Top 5 accountancy tips for bloggers

Are you a UK blogger earning money from your blog? Read on for five top tax tips for bloggers.

It can be so exciting when you start making money from your blog! Whether it’s cash for sponsored posts, selling advertising space or payment in products (yes that counts), earning from blogging feels amazing, right?

I’ve been blogging for over 7 years, working with brands and promoting my own coaching business, but one of the areas that confused me was how I should account for my blog from a tax point of view.

If you’re anything like me you’ll want to spend as much time writing and creating awesome content for your readers… and as little as possible on my accounts or dealing with the tax man…

So when Cheryl Price from Accountancy & Bookkeeping Ltd offered to share her top accounting tips for bloggers I just had to say yes!

Cheryl is passionate about helping women in business make more time to spend on their profitable and family activities by taking the stress out of their accounts. She totally appreciates the struggles of family life and juggling a business alongside a family – because that’s what she does too! Her aim is to support her clients’ whole business, not just their accounts and was crowned Essex Accountant of the Year in the 2016 Global Accountancy Awards.

Cheryl Price from CH Accountancy

Tip 1 – Get yourself registered

Any business, including blogging, takes time to build and often you need to invest money for things like software, apps and attending blog conferences, as well as your time, so it could be a while before you start to see a return. But even if you’re making a loss you still need to register and file returns. That loss can be carried back to reclaim tax, carried forward to offset against future profit, or even offset against income from another job if you have one to claim back any tax you’ve paid.

It’s best to register as soon as you start your blogging business, but at the very latest register with HMRC by the 5th October following the end of the tax year you start your business in. So for example, if you start your business between the 6th April 2016 and the 5th April 2017, make sure you register by the 5th October 2017.

Tip 2 – Payment in kind

Payment in kind is the term given to products you are given for your services. For example, if you are given some gym equipment to trial, so you can then write a blog post about them, this is classed as a payment in kind.

Unfortunately, payments in kind do need to be included on your tax return as income.

You will need to include the ‘cash equivalent’ as the income amount – ie how much the item costs. So if the gym equipment in our example above cost £100, then you have earned £100, and this needs to be included in your sales figure on your tax return.

Blogger working at home

Tip 3 – Use of Home Expenses

Do you work from home? If so you can claim a proportion of your electric, gas, water, council tax, insurance and mortgage interest or rent as an expense. If you are lucky enough to have a cleaner you can also claim the business proportion of their costs. The amount to claim is based on the number of rooms in your house used for business purposes and the amount of time working from home.

The amount can be worked out in two ways – Simplified Expenses and Fair proportion of actual bills

Simplified expenses

The simplified method of working out your use of home uses a flat rate depending on the number of hours you work from home each business month like this…

 

TAX for bloggers chart

Have a look at each month and see which category you fall into. If you have a seasonal business and work more hours some months than others, then you can claim a higher rate for the months you work more hours.

Have a look at each month and see which category you fall into. If you have a seasonal business and work more hours some months than others, then you can claim a higher rate for the months you work more hours.

For example, say you usually work 30 hours per month for 10 months of the year, but the two months leading up to Christmas you work 60 hours per month:

10 months x £10 = £100

2 months x £18 = £36

Total expense for the year = £136.

Fair proportion of actual bills

The other method takes a bit longer to work out, but generally gives you a higher expense amount, so will reduce your tax bill more than the simplified method!

You will need a reasonable method for calculating the expense you can claim – ie divide your bill by the number of rooms you use for business or the amount of time you spend working from home.

For example, if you have 5 rooms in your home, one of which you use as an office. Your gas and electricity bill for the year is £500. Assuming all the rooms in your home use equal amounts of gas and electricity, divide the bill by the number of rooms in your home (£500 divide by 5 = £100), then divide 7 (for days of the week – £100 divide by 7 = £14.29) and then times this amount per day by the number of days you use this room for business purposes (if you work 3 days – £14.29 x 3 = £42.87). Do this for all your household bills, then add them up to get the total Use of Home amount to include on your tax return.

If you are self-employed you can include all of your household expenses:

  • Gas & electric
  • Water
  • Council Tax
  • Buildings & Contents Insurance
  • Rent or Mortgage Interest (ensure you only include the interest element – the capital part of your payment cannot be included or your business will technically own part of your home!)
  • Cleaner

If you are operating as a limited company you can only include the variable bills:

  • Gas & electric
  • Water
  • Cleaner – if you working from home causes additional cleaning

For bills like your home phone and broadband you can claim a fair percentage for business use – ie if you spend approx 60% of your time on the phone/broadband for personal use, and 40% for business use then you can claim 40% of the bill as an expense. Just remember that even if you physically do not use your home phone you still need the line to use the broadband!

If you have another employment – ie your business is on the side of a day job, you can also include these as an expense for your employment on your tax return.

One thing to note – if possible, do not use any part of your home, or outbuildings (ie shed/garage) exclusively for business, or when you sell your home the gain attributable to that part of your home is chargeable for Capital Gains Tax, and the council will also want to charge you business rates as well as the normal council tax.

So always use your office to do personal paperwork/kids homework/guest room/personal storage etc!

Tax tips for bloggers – how to fill in a UK tax return for your blog

Tip 4 – Get organised – Making Tax Digital is coming

The tax return system is changing in the next year or so, so now is an excellent time to get ready! Currently, you need to file a return once a year by the 31st

January following the end of the tax year (if filing online, by 31st October if filing a paper return).

From April 2018 you will need to submit a summary each quarter using cloud software, which connects to your digital HMRC account. It will only be mandatory for those with sales (not profits) of over £10,000 per year, but at CH Accountancy we are moving all of our clients over to this way of working from this April and start reaping the benefits a year early.

You may think this is an additional burden, and cost thanks to the software you now have to have. However, I think it is actually a great way to work. Software offers you so many more benefits to paper records and spreadsheets, and having to submit information each quarter will force you to keep on top of your figures, and not leave it all until the last minute then stress the day before deadline day that you have a years worth of receipts to sort!! The biggest benefit though is you’ll be able to track your sales more easily, and even more importantly how much tax you owe. Hands up who’s had a nasty shock at the last minute and you have a huge tax bill you need to find money to pay! Well this new way of working will allow you to keep on top of the tax you will need to pay so you have time to save the cash – no more stress.

So now is the time to start looking at software and how you will keep on top of your finances. The software we use at CH Accountancy also has a great app that you can raise invoices from in seconds, and even allows you to take pictures of your receipts as and when you purchase something for your business – so no more worrying about lost receipts – win win! Read more about Making Tax Digital and what you need to do.

Tip 5 – A great accountant will save you money

I know you probably think ‘why do I need a bookkeeper or accountant?’, ‘isn’t it a waste of money when I can do this myself?’ or ‘I can’t afford a bookkeeper or accountant!’

Well, the real question is can you afford not to? Why spend your time doing something you hate when you can pay someone else, who knows what they’re doing, to do it for you. You can then concentrate more on what you love to do – creating! Let’s face it, while you’re wasting time on doing it yourself you could be focusing on profit making activities and earn more.

A good bookkeeper or accountant will know all the rules, be able to advise you, stop you making costly mistakes etc. It really is an investment worth making.

Free ebook - how to set up your business

To find out more about how to account for your blog on your UK tax return or have a chat in general about your finances you can get in touch with Cheryl at hello@chaccountancy, call her on 01245 791164 or check out her website. You can also follow her on Facebook, Twitter, and Instagram.


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