Let me begin with the caveat that I don’t actually know what I’m talking about. This is just a tale of my own fumblings, so take it with a grain of salt, and consult a tax professional to get the real story on whether there are any key accounting considerations for bloggers.
If you’re a blogger and you’re making some money through your online activities, whether that be from your own blog, writing for paying sites, or selling your published books, you’ll need to keep track of that for tax purposes.
While you can leave everything until tax time to figure out, it’s probably going to be a lot easier if you’re keeping some form of accounting records as you go along.
Coming up with a records system
I’m a fan of simplicity, so I’ve got a spreadsheet, but writing it out in a notebook would work just fine too. The first step is figuring out everywhere you might be getting income from. For me, that’s Amazon and the other sites where my books are sold, my little blog store, the writing I do on Medium.com, and an article I had published in Bella Grace Magazine. I haven’t made enough for a payout yet through Google AdSense, Amazon’s affiliate program, or writing for Vocal Media, so need to worry about those at this point.
I’ve got columns for each month of the year, and then rows for each source of income. I’ve also got rows for my expenses like my WordPress plan and the book ads I run on Amazon. I doubt those will end up being tax-deductible, but I figure it’s better to keep track anyway.
I’m guessing Amazon and Medium will come out with some form of year-end statements, but since this is my first year making any online income I’m not sure what that will look like. I’ve chosen to keep track of things monthly and check my payment reports against my bank statements, because sometimes those things are in different currencies.
Consistent with my organized nature, I download payment reports each month and have a handy dandy folder system on my laptop to make everything easy to find.
While all of this might seem a bit overkill, I figure this is the kind of thing that it’s far better to be over-prepared than under-prepared.
Dealing with multiple currencies
For me, this is the biggest headache, because most earnings come in US dollars, which my bank then converts to Canadian dollars to deposit into my account. For tax purposes, this means I can’t just use the US dollar figures on my earnings reports; I need to report what I make in Canadian dollars. Hence the monthly record-keeping rather than having to go back through a year of bank statements all at one time.
Amazon pays you in whatever currencies your books are sold in, so on a given month I might get four different payments in US dollars, Canadian dollars, British pounds, and Australian dollars, for example.
I decided to price my blog store in US dollars, which means the reports generated by my ecommerce plugin (Woocommerce) are in US dollars. I use two different payment options: Stripe and Paypal. Stripe converts payments to Canadian dollars before transferring the money to me, but payments via Paypal stay in US dollars until I transfer it into my bank account.
See why it’s a headache?
Are you a person or a business?
If you’re making money off of your blog and/or other online activities, you’ll want to think about whether or not to set up your blog as a business in a legal sense. This will depend on your own situation and the tax situation in the country where you live.
I started looking into this when I first set up my blog store. In my province, to set up a sole proprietorship using a name other than your own name, you have to register it with the government. The problem was, they wouldn’t approve my blog name or even anything all that close to it, because it’s not specific enough for them. So I gave up and that was the end of that. It might end up being a problem that I’m taking payments using the name of my essentially made up business, but I think I’ll wait and cross that bridge if my blog store ever gets big enough for the government to notice (which realistically will never happen).
It’s all been rather brain-confusing, but luckily my best friend’s mom is a tax auditor, so I may have a chit-chat with her before tax season. I would be very curious to hear how other bloggers who have income related to their books and/or websites have managed and what their record-keeping system is.
You can find more posts about blogging on the Blogging & Writing Tips page.