Blogging has been and continues to be one of the best ways to earn money and grow your own little business on the Web. But many bloggers don’t take the financial side of things into consideration and end up disorganized, not doing what they should be doing, or even losing money. Even if you are a small-time blogger, it’s important to handle your accounting the way any other small business would.
1. Know If You Need to Pay Estimated Taxes
There are a lot of important things to know about taxes when you’re working on your own and not traditionally employed by a company. Most companies have to pay quarterly estimated taxes to the IRS, and as a blogger essentially running your own business, you must do this too. Consult a tax professional or fill out the forms yourself to see if you must pay, but the general rule is that if you will have to pay more than $1,000 in income taxes after deductions, you need to pay quarterly estimated taxes.
2. Set Aside Income for Taxes
As a sole proprietor or any small business owner, you are responsible for setting aside enough money to pay quarterly estimated taxes (if applicable) and regular annual taxes. The amount you set aside will be based on the estimated amount of taxes you must pay, of which there are ways of doing so. The upside is that you can deduct business expenses on your tax return.
3. Keep Personal and Blog Finances Separate
As a blogger, you might feel that your operation is so small that just depositing your income from blogging into your personal checking account is fine. But this is generally bad business practice, and could result in considerably more work come tax time, messy audits and inaccurate perceptions of your blog income.
4. Use Software as Well as Provided Tools
Whether you just use PayPal for everything, simply monitor ad revenue via Google AdSense or use an accounting system like Microsoft Dynamics GP, using some kind of software to keep track of revenue and spending is going to make things a lot easier on you. Generally, using software is going to be a lot easier than trying to keep track of revenue and expenses on an Excel spreadsheet.
5. Review Financials Monthly
Most businesses produce monthly financials for review. There are a number of reasons to do this even as a small-time blog owner—it helps you keep track of the financial health of your blog and monitor your progress as you work towards your goals (whatever those may be, though hopefully they have been mapped out in advance). Doing this will also help you catch any mistakes in your accounting as well.
Running a blog might be simple nowadays, and everyone might be doing it, but if you’re serious about running your blog as a business, you need to treat it as such. And that includes keeping a very close watch on your financials, using good software and utilizing good accounting practices. Remember to always consult an accounting, legal or tax professional if you need assistance.