Why Your Hobby is a Business
First, let me address the elephant in the room.
“I don’t make real money”
“A new fridge and stove doesn’t pay my mortgage”
“Exposure and a car seat don’t feed my kids”
“I’m not a business, I’m just a small blog”
“I only do reviews, I’ve never received money”
It’s a common misconception in our industry and I’ve spent the last 7 years dispelling these and other myths to bloggers and brands alike.
Income, Swag, and Samples
Ok, so you’re a business. What’s next?
Let’s look at what constitutes income in the eyes of law – because the only opinion that really counts here is that of the IRS and CRA.
Income is anything you receive in exchange for services rendered.
If there is an expectation, implied or explicit, of an exchange – it is income.
The litmus test of income vs swag and samples is as follows: Is a brand, agency, or individual accessing your audience or using your influence to their (potential) benefit? If yes, it is most definitely income.
The half of a mini hot-dog you were given as a sample while shopping in Costco is not income. They are hoping to sell to you, not to your audience.
Money, of any kind, is income.
I can hear the collective sighs of frustration as I write this. You are absolutely right – a blender or a trip to Detroit won’t pay your mortgage. You feel you shouldn’t have to pay taxes on it. Your feelings on the matter, however, don’t change your tax liability.
This is where you must take stock of what matters to you and your family, what brings value to your household. Would you have spent money doing XYZ, or buying ABC if you had it? If it doesn’t make sense to you, or add value to your life, pass on the next project.
One-Night Stands, FWB, and Going Facebook Official
Bottom line, if you don’t want to jump in bed with a brand don’t take them on a date.
Focus on building real relationships with a brand instead of having a bunch of one-night stands.
The money you spend
You may be surprised at how many expenses you can claim. These expenses are used to offset your income, reducing your tax liability.
Before you say “I don’t have any expenses, I just have a blog online” have a look at this quick list of expenses you can deduct:
- Hosting, domains, ads, graphic design, web development and other related expenses to maintain your blog are claimed as advertising expense. You can also claim business cards in this category
- You can’t blog without the internet. You can deduct 100% of your home internet (base price, excluding overages) as well as 100% of your cell phone. Not the 6 devices on your family plan, but the one you use.
- You can’t get on the internet without a device. A new computer, laptop, tablet, or phone can be claimed as you require these in order to blog.
- Do you attend conferences? The registration fee you paid for each conference (maximum 2 in Canada, no limit in US) can be claimed under convention expenses.
- The cost to travel to and stay at the conference are considered travel expenses and can also be claimed. In Canada, you can only claim the registration fee for 2 conferences. However, you may claim your travel expenses for all events you attend. You’re still there on business and these costs are valid.
This is by no means an exhaustive list of expenses you may claim. For the full list, download the Bloggers’ Tool Kit. Enter the following password #USEFULSWAG (it’s case sensitive and includes the hashtag) to download a zip folder with everything you need to track your blog income and expenses.
Ready, Set, Go
It’s my hope with this post and your blogging tool kit you feel more confident as we approach tax season.
Have questions about taxes? You’re probably not the only one. Ask away, and everyone will benefit!