TAX SEASON: Expenses, Taxes, Business 101

*We are not tax professionals, however we have tips that you can discuss with your accountant*

Tax season is upon us and managing your taxes is an important task if you’re on the road to being your own boss, or if you’re already there.

Did you know the services you purchase from THB Marketing House are considered marketing expenses? That’s right! There are many expenses that go into running a business that can be written off to lower your tax liability and this is one of them. So, when spending money on your business (investing) make sure to categorize your expenses properly!

First things first, you’ll need to register your business. Not only will this help you appear more professional to your clients, but you’ll need to do this for tax reasons. I won’t get too deep on this but we always recommend Legal Zoom to our influencers. It’s SO easy and you can have this done in a matter of minutes PLUS they take payment plans. Honestly, this is not an option. You should not be taking any payments in your name or through your personal checking account for work done through your business. This will cause problems with your taxes and, regardless if you’re actually making any money with your blog, you need to register your business for legal purposes. Trust, go to Legal Zoom if you’re looking for guidance that is quick and easy.

When you have a real, registered business, you can start to track your expenses. This is SO IMPORTANT! As a new business owner, you’re likely going to spend more money on operating your business the first year (or two or three) than you actually make. I can’t emphasize the importance enough. Not only will this allow you to budget your expenses accurately but this will actually tell the IRS how to categorize your taxes. As a business owner, your taxes will work differently than when you receive a paycheck from an employer.

(BTW we use Xero which is tailored towards small businesses. It’s incredibly easy to use, as opposed to quickbooks, and there is an app)

An employer is responsible for expenses that go into running a business and part of that expense is paying you. At the end of the year, you’ll file your taxes, report your income and that’s it. When you own your own business, without getting super technical, your expenses are subtracted from your income. In most cases, you will run at a deficit as a new blogger and you’ll want to make sure that is accurately documents so you don’t overpay in taxes.

Here’s an example of first year expenses vs income:

  • Camera equipment = $800

  • Photographer = $75 3x per month = $2,700 per year

  • Website = $25 per month = $300

  • Monthly email subscription = $10 per month = $120 per year

  • Giveaways = $300 per month = $3,600 per year

  • Instagram ads = $20 per week = $960 per year

  • Products for shoots and reviews $500 per month = $6,000

THE LIST GOES ON…

Total = $14,480

The average first year blogger makes anywhere from $0 - $5,000 and $5k is really reaching. So, if we took those basic expenses and even exaggerated to say they killed it and made $10k the first year (which is not common), the business would still be negative and make -$4,480 during the first year. This might be scary to look at, thinking you’re making negative income but this is VERY NORMAL for any business especially blogging. This is just an example but you’ll never really know your expenses until you start tracking them. Again, in most cases, your blogging income will be lower than your expenses in the beginning. As far as your tax liability, you will need to create a registered business entity to be able to file this properly and you’ll want to or else you could be paying way more in taxes than you should.

All of this should be managed by an accountant. We are not claiming to be tax professionals and every business is different but this is just a very common example of what blogging and taxes looks like. Trust, you’ll want to iron all of this out in the beginning.

If your mind is spinning and you want to learn more, you can purchase our business mentoring this season to quickly get you on your way!


GET THE AGENCY / BRAND CONTACT LIST FREE WITH PURCHASE

BUSINESS STARTUP 101 CONSULTING
350.00

Setting up your business is extremely important, not only for your reputation but for your taxes!

  • 2 hour phone consultation + 1 hour follow up for questions afterwards

  • Personalized breakdown of your business currently and calculating goals

  • Personalized actionable check-list of what needs to be done and how

    • EXAMPLES INCLUDE: setting up an LLC, tracking expenses, which programs to use, how to efficiently use them, business investing advice, invoicing + banking, 1099 / w9 tips and more!

OPTIONS:
Add To Cart