You may have started writing your blog because of a passion you have, but, if you've started making money with it, tax time can be somewhat stressful. As someone who isn't used to running a business, you are likely to be making the following accounting mistakes because you don't realize how your actions can affect you when it's time to do your taxes at the end of the year.
Not Separating Out Business Income and Expenses
An easy mistake many beginner bloggers make is that they keep all their expenses and income in one or two personal accounts. The same debit card you use for groceries might be the same one you use to pay for your e-commerce plugins and your hosting fees. This can lead to a huge headache when it comes to your taxes because looking at pages and pages of bank documents from the past year to attempt to find specific business-related expenses or deposits can be time consuming.
Instead, set up a completely separate account for your blogging business. Have deposits go straight there and when you make any purchase regarding your blog, use the money from that account only. When you or your accountant finally gets to the taxes, it will be much easier to work with the numbers.
Not Holding on to Your Receipts
Another mistake bloggers make is that they don't always hold on to relevant receipts. You might not have expected to make money from your blog when you first started out, but it's important to realize that receipts can help you prove purchases and may help you prove other deductions. Keeping computer receipts, printer ink receipts, event receipts, and fuel receipts from your trip to someone you interviewed is smart.
It's also wise not to put all your receipts inside a shoebox. Sort them according to category and place them neatly in a pile using binder clips. If you're uncomfortable with receipts of all different sizes, you might also want to scan them into your laptop or computer. Save the images on a pen drive so you can always be sure that they're available and not lost.
These two mistakes can cause a great deal of stress when it's time to complete your taxes; use the advice here to alleviate your stress. Ask a small business accountant like Teri J Henderson, CPA, P.A. if there are additional things you can do to make tax time easier.