Money Talks: An Introduction to Blog Business Expenses

As the old adage goes, “You've gotta spend money to make money.” While starting a blog can be free, the costs to maintain, improve and promote it can add up, especially if you're trying to create a business. What kind of expenses do you have for your blog? Hosting fees? Graphic design work? A DSLR camera? DIY supplies?

A blogger friend of mine recently got in touch wondering about what kind of expenses you can write off (or deduct) on your annual tax return as a blogger. Tax season in the U.S. is months away, but now is the time to start keeping track of your expenses and your income so that you're not scrambling come April.

First thing's first: if you're a blogger in the United States making any money from your blog, you have to claim that income on your tax return, and that requires classifying your blog as a business. That being said, there are also deductions you can make to help cover some of the expenses you may have as well, and we recommend consulting a tax professional to find out what deductions you may qualify for.

So what kind of business is your blog? Usually, it's either a sole proprietorship or LLC (limited liability corporation).

  • Sole Proprietorship: This is a type of business entity that is owned and run by one individual (you), where there is no legal distinction between the owner and the business. Anyone can start a sole proprietorship and claim earnings as part of their tax return, and in this case, all the income and expenses of the business take place in the owner's personal financial accounts.
  • LLC: A limited liability corporation provides legal and financial protection to it's owner, because it operates as it's own entity. An LLC is more difficult to set up than a sole proprietorship, and is not free, but if you want to look into it, The Wall Street Journal is a reliable source of information on this subject. In their “How To Guides” section, there is an article titled, “How To Form an LLC.”

Because we are neither tax professionals nor lawyers, we at IFB cannot tell you exactly what deductions you are eligible for, and they will absolutely vary from blogger to blogger. Through research, however, we have been able to find out some of the most common deductions for blog businesses. Here is just a sampling:

  • Internet access, hosting, and domain name fees
  • Computer
  • Digital camera
  • Business cards
  • Web design
  • Conference fees
  • Blog-related travel fees
  • Office or home office supply expenses

 

In case of auditing, you will need to have receipts or records for all your purchases and expenses, as well as your blog earnings. It's also important to note that there are different kinds of expenses for small businesses, not all of which are deductible. The U.S. Small Business Administration website gives a clear, easy-to-understand explanation of each. (A quick Google search lead me to one of their landing pages that focuses on expenses and tax deductions.)

Again, we strongly recommend consulting with an accountant, a tax professional or at least a trusted friend to help you figure out what kind of business your blog is, and what kind of expenses and deductions apply to you.

Sources & Further Reading:

 

*Disclaimer: Information in this guide is based on general principles of law in the United States and is intended for information purposes only. It is not offered for the purpose of providing individualized legal advice. Use of this guide does not create an attorney-client or any other relationship between the user and IFB.

If any of our bloggers in the community have experience with filing blog-related taxes, please share your advice in the comments!

 

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16 Responses

  1. Grace - Stripes & Sequins

    Thanks for this, Taylor! I think I was the friend. 🙂 I am about to head over and check out the further reading. I know people may not want to share this stuff but I wish you could have gone a little bit further with this. I hear of bloggers who expense trips, clothing, gym memberships, manicures, etc. While some of this seems valid, it feels like it might be a bit excessive / cheating. I’d love for you to open up the forum for bloggers to share their thoughts on this… or to hear the opinions of a professional (accountant, etc.!)

    Reply
    • taylordavies

      Hi Grace! Thanks for the feedback! As I started to look into this, it became clear immediately that this is a really complicated topic, hence why I’m just kicking things off with an introduction. I haven’t heard of anyone expensing that kind of stuff, which definitely sounds shady. I doubt anyone would own up to it to us 😉 But if there’s a legit way, I hope those bloggers will share their tips in the comments.
      The expenses for each kind of small business and blog are so incredibly varied, I really recommend that bloggers talk to a professional to get personalized council. I think as tax season gets closer I want to explore this further and yes, hopefully with the input of an accountant! (Deadlines…) Thanks again for the inspiration girl!

      Reply
  2. Ariana

    This is awesome and helpful information! I just launced in July but I have been keeping a folder with 2012 reciepts. So good to know exactly what I can claim and what I cannot. Now I can use this list in the future to organize my reciepts. When you say “computer” does that mean the purchase of a new computer? My laptop is in need of replacing and I plan to buy around December and use it for my Blog and personal use. Also, I see some people mentioned above that we can expense clothing used for Blog did not know that is that true? Perhaps I will take the advice above and also talk toa tax advisor to make sure.

    Ariana

    http://shopaholicundercover.com

    Reply
  3. Chaucee from Streets and Stripes

    Honestly, blogging has cost me more than I care to admit. Not only do I attend events and travel for the blog, but I have to have something to wear to these events too! It’s starting to add up 😛

    Thanks for this article! It’s definitely getting the thoughts turning…

    Reply
  4. Danetha Doe

    Hi!
    I am an accountant and owner of EmeryCloud, a cloud based accounting service for beauty and creative companies. I apologize for the length of this comment, but I wanted to help shed some light on the topic. As the author suggested, there is a difference between an accountant and tax specialist. While an individual can be both, often times the professional specializes in one area or the other. I am not a tax specialist, so I will avoid getting too detailed on the legalities behind filing taxes.
    Ultimately, what a business (in this case a blogger) can claim as a tax deduction truly depends on what the blogger is writing about. If the blog focuses on nail art, it would seem natural that the blogger visits the nail salon regularly to receive services. Gym memberships may be considered a necessary part of the business if the blog is about fitness or beauty. Lets say you have a section in which you review different beauty treatments. It would make sense that you are purchasing hair products or testing different cosmetic lines in order to relay information to your consumer base. Again, this is a gray area and I am offering generalities to shed light on the topic.

    When it comes to filing taxes, I HIGHLY suggest that you have a formal accounting system in place in order to avoid unnecessary fees and hassles when it comes time to work with a tax accountant in March or April. This can be as basic as an Excel spreadsheet or a formal small business accounting system handled by yourself or an accountant. Holding on to your receipts is great, but not enough. They need to be organized in some sort of accounting system in order to make sense of the receipts. Also, contact the tax professional you want to work with as soon as possible. Come March, they are typically swamped. The best time to find one for this upcoming tax filing is after October 15 and before the end of February of next year. Why should you organize your receipts into an accounting format? Because not only will it reduce the amount of work the tax specialist will have to do for you when reconciling your expenses, but it also helps you know where your business stands through out the year. If you are serious about generating a profit, you have to understand the cash that flows in and out of your blog business, your marketing expenses, etc. This will also help you set up a budget for your business as well as legitimize the blog’s financial well-being to potential lenders, advertisers and investors.
    Hope this helps! Sorry it was long. Feel free to check out my site http://www.emerycloud.com for a free consultation.

    Danetha Doe

    Reply
  5. Logistics

    Its a great post. Really nice to read it. The kind of information provided here is undoubtedly wonderful and worth readable. keep sharing

    Reply
  6. Thomas

    Too easy for US bloggers so. I would love to have the same process in EU. Need to check if there is something similar to this! 🙂

    Reply
  7. AnaInStyle

    When companies send me merchandise, so that I will use it in a post or a review, is the value of this merchandise considered taxable income?

    Reply
  8. Rhythm and Ruffle

    Very informative, still living outside of the US, I have already registered my blog as a business. I say if you think of it as a business, treat it as such – be 100% professional and 100% responsible, abiding the law of your land.

    http://rhythmandruffle.com <3

    Reply
  9. CLAUDIA

    Do you think that the monthly fee for rent the runway should be deductible?

    Reply