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!
Good morning, friends.
Here we go, the fourth installment in the Accounting for Bloggers series.
Similar to last week, I highly recommend you grab yourself an extra cup of coffee (or tea) and be sure to pin this post for later, as I’m sure you’re going to want to refer back!
Accounting for Bloggers
Today we’re going to talk about how to file your taxes if you are treating your blogging business as a corporation.
You and your blog are separate. Think of your blog as its own being. It generates income and expenses and you pay yourself out of your blogging business (there are a number of ways you can accomplish this – dividends, salary, etc). The income you make is included on your personal tax return and you will file a separate tax return for your blog corporation.
In order to treat your blog as a corporation you must:
- Incorporate. (Note that in Canada we do not have different corporate structures like in the US, you are either incorporated, or you aren’t).
- Register as a business with a trade name. You will also be given a business number at this point.
- Register for GST if your blog will be generating in excess of $30,000 in revenue each year. (If you are registered for GST depending on the level of income you will file your GST return: annually, quarterly, or monthly.) You probably also have to do something with PST/HST but I live in Alberta and we don’t have that so I honestly know nothing about it.
Type of Return
You are required to file a corporate (T2) return every year. Yes, even if your business didn’t make money you must file a return. The return is due 6 months after the date of your year-end. If you follow a calendar year, that would mean your return is due on June 30, 2016 (for 2015).
Filing a corporate return is definitely more complex than filing a return for a sole proprietorship as you are expected to report on more than just income and expenses. It is imperative to keep good and accurate records (separate from your personal records) for your corporation.
I strongly recommend purchasing software (TurboTax, for example) to assist in preparing the corporate return. As a bonus, it will also roll forward year-over-year.
The first page of the tax return is going to ask you some general information – to help you out, I’ve highlighted the probable answers, assuming this year is the first year you’ll be filing a return.
The following 2.5 pages ask a million different questions that I’m not going to bother going through because 99% of them will be “no”. If you purchase tax prep software, this section will be a heck of a lot easier on you.
You’re required to include financial information on your T2 Corporate tax return. Again, tax prep software will walk you through this. You may also want to modify the income and expense tracker to include some of the balance sheet items (cash, amounts not yet paid to you by your ad company, etc) to make this part easier on you.
A bonus to using tax prep software is that it will perform all the necessary calculations for you, so you won’t even need to bust out your calculator.
A lot of the above items won’t be applicable for a blog, but you should get a sense of what you should be tracking and aware of (ie. do you have a separate bank account for your blog? If not, you should probably get one).
Many of the income and expense items are similar to those I discussed last week, so I’m not going to go into detail on those items since the CRA doesn’t care if you’re a person, or a corporation, you can still only 50% of meals and entertainment on any tax return.
I’m also not going to walk you through all of the different corporate schedules, as they may or may not apply, and the tax prep software you purchase will determine which schedules are required in your situation.
Can you tell I highly recommend using tax prep software?
- Keep good records (this goes for sole proprietorships as well!)
- Purchase tax software
- If you’re really overwhelmed, consider hiring an accountant (but please please please do not go to those people who prepare returns while you wait! They are not designated accountants (think CPA) and will not be able to help you to determine the best way to minimize your taxes. I refuse to name them in my posts because I don’t want to give them any Google juice!)
Now that we’re at part four – what questions do you have for me?! Shout them out so I have something for my FAQs next week!
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