Making money online, especially via blogging, is a great way to supplement your income, save more money and generally improve your financial situation. But, what a lot of people who are interested in earning extra money online fail to think about is tax.
When you earn money online, you generally need to pay tax on it like you would your regular salary, and a failure to do so could leave you in a lot of trouble, and a bigger financial mess than the one you were trying to get yourself out of. This shouldn’t put you off blogging for a living (or freelancing), but it should make you think about what you’re doing, so that tax troubles aren’t a part of your future.
To help you out, here are some important things you need to know about blogging and taxes:
You Should Register as Self-Employed
If you’re thinking about making money by writing a blog, then it’s a pretty good idea to register as self-employed BEFORE you start making money. As soon as you’ve registered your domain name and started thinking about possible blog posts, visit the HMRC website and sign up. If you don’t do this and you start making money, even if it’s only a few pennies, you could get into trouble for avoiding your responsibilities.
There’s nothing to worry about, because if you don’t make any money from your blog, although you’ll need to file a tax return, you won’t have to pay any tax. It’s only when you make a profit, and when your total earnings are over a certain threshold, that tax will be taken.
Things That Are Included in Blogger Earnings
Blogger earnings are quite simply anything you earn as a blogger. This could be money earned from affiliate links, Google ads, sponsored posts, etc.), but they could also include any products that you are given to review, which you are also allowed to keep. Even if you sell a product that was given to you as a PR sample, should you later sell it, you will need to include that money as income on your tax return too.
It can be tough to keep things straight and ensure that your accounts are accurate, but it’s important that you do so if you don’t want to get in trouble and end up with a sizeable fine. There are accounting tools like Quickbooks and Adra that can help you keep track of your income and they work very well. However, you could just record all of your blog-related incomings and outgoings on a simple Excel sheet too.
Things That Count as Tax Deductions
What can and cannot be included as taxable deductions can be a bit complicated, but in most cases, the cost of your domain, and blog hosting should be tax deductible. Anything else you buy to enhance your blog, such as new themes, photos, etc. should also be included.In some cases, you may even be able to claim a small percentage of your utilities back in the form of deductions if you work from home.
Hopefully, this has made things a bit clearer for you, and you can start making money from your blog, without worrying about a call from the taxman.