I know it sounds nuts, but did you know that blogging can actually save you money? If you know what you’re doing, your blog can actually be a huge asset and end up saving you money, even if you aren’t making a profit with your blog yet. Sound too good to be true? Keep reading and learn how your blog can save you money!
So the way your blog can save you money is through your taxes! You might be saying “um, no that can’t be right.” But stick with me. If you know what you’re doing, come April 15 (or earlier, since you really should be doing your taxes way before then!), you could actually have more cash in your pocket than you expected. Let me explain.
If you’re a blogger, the IRS considers you to be self employed or a sole proprietor. This basically means that your blog is your business – whether or not you’re making a profit yet. The IRS understands that most businesses actually lose money the first year or so (due to start up costs) and that’s ok. If your business loses money, you can actually claim that loss on your taxes. That loss can be applied against your gross income if you have another job. But your business really shouldn’t be losing money year after year.
(If your blog is only losing money year after year, the IRS is actually more likely to categorize it as a “hobby” – meaning you don’t have to pay taxes on profits but you also don’t get to write off your expenses. To determine if your blog is a business, the IRS will want to see that you’ve made a profit in three out of the last five years and will also look at other factors to determine that your blog is a business, rather than a hobby.)
So your expenses really shouldn’t be more than your income year after year because that would be a pretty crappy “business.” But if you keep track of your legitimate expenses, you can apply those expenses against your earnings, so that you will end up paying less on your taxes. There are lots of qualified deductions that can be applied against your earnings to determine your business’ profits for the year.
It’s all about knowing what qualifies as appropriate business expenses, which the IRS defines as anything that is “reasonable and necessary” to your work.
I know taxes and money stuff can be overwhelming, so I’m actually doing a free webinar this week all about taxes for bloggers and small business owners! Tax season is upon us and I’m here to get you ready – click below to sign up for the webinar. Hope to see you there – I know taxes can be “blah” but I promise to make it painless!