In the spirit of my final project for my Law of Digital Media class, I’ve decided to focus my research around the business of blogging. So far I’ve covered when you should make the leap from blogging as a hobby to blogging as a business and the types of business you can file as a blogger.
In today’s blog post, I’ll be sharing what you need to know if you AREN’T ready to file as a business as a blogger.
Business of Blogging: What if you’re just starting out as a blogger, micro influencer or freelance writer?
Well still need to report your earnings. According to the IRS website, you have to file an income tax return if you earned $400 or more. Additionally, according to Chart A of the IRS 2017 1040 Form Instructions, if you’re single and your gross income (what you earned over a full year) was over $10,400, you should file a return. For the detailed instructions, feel free to visit the IRS 1040 guidelines.
As a self employed individual, you may also be subject to estimate tax – which is what’s used to pay income tax, Medicare and social security taxes. You can use the IRS 1040 guidelines linked above to determine if you need to file these taxes.
Business of Blogging: Blogging Collaborations more than $600
If you’re engaged with blogger collaborations where you are working with brands and getting paid at least or more than $600, you can ask brands for a 1099-MISC form. Aside from invoices and contracts, a 1099 form is another way to track your earnings and brand collaborations (IRS website). Companies can issue 1099 forms to people who have performed services, like writing blog posts or sharing photos on Instagram, and are not officially employed by the companies.
Business of Blogging: But wait what about gifted items? Do you pay taxes on those?
Have you heard of bartering income before? Well according to the IRS website, bartering is the exchange of goods and services. Bartering takes place when an organization reaches out to exchange services or products with another person or company.
According to the IRS, you should include your gross income of the fair market value of goods and services you receive from bartering. You can find specific instructions about bartering exchanges on Form 1099 B.
You might be overwhelmed with all this information…but if you’re a blogger who’s serious about taking your blog the next level and filing as a business, it’s important to be aware of all this information. As I mentioned in my first blog post, the influencer marketing industry is expected to reach $5-10billion these next few years. More and more marketing dollars will be reallocated to influencer marketing campaigns.
Business of Blogging: What happens when you don’t pay your taxes?
There are penalties for not filing your taxes and also not paying them. According to CNBC,
Failure to file penalty is what you encounter when you don’t file your taxes. You face a 5% penalty of your unpaid taxes for every month your tax return is late. This 5% penalty can increase up to 25%.
And if you filed your taxes and fail to pay them, you’ll face a failure to pay penalty. In this situation, the IRS will charge you 0.5 percent of your unpaid taxes for every month your taxes remain unpaid. Interest can also accrue on those unpaid taxes.
Wrapping the Business of Blogging series up…
As your following, blog, and social media channels grow, you may want a slice of this industry. In order to be recognized as a legitimate legal entity, you should strongly consider filing as a business. You also are required to pay taxes on your earnings – especially if you made over $400 as a self employed person.
In my personal opinion, if you want to be taken seriously as a blogger and seen more professional, you should consider filing as a business especially if you’re making a steady income.
Have you filed as a business? Do you plan on filing as a business in the future or keeping blogging a hobby?
I also highly recommend reaching out to an accountant or lawyer if you have any specific questions. Again, I’m a graduate student at the University of Washington and I’m sharing the research I’ve learned from the IRS, Legal Zoom, and US SBA websites.
Thank you again for following along the Business of Blogging Series! I hope you have more clarification on when you should file as a business, what types of businesses you can file as and learned about bartering income!
Thank you for reading!
Photos: Karya Schanilec