If you have any questions do not hesitate to contact me at intentionallyinspired@gmail.com.
Have a great day and be intentional..
Here are some notes from the scope.
Kristin Zolkowski
https://www.facebook.com/kristinjalowieccastellano
I live in
Wisconsin, Wife mom of 4 2 adults 2 teens that think they are adults. I have
been in business since 1996, Moving business, Sign Business (4-6 employees)
Bookkeeping, concierge, in home daycare center, cleaning, desktop publishing,
logo design. Moved in June to a small farmhouse. I just cut off the last of my
clients letting them know I would not be doing their taxes this upcoming
season. I am not up to keep up with the ever changing laws J
Except for whoomyself..
Approaching this as though you know nothing. Sorry if some of this
sounds very basic but believe it or not some people are not fully aware of the
most basic IRS rules and since the laws are changing from year to year tax
preparers are now required to obtain a certified license for preparing taxes in
an office.
When you decide that your blog or other business is ready to become
more than a hobby per the IRS, there are a few things you need to consider;
Business Structures, DBA, yes
Business or hobby ??
The IRS will not allow
tax deductions if your business, be it blogging or any other business is
categorized as a hobby. To claim your deductions, you must first show the IRS
that you are running a legitimate business that is generating a profit 3 out of
5 of the most recent years. Some Other things the IRS may might look at is the
amount of time and activity that you put into your business and whether or not
you depend on income from it and does it how profit potential.
Estimated Taxes are Due April
15, June 15, September 15 and January 15 (with some exceptions for holidays,
etc.). If you don't pay your estimated taxes in a reasonable timely manner, you
may owe an additional tax penalty.
What you are calculating is the amount you must pay for
self-employment tax on your income, which is the combined Social Security and
Medicare taxes paid by an employee and an employer. Because you run your own
business, you required to pay both the employee and the employer portions.
Self-employment tax must be paid whether or not you owe any federal income tax.
Self-employment
tax when you are putting money aside for your estimated income
taxes, don't forget to set aside additional money for self-employment tax. From
the perspective of the IRS, working as a blogger means you run your own
business and that your income from that income is taxed.
Keeping
Track of Expenses: I cannot stress enough how
important Good record keeping is. I was audited by the Irs years ago. I made
several costly mistakes but I was forgiven of those mistakes with a warning by
the IRS, solely based on the fact that I kept my paperwork extremely organized.
They were able to wiz through thousands of receipts and expense. This was much
better than dropping a load of jumbled receipts on their desk and expecting
them to calculate them.
Ideas for
keeping track of expenses and deductions: There is a giant Plethora of options
for keeping track of expense ranging from simple excel spreadsheets to $400 +
accounting programs where Programs like Quickbooks, Peachtree and Quicken Etc.
Quickbooks hands down is probably, still, after all these years the consumers
choice. (Side note: Keep a small ledger in car to keep track of business
mileage. The Irs will ask if you keep track of your mileage. )
I cannot stress
enough!! Keep receipts, keep them in categories. Print them, ask for them, and
get them. (Stubs, PayPal receipts, emails
etc.)
a special tax rule allows you to deduct
up to $5,000 in start-up expenses the first year you are in business, and then
deduct the remainder, if any, in equal amounts over the next 15 years.
For
an expense related to your business to be deductible, it needs to be both “ordinary” and “necessary”. No matter
what industry you are in, that is the standard for the IRS. So, any
time that you question whether something is deductible, as a first step, ask
yourself is this “ordinary” and “necessary”?
An ordinary expense is one that is common and
accepted in your industry. It’s the one time that you care about what your
competitors are doing. No matter what your mother says, it does matter whether
everyone else is doing it, too.
A necessary expense is one that is helpful and
appropriate for your trade or business. You don’t have to prove that you
couldn’t be in business without the expense – more or less, it needs to make
good business sense.
You’ll need to retain excellent records with annotations
about the expenses
Always check with a tax
professional if you are unsure if something is or is not deductible. Call IRS
during tax season or check out the interactive tool at
Deduction Categories: (remember to err on the side of caution when
it comes to the IRS and only deduct the business portion of items you are
claiming.)
Corporation
incorporates fees. Advertising & Marketing (Head
Shots, promotional materials, advertising spots on other blogs, business cards,
signs, printable, flyers, ad spots, newspaper spots or advertisements, Logo
design etc.)Trademark and copyright fees, Depreciation (Long-Term
Assets Long-term assets are things you purchase for your business that will
last for more than one year,(must be used more than 50% for business such as
computers, office equipment, cars, and machinery. Long-term assets you buy
before your business begins are not considered part of your start-up costs.
Instead, you must treat these purchases like any other long-term asset you buy
after your business begins: You must either depreciate the item over several
years or deduct the cost in one year under Section 179. However, you can’t take
depreciation or Section 179 deductions until after your business begin.)Office Supplies (Tax software, Accountant, Tax prep etc, paper, printing, ink, pens
etc.) Postage, PO
Box, Materials and supplies to create a post that
makes you money (including shipping if applicable), Prizes, Gifts and
giveaways. If you make the gift you can only deduct
the cost of creating the item, for example I make bath salts and sell them on
etsy. I can deduct the cost; let’s say 2 dollars that I paid to make the bath
salts. NOT the full retail value. Vehicle, travel and meal expenses (blogger meetups, small business seminars and blogging conferences) any
sort of Education related to your business (including but not limited to eBooks, courses,
seminars etc.) ANYTHING
Downloaded for business purposes, Costs and expenses to run your blog (Domain name, Webhost, Logo Design, Web templates, WordPress plugins and
costs, Cost of contractor to help you, Internet Fees and Phone Fees as well as
cell phone fees. If you use the cell for personal you figure a percentage to
deduct for business. Let’s say you pay 100 a month and use your phone 50% for
business then you can deduct $50 a month for cell phone fees as well as
additional app charges related to your business. Digital Cameras, Design Software, memory cards or other
peripherals and or equipment. Dues and Subscriptions, Paid websites for
subscriber newsletters etc like mailchimp,
Equipment, Material and supplies used solely for the purpose of
creating an engaging blog post; here are some examples: http://www.taxgirl.com
- Your
blog is a baking blog and you make a full course meal, soup to nuts. Is
it deductible? Perhaps the cost of the sourdough bread is … but not
the rest of the meal.
- Your
blog is a baking blog and you make three loaves of sourdough bread. Is
deductible? Probably the cost of one loaf – that’s the part you needed
for your review, right? But not three. The other two are likely to be
eaten for personal use and are not deductible.
- Your
blog is a general food blog and you make lasagna for your entire family. Is
it deductible? Maybe. If your blog is a “family food blog”, then
perhaps the family-sized portion is deductible. If your blog focuses
solely on a niche, like healthy eating or cooking with noodles, then only
the portion attributable to you, for the purposes of testing, is
deductible.
Business Use of Your
Home' Not a fan of this. It’s a red flag for IRS If you use part of your home for your business,
you may be able to deduct expenses for items such as mortgage interest,
insurance, utilities, repairs, and depreciation. To qualify you must meet the
following criteria:
a)
The business part of your home must be used exclusively and regularly for your
trade or business. However, there are exceptions for daycare facilities or
storage of inventory/product samples.
b)
The business part of your home must be:
-
The principal place of business, or
-
A place where you meet or deal with patients, clients, or customers in the
normal course of your business, or
Some Apps that I came across to help you are (Software
programs Quickbooks, Peachtree, Quicken)
AndroMoney FREE
Expense Manager by Bishinews FREE
Concur
Small Business Accounting Pro
FREE
Daily Expense FREE
Book Keeper Accounting and
Invoice FREE
Real Quick I was asked “If I am
sent a product for review is this taxable” Right now there is not a lot of
information from the IRS indicating the specifics on this. If you make money
generated because of doing this review my answer will be yes you may need to
count it as income. Sorry.
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