If you earn any income from your blog, you need to keep track of your blogging finances – both for your own benefit and for tax purposes! Discover how to keep track of your blogging income and expenses, plus get my free, easy to use BLOGGING ACCOUNTS SPREADSHEET!
Do you make money from your blog? Woohoo! One of the reasons I love blogging so much is it is a relatively low risk way to earn good money, working from home and being your own boss.
However, one of the downsides to this is that, whilst it’s great being your own boss, it also means you have to do EVERYTHING yourself – and that includes keeping track of your income and expenses. There’s no accounts department to sort it out – it’s all on you!
The good news is – it’s nowhere near as hard as everyone makes out! I have been happily doing my own accounts and filing my own tax returns since 2014. I use one simple spreadsheet and it takes me about 30 minutes a month to keep on top of things and about 1 hour once a year to file my tax return – that’s it!
In this post I am going to be sharing with you all my simple tips and tricks that I use to keep on top of my blogging finances – plus you can grab my BLOGGING ACCOUNTS SPREADSHEET – the exact same one I use, for FREE!
Two Important Caveats
Before we dive in, I just want to make two important caveats…
First and foremost, I AM NOT A PROFESSIONAL in this area – I am not an accountant, tax adviser, financial adviser, CPA or anything like it. I am just a relatively financially savvy blogger who looks after her own accounts. The suggestions in this blog post should NOT be taken as any kind of formal, official or professional advice – if in doubt, you should always consult a proper professional in this area. I know you know that, but I’ve gotta say it!
Secondly, I’m British and that’s the legal/tax system I know best. In the UK it’s OK to do all of this yourself (assuming you are a sole trader and under a certain income threshold). That may not be the case in your country, so please check. The suggestions I am giving in this post, though, should be pretty universal – it doesn’t matter what country you live in, you still need to keep track of your income and expenses! But please do take a moment to read up on the rules for your own country, if you are at all unsure.
OK – I’m glad I’ve got all that off my chest – now we all know where we stand, let’s dive in…
First up – why bother?
Why should you track your blogging income and expenses?
Because it’s a legal requirement!
If you earn any money from your blog (or even get freebies), you need to start tracking your blogging income and expenses because it is a legal requirement. From the moment you earn your first pound (or dollar… or euro…), you must register as self-employed and file a tax return every year. In that tax return you will be required to declare all your income from blogging and your expenses. In the UK you will be required to pay tax on your blogging profits and national insurance. (In other countries you may be required to pay other taxes as well.)
So, you pay the right amount of tax
It is important that you declare ALL your income (including freebies) AND your expenses. If you fail to declare some (or all) of your income you are guilty of tax fraud. So, keeping fully on top of your blogging INCOME is vital so that you don’t accidentally commit a crime!
It’s also important that you keep accurate records of your EXPENSES. Given that you pay tax on your profits, it’s important to you that you also declare your expenses, so that you don’t end up paying too much tax. But obviously it’s also important to make sure you don’t claim for expenses you didn’t actually incur as a result of blogging or again, you would be guilty of committing FRAUD!
To make sure you do actually get paid
A third really good reason to make sure you keep on top of your blogging finances is to make sure you actually get paid for work you have completed… If you have lots of money coming in from various sources (sponsored posts, affiliate links, ads, products, services etc.), you need to keep track of it all so you remember to chase up money that hasn’t paid. This is especially important for sponsored posts, which are often paid for a month or two AFTER you have done all the work. I find I have to chase up about HALF of all the sponsored posts I do to remind them I still need paying – if I didn’t have a robust system for this, I would lose out on income I am owed!
Tools you need to keep track of your blogging finances
As I said at the outset, keeping track of your blogging income and expenses is not especially difficult so long as you have a robust system in place. I use just three simple FREE tools to keep track of my blogging income and expenses…
1. A spreadsheet
First and most importantly is my BLOGGING ACCOUNTS SPREADSHEET. This simple spreadsheet allows me to keep track of all my blogging income, outgoings and profit.
2. A lever arch file
This is where I store the ‘proof’ of every bit of blogging income and expenses. If ever I am asked for proof of my income and outgoings by the tax man, I have it all in one place. Each item is numbered, and that number is logged on my spreadsheet. I keep all this in date order and by tax year, so it is very quick and easy to lay my hands on the exact document I need.
3. A folder in my inbox
The final piece of the jigsaw is a folder in my inbox labelled ‘accounts’. This folder is subdivided by year and by month. In this folder I keep electronic versions of the ‘proof’ of my blogging income and outgoings. Whenever I get an email into my inbox which relates either to my blogging income (notification that I’ve been paid by my ad company, contract for a sponsored post, notification of affiliate income etc.) or blogging expenses (receipts and invoices for things I’ve bought), I immediately drag it into the current month’s folder.
At the end of the month I go through this folder and print everything off, add each item to my spreadsheet, assign each item a number and then write those numbers on the documents. Finally, I file those documents in my lever arch file. All this takes about 30 minutes per month – that’s it. Come tax time I have all the information to hand to fill in my tax return, and if ever I am audited, I have all the proof I need that my income and expenses are what I say they are.
How to keep track of your blogging income
So, the first thing to keep track of is blogging income. Every time I am notified that I have been paid, I file that in the correct month’s folder in my inbox. Additionally, every time I agree to something (e.g. a sponsored post) which I will be paid for, I make sure I get that agreement in writing and file that in the same place.
Once a month I go through that folder, print out each document and make a note of all my income on the first tab of my spreadsheet.
For every piece of income, I make a note of the following details:
- Income type (e.g. advertising, affiliate, sponsored post…)
- The company that’s paying me (e.g. Mediavine, Amazon…)
- When I accepted the job (if it’s a sponsored post)
- When I actually did the work to earn the money (e.g. published the sponsored post, or the month where I earned the advertising fee/affiliate income)
- The amount due (in pounds – if I get paid in another currency, I put the amount in the original currency in the comments section)
- When I invoiced (if it’s work that needs an invoice)
- When the money is due (most of my income is paid in arrears, it’s important to have this date so you know when you need to chase!)
- A unique code (see below)
- Comments – any notes, such as whether I’ve chased, amount paid in original currency and anything else I need to remember.
I keep every item of income in date order (by date accepted) and assign it a unique code. I use a very simple system for this. For example, for the tax year that runs 2019-2020, I assign the first two digits as 19 (because the tax year started in 2019) and then 0001.
So, for the first piece of income in April 2019, my code is 190001, the second one is 190002 and so on. When it’s the start of the tax year in April 2020, I’ll start again at 200001, 200002 and so on. (I’m banking on not getting more than 9999 different pieces of income each year!)
Once I have transferred all my income to the spreadsheet, arranged it in date order and assigned my codes, I then write the corresponding code on each document. I ensure these documents are in the correct order and then file them in my lever arch file.
If the income I am due requires an invoice, the unique code goes on the invoice and I print and file a copy of that invoice for my own records, as well as sending it to my client.
On the spreadsheet, I colour code income that I have RECEIVED in green, income that is DUE in orange and income that is OVERDUE in red – this helps me see at a glance if there is anything that needs to be chased! If there is income that is overdue, I chase it then and there, so I don’t forget and make a note that I have done so, and the date chased, in the comments section.
Then I move onto my expenses…
How to keep track of your blogging expenses
I deal with blogging expenses in a very similar way. Every time I pay for something related to blogging, I file the receipt or invoice in the correct folder in my inbox. If I don’t have an electronic copy of the receipt (for example, because I bought it in a shop), I place the paper receipt in a safe place (my paper receipts have their very own in-tray).
Once a month I go through the folder in my inbox and print out each document (and grab any paper receipts from my in-tray) and make a note of all my expenses on my spreadsheet.
For every expense, I make a note of the following details:
- Date purchased
- Company I bought it from (e.g. SiteGround, ConvertKit, Amazon)
- Item (or service) bought
- Code (I give every expense its own unique code too)
I keep every expense in date order (by date bought) and, just as with my income, I assign it a unique code. I assign codes for expenses in exactly the same way as I do with my income, so 190001 for the first expense of the tax year in April 2019 and so on. (Again, I’m assuming I won’t have more than 9999 expenses in each tax year – I really hope that never happens!)
Once I have transferred all my expenses to the spreadsheet, arranged them in date order and assigned my codes, I then write the correct code on each document. I ensure these documents are in the correct order and then file them in my lever arch file.
With this done, I can check how my profits are looking for the tax year in question…
How to keep track of your blogging profit
The way I have my spreadsheet set up means that all the totals for blogging income and expenses are automatically totalled and that total automatically populates the third tab on my spreadsheet – the profit/loss tab.
This is just a simple calculation: income minus expenses. My hope is that the resulting figure is always positive – that means my blogging activities are generating a profit!
What should you keep track of?
As far as income goes, you should keep track of ALL of it. Anything that you earn from your blog and its related activities (for example if you offer services, do freelance writing etc.).
As regards expenses, you should obviously take note of what is allowed in your country, (e.g. HMRC guidelines if you are in the UK), but in general you can include any expense you occur as a direct result of your blogging activities. For example:
- Web hosting (e.g. SiteGround)
- Domain names
- Premium themes (e.g. Genesis, Restored 316)
- Premium plugins (e.g. Social Warfare, WP Recipe Maker)
- Email marketing services (e.g. Mailchimp, ConvertKit)
- Design and editing tools (e.g. Lightroom, Premier Pro)
- Social Media Scheduling (e.g. CoSchedule, Buffer)
- Backup services (e.g. VaultPress)
- Design/marketing materials (e.g. business cards, logo design)
- Computer equipment/printer
- Paid stock photos
- Stationery & office supplies (pens, paper, stamps, files)
- PO box (e.g. for use on your email newsletter)
- Blogging courses and conferences
- Blogging related books and magazines
- Travel costs (e.g. to a client or blogging conference)
- Staff costs (e.g. if you employ a VA)
If you work from home, you may also be able to be able to claim for a proportion of your costs for things like heating, electricity, internet use.
What to do about tax as a blogger?
As I mentioned above, as soon as you start earning from your blog, you need to register as self employed and start tracking your income and expenses. At the end of each financial year, you will need to complete a self-assessment tax return.
In the UK the self-assessment must be filed by the end of January the following year. So, for example, the self-assessment tax return for 2018/19 must be filed by 31st January 2020. To find more information about how to register as self-employed in the UK and get a self-assessment tax return visit the HMRC Website.
Filing a tax return is nowhere near as scary as it is made out to be. It usually takes me about an hour once a year and it’s really just answering a series of questions about your business (AKA your blog) and giving the figures for your income and expenses for the tax year in question. If you’ve done good job of keeping track of your blog’s finances all through the year, it’s really nothing to be daunted by.
Don’t forget to save for tax!
At the beginning of each tax year, you should familiarise yourself with the tax rates and allowances for the year and estimate how much tax you think you will have to pay, based on how much you are currently earning and how much you think you will earn in the next tax year. You should make sure you set aside enough money each month to cover your tax. That way there will be no nasty surprises when you get your tax bill!
If you are in the UK you can check out the HMRC website for more information on how much tax you have to pay and when you will have to pay your tax bill. They also have a handy little calculator to help you work out how much tax you will have to pay, based on your monthly income.
Grab a free copy of my blogging accounts spreadsheet
Want to stay on top of your blogging finances? Grab yourself a free copy of my blogging accounts spreadsheet…
Want to read more about blogging basics?
If you’ve enjoyed this post you may like to read more about blogging basics. Here are some of my most popular posts on this topic…
- How to choose the right host for your blog
- How to choose the right theme for your blog
- 15 essential plugins for WordPress blogs
- How to protect your blog
- How to treat your blog like a business (and start actually making money!)
I’d love to help if you have any questions about this topic. Let me know in the comments below or over in my Productive Blogging Community.
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