This post originally appeared on Cowgirl Runs.
Disclaimer: While I am a designated accountant, I am not your accountant. If you have any specific questions, I recommend you discuss those with a designated accountant. Don’t know one? I recommend me!
A note: I’ve been immersed in the world of accounting since 2004, so if there’s anything here you don’t understand, please tell me! I don’t want anyone to feel lost of confused when I’m trying to make things a bit easier!
Welcome to the final installment in the Accounting for Bloggers series.
My goal of today’s post is to answer some questions and to touch on some items that I didn’t got into too much detail on in my earlier posts. As always, if you have any questions, please let me know!
Accounting for Bloggers – FAQs
Do I really need to include goods received in my income?
Yes, you absolutely do. The Canada Revenue Agency (CRA) views goods received (shoes, apparel, product) and other compensation (gym memberships, race entries, gift cards, etc) as a benefit received by you as part of running your blog. You need to calculate the value of the goods received an include as part of your income.
Is there a dollar limit where I need to report?
Unlike our American friends, we have to report income as soon as you earn it. So, if you earn as little as $1 on your blog, it is expected you will report this on your return.
What if I never make a profit?
When you have a business, the CRA expects you are operating with a reasonable expectation of profit. So if you are constantly losing money by claiming expenses and you’ve done this over a number of years, you may need to consider the income earned as ancillary and continue reporting that, but not your expenses. However, that may also not be necessary.
Basically, the CRA doesn’t want you to create a business merely to create a tax loss to save on paying personal taxes. If you can show you’re operating your business in good faith and are making a reasonable effort in order to make a profit, you probably don’t have much to worry about it.
That’s not a very clear answer, is it? Unfortunately, when it comes to CRA guidelines, not everything is clear.
Can I expense my shoes/clothes/makeup/food/etc?
Is what you’re trying to expense directly related to your blog as a business? If yes, then yes.
If no, then no.
If you’re a food blogger, you can absolutely expense the food purchased for blog recipes only as part of your expenses.
If you’re a running blogger, you might be able to argue that a race entry is a business related expense. I’d consider the page views generated by your race reviews and consider whether that appears to be reasonable.
Consider this scenario: The CRA calls to ask what items make up your expenses for your blog. You list them off. The agent then asks you to explain the purpose of the expense and why it pertains to this business. If you can explain why it relates to your blog/business, you likely don’t have much to worry about it.
What about meals and travel?
This is a bit more of a grey area.
Say I go out for brunch/dinner/drinks with a group of bloggers (this actually happens quite frequently). Can I expense that?
If it was purely social, probably not.
If it was a blogging brainstorming session, and the results of the gathering play a part in your blog? Probably. But remember, you can only claim 50% of the cost of the meal – even if you only pay for your own.
Travel is also tricky. You can absolutely expense travel related to your blog (say, attending a conference) without issue.
Personal travel that ends up on your blog is a different matter. I’d advise not claiming 100% but making a reasonable estimate of the amount that pertained to your blog, and claim that. There’s a chance 0% pertained to your blog, and that’s fine too.
What if I have an expense that I know is blog related but don’t have a receipt?
I assume you have the information because of a credit card statement and know the vendor and the actual amount.
In that case, I would say it’s fine to claim, but if the CRA requests support, be prepared to go back to the vendor and attempt to get a copy of the receipt (ie. hotel bill).
Also, get into the practice of retaining receipts and, if it isn’t clear, write on the receipt so if you need to look into something 1-2 years down the road, you’ll know what it’s for.
Honestly, it’s extremely unlikely the CRA will decide to look at your return. They’re concerned with people who appear to be defrauding the income tax system, not those making a relatively small amount off of a blog.Your accounting and taxation FAQs answered. Maybe 🙂 #tax #bloggingClick To Tweet
Do you think filing your taxes will be easier after this series?
Do you have any questions that I haven’t answered? Let me know!
Accounting for Bloggers: How to Structure Your Business
Accounting for Bloggers: How to Track Income and Expenses
Accounting for Bloggers: Filing Your Taxes (sole proprietorship)
Accounting for Bloggers: Filing Your Taxes (corporation)
Accounting for Bloggers: Frequently Asked Questions