Bloggers and Taxes

Writing your opinions down for the world to see, in return for a ‘free’ product is an illusion. Many of the seasoned bloggers know that technically we’re supposed to be claiming those free products as income. As well as the trips we may take that are all inclusive, cash monies we earn in return for a small ad space on our sidebar.

It is in fact all income.

Today, while I was having my taxes done at H&R Block, I asked a question that changed my entire visit. I was getting a measly $100 back on my return, and before they put the cheque in my hand, I asked about blogging. I asked what we’re supposed to be claiming, what we’re not, ect….

By asking that question my return went from a personal, to a business.  My return no longer cost $17 to file, but $80.  And I no longer qualified for cash back.  Even though I had claimed monies earned through blogging…I claimed it on the “Other Income” line.  I’m a waitress as well.  I just kinda added it together.

So, since I had already put my foot in my mouth, and couldn’t take it back.  I dove deeper to find out exactly what we can and should be doing.

Here is what I learned today…

Revenue:

• Have a separate bank account to be used only for your website/blog.  If you are not a registered business, than it would be a personal account. Same goes for paypal.  (the fees are deductible)
• If your blog’s revenue is under $30,000.00 you do not need to be a registered business.
• Products you receive to review must be claimed at full market value, unless you are given a value by the company sending it to you. (Check your packing slips/shipping slips, often they will write the value of the product from their perspective here)
• If you are sponsored to go to a conference, media event, ect… that is “taxable benefits”  You must claim the value of the trip, including food, flights, passes, ect.  (If you do not know the value of this, you have to give it a value)

Expenses:

• You can write off a portion of your household expenses, not all of them.
• If you have an office in your home, measure it.  The amount of rent/mortgage/power/heat is based on this.  For example, if your house is 3000 square feet, and your office is 600 square feet than you can claim 20% of those expenses.
• You can only write off a portion of your Internet/cellphone bills unless they are solely used for business purposes.
• Keep track of every expense: Mileage, Food, Drinks, Hotels, Flights (while traveling on your own dime) – Hosting fees, domain names, image rights, shipping prizes, computer expenses, office supplies, anything you purchase for the purpose of your website.

So, now you’ve got to get organized.  Since we’re all online anyway, my suggestion is to scan every receipt/packing slip/expense, ect and put them in files on your desk top.  Have a file for each month, and inside, one for expenses, on for revenue.  (ie.  desktop/taxes/january11/expenses)  Be diligent about it.  Because when it comes time to claim that revenue, you want as may deductibles to put against it as you can find.  You’ll also want to keep the paper copies of these, and put them in a file folder.  Have them separated by months and that will help you come tax time.  Make sure everything balances before you see the accountant.  The more organized it is, the less it’ll cost you to have filed.

I hope this helps to answer the questions that we all have, if you know something that I don’t, please feel free to leave it in a comment below.  I’d love to add to this so that we know just what we’re supposed to be doing when it comes to Revenue Canada.