Blog Bookkeeping Organization
Taking your blog to the next level by monetizing is very exciting. There are so many opportunities! But with these new chances to add to your family’s income come additional requirements.
A big one? You have to pay taxes on that newfound income. Yep, you are a business owner now and that means paying attention to that balance sheet. This means you are going to need to keep track of your income and expenses.
In order to do that, you need a system of just gathering and keeping that information. It’s time to face what most people want to ignore- your bookkeeping system.
How do you organize your blog income and expenses? You need to know your transactions beyond just sales. Don’t worry, you don’t need to hire accounting services when you are just getting started.
So what information do you need to track for your blog taxes? I know it sounds daunting, but I have a simple system that can get your blog bookkeeping in order in no time. (And a handy cheat sheet to print out!) Get ready for a little bookkeeping 101.
Small Business Bookkeeping for Bloggers
Why do I need to do this?
First of all, you might be wondering why you even need to worry about this. If you are blogging for fun and as a hobby, it might not be too big a deal. There are a lot of free tools to use and you might not be looking to make any money. You might not have many financial transactions related to your blog.
But if you do spend money on your blog it is a good idea to keep track of the business expenses, just like with any hobby. You want to maintain financial records of what you are spending. It comes down to being smart with your household budget. You want to know what your household cash flow is, and that includes extras like blogging.
And you never know, you might decide to look into money making options at some point. Then you will already have a system in place to keep track of your blog finances.
If you are trying to make some money off of your blog, this is definitely something you need to do. A lot of bloggers follow the idea that they need to treat their blog like a business. Well, no good business owner can succeed without acknowledging the financial tracking aspect. That means learning about bookkeeping.
Come tax season you will be happy that you have this information organized and ready to go, confident you have what you need to report. (And if you are thinking you don’t need to report that info, well, remember it was the IRS that finally brought down Capone.)
Basic Blog Bookkeeping Organization
Keeping accurate bookkeeping records doesn’t have to be hard. And when you are just starting out you don’t need to hire bookkeeping services or accounting services to do this for you.
This is seriously the easiest system ever. Get 12 large envelopes. I use the big brown ones you can fit a whole sheet of paper into without folding it. Write the months of the year on them, one per envelope.
Blog Related Expenses
Every time you make a purchase for your website – buy a theme, take a course, use a paid scheduler, etc- print out the receipt or write it down. Then pop it in the envelope.
This is anything you spend money on directly for your blog. If you aren’t sure if it is a blog expense, write it down anyway. You can always check with your financial professional when it comes time to file taxes on your blog.
Blog Related Income
Anytime you receive payment for anything, such as from ads, an affiliate link, or a sponsored post, etc, print out the receipt and pop it in the envelope.
Make sure it is actual, received income, as in you have received a payout you put into your bank account. If you have not yet reached a payout threshold, you don’t yet have that money. Do not include it.
If you receive a product for free, you need to write that down along with the retail value of it. Yep, that free product is income. If you are making money, record it. (Yes, there are some thresholds for this to. But it is best to track everything and review with your financial professional what you do and do not include as income.)
What information do you need to document?
- Date. When did this transaction take place?
- Who. Who did you make a payment to or who did you receive a payment from?
- Method of payment. Did you use your credit card (note which one), a check, or cash? How did the payment come to you (PayPal, check, free product)?
- What. What did you spend the money on? What exactly did you receive payment for? (Be specific!)
- Amount. How much did you spend? How much did you make?
I know it seems like these are very basic, but the more detail you include the better. When you look back on this info at tax time you don’t want to be left wondering what a payment was for and having to search for the information.
Alternative Bookkeeping Organization Systems
If you prefer not to use a physical paper system, you can create email folders for each month of the year and simply email yourself copies of what you need to know.
As a bookkeeper, I prefer the paper system. With envelopes, you have your packets to give to your bookkeeper if you are using one, and you don’t need to send a ton of emails.
It makes it easy to organize and move things around if needed. (It’s easy to fix if you put a receipt in the wrong place for example.) When you are actually entering your information into your books it is much easier to have pages to go off of instead of flipping between browser tabs on the computer.
And just in case something happens to your email, like accidentally deleting a folder, you have what you need to know.
Once you have all this information together it is so much easier to track your monthly expenses and income. Once a month (or however frequently you review your blog finances) you can pull out your envelopes and you are good to go. As your business grows this system makes it easy to hand over your data to your bookkeeper.
This is the system I use and what I encourage all the business owners I work with to use. It makes bookkeeping and preparing tax returns easier.
Additional Information To Keep with Your Records
If you are just starting out as a blogger you are probably just using your personal bank and credit card accounts. If you have business accounts or cards you will want to add a copy of those monthly statements into your envelopes so you can reconcile them monthly. Basically, hold onto monthly financial statements.
Yes, I said the ‘r’ word- reconcile. Reconciling doesn’t have to be a scary thing. But as I said, if you are just starting out and only have a few payments and income sources it isn’t something you need to stress over.
If you choose to use an accounting service in the future they will want this information as well. It is helpful to get into the habit of maintaining these records from the start.
Congratulations! You are ready to tackle your bookkeeping. Seriously, taking a few minutes to run through these organizational steps will save you hours of time in the long run.
So now I have to ask. What issues are you facing when it comes to handling the bookkeeping on your blog? Is this organization system helpful? What do you want to know about this topic? I want to help out, so let me know! (Email me at SimpleBlogTaxes@gmail.com)
Another great article. I used my personal pay pall to purchase a refurbished mac book for blogging. I’m also using my personal credit card for hosting. I’m wondering should I/ can I get a business credit card without an Llc. Am I able to write these things off though I have yet to earn any profit? Thank for these great article. I’m gonna be browsing around you’r site some more.
Yes, you can get a business credit card as a sole proprietor. You use your social security number instead of an EIN.
As for writing things off if you are not writing a profit: If you are filing as a business then yes, you can deduct without making a profit. If you are filing as a hobby you can only deduct as much as you are reporting as income. Talking to your tax professional will help you decide what is best for your situation.
I am not much into reading, but somehow I got to read nice information on your site. Simple to understand and helpful. We will look forward to your future updates. Thanks!
Greetings from Accountants Bend Oregon
Terri Steffes says
I have read three posts on your blog about blogging taxes. I had my first year of making a profit (somewhere between 5-10K, still figuring this out) and I need to file taxes. I have a lifestyle blog, so I have a lot of categories where I write about. Lots of receipts and expenditures.