Are you looking for an easy way to track your blogging income? If so, you’re in the right place because in this article, we’ll be talking about:
- What routines you need
- what to track
- what software to use
- and, how to prepare for tax time
- 1 A Common Scenario for Bloggers and Online Entrepreneurs
- 2 Many Bloggers Don’t Know about Bookkeeping
- 3 How do you Track Blogging Startup Expenses?
- 4 When Should You Separate Your Personal and Business Expenses as a Blogger?
- 5 How Often Should You do Bookkeeping as a Blogger?
- 6 Monthly Bookkeeping Tasks
- 7 Weekly Bookkeeping Tasks
- 8 Daily Bookkeeping Tasks
- 9 What Software Can Help with Managing Bookkeeping as a Blogger?
- 10 Do Bloggers do Invoicing?
- 11 How do you Pay Yourself as a Blogger?
- 12 Who can you ask Business Finance Questions to?
- 13 What to do at Tax Time?
- 14 Conclusion
A Common Scenario for Bloggers and Online Entrepreneurs
So the scenario goes…
You’re doing a job you don’t enjoy. It makes you cringe to think about going to work, so you become desperate for a new way to make money. You start doing research online and you hear about blogging as a top-rated home business with low startup costs, so you decide to start a blog.
You don’t know how to “blog”, so you start by buying courses. You buy plugins, hosting, and other things from the money you earned from your job.
The blog starts growing. More customers are coming to your website. You start getting consistent sales, and tax time is here. You don’t have a clue what to do, what you should have done, and you’ve heard of people being slapped with large tax bills so you’re scared of what COULD happen.
You’d be surprised how common this scenario is. Have you heard of this before? Maybe you can relate.
Many Bloggers Don’t Know about Bookkeeping
As a blogger, online entrepreneur, affiliate marketer, freelancer, digital course creator, or whichever name you choose to go by, you are a small business owner. As a small business owner, you require finance, accounting, bookkeeping, marketing, and legal support.
Many bloggers and online business owners don’t know much about bookkeeping. They start an online business to make extra money, and when it works, the bookkeeping comes as a surprise.
It’s important to know:
- What you need to do to keep your online business finances in order
- What routines you should have in your online business
- Who you can go to for business finance advice
- and, How to handle tax time
How do you Track Blogging Startup Expenses?
Starting from the beginning, before the blog starts making money, there are expenses–this is 100% normal for any business (regardless of type). In an online business, some common expenses are:
- Web Hosting
- Social networking
- Office Supplies
- Legal fees
- Accounting fees
- Marketing coaching/consulting
- Incorporation costs
- and the list can go on
Yes, there is a minimum viable list of blogging expenses, but that’s not what this post is about. If you’re on a tight budget, you can ask a successful blogger, what’s the minimum viable list of expenses you’d need to make money blogging. I give more insight on that here.
Startup bloggers and online business owners can have ranging expenses, and they need to be accounted for.
When you start a new business, the expenses most likely come out of your personal income. Money you spend to start a business can reduce the amount of taxable income you have, but you can only get the “write-off” when you’ve documented your expenses.
It’s important to have a personal budgeting routine, so you know how much your investing into your business. When you spend money on your business, you can add that to a line item on your personal budget. I have “KOHA Inc.” as a line item on my budget, so when money is taken from my personal budget and given to KOHA Inc., I know it’s an investment I’m making in my business.
I like to budget my personal and business expenses separately in Everydollar. I have one log on for my business and a separate log on for my personal. One line item on my personal budget is my business, so when my business required an investment from my personal income, I could account for what was invested from my personal income into the business.
When Should You Separate Your Personal and Business Expenses as a Blogger?
It’s best to incorporate or get a DBA as soon as you can, so it makes your bookkeeping easy. For many people, they may start out without the budget to incorporate and do all of the formal stuff, but with services like Incfile, you can get help with incorporating for free.
Once your business is incorporated (or when you have a DBA or “assumed name”), then you can open a business bank account. It’s important to spend money on the business from the business account, and to spend money on personal things from the personal account.
It will help to avoid tax penalties, and it will make it much easier to do your bookkeeping later.
How Often Should You do Bookkeeping as a Blogger?
It depends. For most bloggers, you have a few ways you make money and your expenses will stabilize at some point. In the beginning, it may seem like you’re spending on all kinds of new things, and the spending just won’t get predictable, but it will.
When you start out with your bookkeeping, you may need to pay attention to it more often until you have all of your spending regulated.
Monthly Bookkeeping Tasks
At the beginning of the month, or at the end of the month prior, it’s important to do your budget. You want to forecast what things you’ll be buying, how much they’ll cost you, and what income you’re expecting.
Having a plan helps because you’ll be less likely to fall into shiny object syndrome and spend on something you had no intentions on buying.
Weekly Bookkeeping Tasks
At least weekly, you should go back into your budget to update with your real-time spending. It’s one thing to predict that you’ll spend $50 on courses or $19 on hosting, and it’s different once the transaction comes thru your account.
You want to make sure you know what ACTUALLY happens and how it compares to what you predicted–this habit will help you identify patterns of customers who pay on time and those who don’t, dates payments come thru, and how much your spending on various categories in your business.
Daily Bookkeeping Tasks
Most bloggers I know don’t spend every day, but if you have more transactions, you might spend daily. I don’t know. I know it’s important to keep track of your reciepts. Reciepts can come thru on any day of the month.
When they arrive, you may want to save them to a folder in your cloud drive, filter them into an email folder, and keep an offline organization system so you can prove any purchases were valid business expenses if a tax audit ever came up.
What Software Can Help with Managing Bookkeeping as a Blogger?
Software can make it so much easier to manage how you track your blogging income and expenses. I use software to track income and expenses, to pay myself, to file my taxes, and to coordinate with an accountant when I need to. It’s so helpful!
If you try to keep everything in your head, you’ll forget things. Even if you rely on your bank statements, it doesn’t quite explain things as clearly as you’d need to for tax purposes.
For example, let’s say, you scheduled a photo shoot at Walmart for your blog. You buy an outfit, get makeup, buy SWAG, and pay the photographer’s fees. It will show up on your bank statement as “Walmart”, and how will you prove that the transaction was a business expenses?
With software, you can keep notes and even attach receipts. Here are some popular software options for bloggers and small business owners.
- Payroll: Quickbooks, Zenefits, Gusto
- Budgeting: Everydollar
- Income/Expense Tracking, Invoicing and Reminders: Quickbooks and Freshbooks
I personally use Quickbooks for payroll, Everydollar for budgeting, and I don’t currently offer services that I invoice people for.
Do Bloggers do Invoicing?
Some bloggers offer services like virtual assisting, ad management, social media management, influencer marketing, or others. When you have services offers, you can either sell thru a platform like Podia, or you can invoice thru accounting software.
Bloggers who monetize with affiliate marketing or e-commerce typically don’t require any invoicing because payments are processed online.
How do you Pay Yourself as a Blogger?
Everyone is different. There are many ways to approach paying yourself. You can do it completely manual, where you calculate your total income, calculate your expenses, calculate your taxes and profit, and decide what’s left that you can pay yourself, or you can use software for payroll to make things easier.
For me, I do my budget first. Once I’ve done my budget, I know how much income I’m expecting, what expenses I’m expecting, what I want to set aside for profit and working capital, and what I can pay myself. From there, I go to Quickbooks Payroll, and “run my payroll”. I enter my paycheck amount and it will automatically calculate the taxes and deduct the amount needed to pay my taxes when it’s due. It also makes sure I’m paying things most other employees pay like Social Security, FICA, and other taxes.
If I want to, I can also set up my payroll to put money in my retirement accounts, investment accounts, or on healthcare, but I don’t currently use those features.
Who can you ask Business Finance Questions to?
It’s best to have a bookkeeper and accountant you can go to, to confirm current best practices, and to ask questions. They will make sure you’re compliant with tax regulations and making the most profitable finance decisions for your business.
What to do at Tax Time?
If you sustain the daily, weekly, and monthly habits I mentioned within this article, tax time will likely be a breeze for you. You would simply schedule an appointment with your accountant a few months out to have them look over everything, make sure you’ve kept your books clean and understandable, ask your questions, and get a list of what you’ll need to bring for your tax filing appointment, then schedule your appointment to schedule your taxes with your accountant.
If you prefer to do your taxes yourself, you can import your transaction from Quickbooks into Tax software like TurboTax, TaxSlayer, H&R Block, or Taxact, and answer the prompts.
Overall, if you want your blogging business to give you the benefits of a business, you have to treat it like a business. Bookkeeping, legal, and marketing are all key aspects of running a successful business. If you have questions about any of this, leave them in the comments section below and I’ll get back to you.
Need More Insight on Bookkeeping? My Recommendations
The Fundamentals of Bookkeeping [E-Course]
If you feel like you're missing lots of information on how to track your business income and expenses, it may be best to take a bookkeeping course. This course has 1,346 reviews and a 4.5 star rating on Udemy.
My 24-25 Income Report
If you'd like to see my process for tracking my blogging income and expenses, then watch the 24-25th month video income report (posted at Wealthy Affiliate) and see my process.
If you're looking for a software program you can use to track your blogging income, record your expenses, and run payroll in a compliant way, this software may be a lifesaver for you.
Freshbooks is very popular with online entrepreneurs for its simplicity, but it has less features than Quickbooks. If you think Quickbooks is a little too complex and you don't need payroll functionality, then Freshbooks may be a good alternative.
Dave Ramsey made a finance software to help with creating budgets and "telling your money where you want it to go". Profit and Loss statements (like what's available thru accounting software) is great, but if you like to have an ol school budget., Everydollar is a great solution.
See More Normal Online Business Startup Expenses
Are you confused about what you need to spend in your blogging business? Take a look at this article with my minimum viable income recommendations and ways to scale up.