving decision (for the most part. See below).
Here’s a brief rundown of the legal entities 97% of bloggers will likely consider:
Disclaimer: I, Pete McPherson, am not a lawyer. These are just my opinions based on limited knowledge!
I like to consider myself a Soul Proprietor. #dadjokes.
Unless you’re hiring employees are your lawyer thinks there is a risk to your personal assets (house, cash, cars, anything)–this is the choice for most solo bloggers.
Also, there is NO DIFFERENCE between a single-member LLC, as far as taxes are concerned. You’ll simply deduct expenses on your personal tax return (specifically on the Schedule C for self-employment income!)
Plus, you don’t have to register anything with the state.
Want your blog to be a business? Say the words and it’s done. Boom.
FYI, the only downside is that if you DID get into legal trouble, your personal assets would be put at risk.
Limited Liability Company (LLC)
This is the most blogger-friendly “separate entity” option, meaning your personal assets would have limited liability!
From a tax perspective, it’s essentially the same thing as a sole proprietorship though.
(You can actually choose to be taxed like a partnership or a single-member entity. Pretty neat.)
While an LLC does require registration with your state, it’s generally fairly simple and cheap (compared to the options below)
This means your blog/business would be a completely separate entity from you.
This means your personal assets would be separate–but you’d also be subject to double-taxation (meaning your sweet blog revenues would get taxes TWO TIMES, one for your business return, and again when your business pays you. Ew)
This isn’t necessary for most bloggers.
This has the same limited liability as the C-corp, but your income would NOT be subject to double-taxation. Woot!
Why shouldn’t bloggers do this? Because they’re expensive to create, and you also have to file paperwork, comply with corporate formalities like creating bylaws and holding board and shareholder meetings.
First, consult your lawyer, not me.
Second, if you’re not doing anything risky (legal-wise) or otherwise require a separate entity for other reasons, stick with a Sole Proprietorship and deduct blogging expenses on your personal return (Schedule C)
Over to you. Do you deduct blogging expenses? Did I miss any opportunities to save?
Drop me a comment below!