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Author: Jake Snelson

So can you hire family? Absolutely.

In fact, hiring family members is pretty common amongst sole proprietors and bloggers. Whether it causes strained relationships is entirely up to you, but here’s what you need to know in regards to taxes and paying family members. The Internal Revenue Services outlines the following regarding family help.

paying family members

Employing Your Child

  • Wages of a child are subject to income tax withholding, Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) tax if he or she works for:
    • A corporation, even if it is controlled by the child’s parent,
    • A partnership, even if the child’s parent is a partner, unless each partner is a parent of said child, or
    • An estate, even if it is the state of a deceased parent.
  • Wages are subject to income tax withholding, regardless of age.
  • Children under 18, are not subject to Social Security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.
  • Children under 21, are not subject to FUTA tax.

Employing Your Spouse

  • Wages of a spouse are subject to income tax withholding as well as Social Security, Medicare and FUTA taxes if he or she works for:
    • A corporation, even if it is controlled by the individual’s spouse, or
    • A partnership, even if the individual’s spouse is a partner.
  • Payment to a spouse are subject to income tax withholding and Social Security and Medicare taxes, but NOT to FUTA tax.

Employing Your Parent

  • Payment for services of a parent employed by their child in a trade or business are subject to income tax withholding, Social Security and Medicare taxes.
  • Wages are not subject to FUTA tax, regardless of the type of services provided.
  • If your parent works for you, the wages you pay to them are subject to income tax withholding, Social Security and Medicare taxes. Social Security and Medicare taxes do not apply to wages paid to your parent for services not performed in your business, but they do apply to domestic services if both the following conditions are met:
    • Said parent cares for your child who lives with you and is under 18 or requires adult supervision for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition.
    • You are widowed, divorced, or married to a person who, because of a physical or mental condition, cannot care for your child during that period.

Employing Other Family Members

So you’re not hiring your child, spouse, or parent. Can you still hire other family members, like aunts, uncles, cousins, or nieces or nephews? Yep. But there aren’t any special rules provided by the IRS for those family members. Their wages should be treated like any other employee’s.

Employing Other Family Members

If you have additional questions regarding hiring family members, feel free to drop us a line. We’d love to hear from you.

To learn more about accounting for bloggers, visit these posts:

Accounting 101 for Bloggers

Taxes for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

3 Tips to Increase Blog Profits

How Do I Pay My Blog Employees?

Can I Deduct Conference Registration Fees, Travel, and Meals?

Can I Deduct Hosting, Web, and Design Fees?

You’re busy. Your business is growing. You’re thinking it’s time to hire someone to take care of a few things you’d like to have off your plate. But how do you pay employees and does it effect taxes?

Paying employees may seem like an easy task, but you want to make sure you’re spending your money wisely and staying within legal guidelines for small businesses. Here are a few tips to keep you on track:

How Do I Pay my Employees

  1. Know the market. Set an upper limit of what you’ll pay based on what a particular job is worth to you and set the lower limit based on what the market standard currently is.
  2. Consider trading services or intangibles. Lets say you’re looking to find someone to work on your website or put together a new logo and business cards for you. You might want to see if the person you’re hiring would like to swap services instead. As a blogger, you’re more than likely a good writer, and you never know – they may really be needing some new marketing copy or even some ad space to promote their business.
  3. Keep taxes and employee status in mind. Once you hire an employee, you’re generally required to withhold money from their pay for income tax purposes regardless of if they are paid hourly or on a salary basis. That may still be the way to go, but you may want to consider using them as an independent contractor instead. Independent contractors are self-employed individuals who sell their services to clients. They aren’t considered an employee, but a business owner themselves so they’re responsible for taking care of their own taxes.
  4. Offload payroll responsibilities to an expert. Keeping track of paychecks, employee hours, and withholding employee taxes can take up a lot of extra time. Stay focused on your blog and leave the accounting to payroll to an expert.

Offload payroll responsibilities to an expert

Keeping these 4 easy tips in mind will make hiring and paying employees that much easier – now back to the blogging.

To learn more about accounting for bloggers, visit these posts:

Accounting 101 for Bloggers

Taxes for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

3 Tips to Increase Blog Profits

Can I Pay My Family For Their Help?

Can I Deduct Conference Registration Fees, Travel, and Meals?

Can I Deduct Hosting, Web, and Design Fees?

Running a blog isn't a one man (or woman) show anymore. Use these 3 blogger accounting tips to increase your profits and save you time.

 

You’ve put a lot of effort into your blog to make it profitable and your hard work is paying off. Did you know that you might be able to increase your income just by handling your money a little differently?  Here are 3 tried and true ways to keep you financially healthy and possibly increase your overall profits.

1. Track Expenses. Even if financial stuff isn’t your thing, tracking expenses is one of the best and easiest things you can do to increase your blog profits. A running total of money coming in versus money going out, will help you know if you’re being profitable or even if you’re overspending.

What’s the best way to track your expenses? To start, a simple spreadsheet will do. Make sure to include the date, amount, to whom, and what for. Then stash your receipts in a folder or envelope so you’ll have them come tax time (and in case you get audited).

2. Set Aside Money to Run the Business. It seems simple enough, but setting aside money to run the business is one way to ensure you’ll stay in the green.

Make a list of expenditures that you’ll know you’ll have throughout the year – hosting fees, domain name and registration fees, shipping fees if you run a shop that sells physical product, and so on. You know you’ll have these expenditures, so set aside a small amount each month so that you’re not breaking the bank when it comes time to renew.

You don’t have to know your expenses down to the exact dollar and cent, even saving a percentage, say 10-15% from your monthly income should take care of it. No matter how you decide to save, your bottom line will thank you.

3. Hire An Expert. It’s not mandatory, but it sure can put your mind at ease. Accountants know the ins and outs of small business bookkeeping and taxes. They’re happy to help you keep track of expenses and help get your taxes done. Accountants can also help with a myriad of other financial issues. Plus they know how to list your deductions and exemptions so you’ll get the biggest return when it comes tax time. You’ll sleep easy at night knowing you’ve got an expert in your corner and you’ll have more time to focus on your blog.

Following these 3 simple tips will help you keep your blog fiscally fit as well as increase your overall blog profits.

To learn more about accounting for bloggers, visit these posts:

Accounting 101 for Bloggers

Can I Deduct Conference Registration Fees, Travel, and Meals?

Taxes for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

Can I Pay My Family For Their Help?

How Do I Pay My Blog Employees?

Can I Deduct Hosting, Web, and Design Fees?

Running a blog isn't a one man (or woman) show anymore. Use these 3 blogger accounting tips to increase your profits and save you time.

I’m a Blogger. Does the IRS Consider my Blog a Business or a Hobby?

We get a lot of different questions regarding tax code, but one of the most frequently asked from bloggers and creatives is if the IRS considers their blog a business or a hobby. If you have a blog and it’s providing you with even a small income, read on.

According to the Internal Revenue Code, all income is taxable unless it is specifically exempted. Translation – even if you’re not breaking even, any money you receive from your blog is definitely includible when it comes tax time.

That said, one of the main concerns, for established and novice bloggers alike, is how their blog is viewed by the IRS. It may not seem like a big deal now, but it might end up being one when you get ready to file.

There are two ways to classify blogging income – earnings are either reported as coming from a hobby or a business. So, when it comes to taxes, where does your blog fall? Answer the following questions to find out:

  1. Does the time and effort you put into your blog indicate an intent to make a profit?
  2. If there are losses, are they due to circumstances beyond your control or did they occurring the “start up phase”?
  3. Do you depend on income from the activity?
  4. Have you changed methods of operation to improve your profits?
  5. Do you or people advising you, have the knowledge needed to carry on the activity as a successful business?
  6. Have you made a profit in similar activities in the past?
  7. Does the activity make a profit in some years?
  8. Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?
  9. If you’ve made a profit during at least 3 of the last 5 years, including the current year, the IRS assumes your blog is a business.

If you’re answering yes to most of these questions, your blog is a business. So what to do if you’ve got a mixed bag of answers – error on the safe side and consider your blog a business or consult with a tax expert or accountant.

Interested in Learning More?

Schedule a free consultation with our team!

I’m a Blogger. How Do I Legally Operate a Giveaway or Contest on my Blog?

It’s common knowledge that running giveaways or contests on your blog will help drive traffic and attract new readers. It’s also a great way to network with other bloggers and cross promote. But if you currently run giveaways or contests on your blog, or are planning to - listen up.

You may or may not be aware, that regardless the size of your blog or giveaway, there are laws and requirements to running a fair and above board giveaway or contest; and that’s something that’s extremely important when it appears on your tax filing.

You might be wondering why this shows up on your tax filing at all. But many bloggers expense giveaways or contests and write them off come tax time. If a sponsor gifts you the prize that you’re going to pass on to your lucky winner, you can’t expense it. But if you’re paying for the prize yourself you can, along with the cost to ship it to the winner. (There’s more on deductions and expenses, but that’s for another blog post you can read here).

Here are a few guidelines for running your giveaway or contest*:

  • You cannot charge an entry fee to enter your promotion.
  • You absolutely must choose your winner at random.
  • You must accept all valid entries.
  • You must award a prize even if your prize sponsors backs out.
  • Any giveaway with a prize valuing $600 or more must be reported to the Internal Revenue Service. Bloggers should not only make entrants aware of the value of the prize but the fact that they will need to complete a prize validation as well as be responsible from any taxes that will result from winning.
  • Bloggers based in the United States cannot run a promotion involving any of the following industries: tobacco, alcohol, gasoline, dairy, insurance, and financial institutes. There are special requirements for these industries and the cost to meet the requirements usually won’t justify the time you spend on it.
  • You cannot extend an entry deadline in order to get more or any entries for the giveaway or contest.

To be sure you’re 100% in compliance with local laws, we recommend consulting with a legal expert. Good luck with the upcoming contest or giveaway – we’re sure it will be a smashing success!

Interested in Learning More?

Schedule a free consultation with our team!

One good thing about running your blog as a business is that you’re able to deduct expenses that are applicable to your profession. Any goods that you pay for, and that assist you in running your business, can be taken off the income you earn as a blogger.

Have a home office? You may be able to deduct some of your household expenses as well.

Your list of deductions should be included in your annual tax filing. You don’t actually have to send the IRS all of your pay stubs and receipts, but you’ll need to keep them on hand in case you’re audited. To simplify the process, all you’ll need is a spreadsheet with the date, amount, to whom, for what included for each item you want to deduct. We recommend entering your receipts at least monthly so you’re not stuck with a stack of receipts and an empty spreadsheet come tax time.

Here’s our top 20 when it comes to deductible expenses for bloggers:

  1. Hosting fees – if you’re still using a blogspot.com or wordpress.com account hosting fees don’t apply, but anything else, and you’re probably paying for your little piece of the internet.
  2. Domain name and registration fees – if you’ve got a .com or .net you’ll have an annual renewal fee.
  3. Internet access fees – monthly bills to have internet in your home? At least a portion of this counts towards a deduction for your business.
  4. Font, photo, or music downloads for your blog
  5. A portion of your computer, iPad, tablet, iPhone or cell phone
  6. That fancy new camera or even your point and shoot
  7. Software such as Photoshop or TurboTax
  8. Graphic or Web design fees – if you’ve recently updated the look of your site or rebranded your logo, this deduction applies for you.
  9. Purchasing ad space on other blogs – money spent marketing or promoting your blog on other sites, even if it’s just running an ad on a fellow blogger’s site. Make sure to keep the receipts!
  10. Self-sponsored giveaways on your blog (find out more about running a giveaway here)“self-sponsored” means you purchased the prize(s) and paid cash, not traded services.
  11. Giving away your services or products – non-profits, charities, or your child’s elementary school silent auction fundraiser all count. Make sure you invoice for your work – show the amount it was worth, but obviously the amount owed would be $0.
  12. SEO services – lots of bloggers pay for Search Engine Optimization services to increase hits on their site. This is a form of promotion/marketing – so it counts!
  13. Blogging conferences, E-book purchases, online class fees – if it’s helping you learn more about your blog or business it counts!
  14. Books, magazines, online subscriptions that relate to your blogging topic
  15. Transportation to that blog conference or a blogger meet-up
  16. Hotel charges – for blog conferences or blog-related business
  17. Office furniture – new desk, chair, lamp, etc.
  18. Business cards, marketing materials, file folders, Post-it notes, etc.
  19. Fees for professional licenses, etc.
  20. Meals during business travel, or coffee at that next blogger meet-up

If this all feels a little overwhelming, consider talking to a tax expert. Here at Mazuma we like to simplify the process for our clients and provide them with the right answer for any of their questions. And that stack of receipts and empty spreadsheet we mentioned earlier – we can take care of that too. Vyde clients simply upload their bank statements and their receipts and we take care of the rest.

To learn more about accounting for bloggers, visit these posts:

Accounting 101 for Bloggers

Taxes for Bloggers

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

3 Tips to Increase Blog Profits

How Do I Pay My Blog Employees?

Can I Pay My Family For Their Help?

Can I Deduct Conference Registration Fees, Travel, and Meals?

Can I Deduct Hosting, Web, and Design Fees?

As a blogger and small business owner you probably wear several hats every day. You’re a writer, photographer, marketing executive, and a myriad of other things. One of those hats is, or at least should be, bookkeeper and tax guy.

You have to know a little bit about everything. So here’s the skinny on taxes for bloggers. (We highly recommend seeking out an expert if you have questions – we’d love to talk about your taxes and become your resident tax guy if it’s a good fit for you!

Estimated Taxes

Due: Quarterly

Estimated taxes aren’t something most traditional employees have to worry about. If you were to look at your pay stub from your employer you’d see that some of your paycheck was being withheld to pay these taxes. The US tax system operates on a “pay-as-you-go” basis.  Where no money is being deducted from your blogging paycheck, you’re responsible to pay estimated taxes quarterly to the IRS.

If you don’t expect to earn at least $1,000 in blogging income, you may be able to avoid paying estimated taxes. But if you do, you’re expected to pay estimated taxes, due on: April 15, June 15, September 15, and January 15 (this is in the following year but applies to the fourth quarter or September 1 – December 31 of the prior tax year.)

Self-Employment Tax

Due: Annually

As far as the IRS is concerned, working as a blogger means you own your own business. Self-employment tax is the combined Social Security and Medicare taxes paid by an employee and an employer. If you look at that pay stub form your employer you’d see these withholdings itemized each paycheck. Since you’re both the employee and the employer, you get to pay both sides of the tax.

Deductible Expenses

Due: Annually

Good news! Because your blog is considered a business by the IRS, you’re able to deduct expenses that are considered necessary to your profession. Deductions typically can be made for just about anything that you use for your business – domain name and registration fees, blog design and logo creation, business cards, office supplies, a new computer or software that you use for your business, and so on.

Learn more about deductible expenses for bloggers and whether your blog is considered a business or a hobby.

To learn more about accounting for bloggers, visit these posts:

Accounting 101 for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

3 Tips to Increase Blog Profits

How Do I Pay My Blog Employees?

Can I Pay My Family For Their Help?

Can I Deduct Conference Registration Fees, Travel, and Meals?

Can I Deduct Hosting, Web, and Design Fees?

You’re a blogger. Not an accountant, right? But the IRS doesn’t count that or an excuse like “I didn’t know” as viable when it comes to your blog and how you handle bookkeeping and tax documentation.

We get the fact that you’re busing writing, promoting, and connecting so here’s what we’d recommend when it comes to bookkeeping, taxes and then financial ins and outs for your blog.

Keep Receipts. At the very least find a large file folder or envelope and stash receipts from blog purchases there. Take it a little further and enter your receipts into a basic spreadsheet, include the date, to whom, and for what. If you’ve got multiple items on the receipt you may want to itemize it on your spreadsheet.

Create a System. If you’re not making a lot of money from your blog it may seem trivial, but it’s a good idea to put a system in place for bookkeeping and paying yourself and any employees you may have. Decide up front what percentage you’ll take home each month, and make sure to save out the appropriate amounts for taxes as well as investing money back into your business.

Set Up a Budget. This is part of the system we mentioned above. It’s hard to manage money, especially when you don’t keep on top of reoccurring expenses, like your blog hosting and renewing domain names or you forget to set some of your income aside to pay quarterly taxes. Budgets help with all that. You can go old school and use a piece of paper or a spreadsheet on your computer or try out a simple app – this one works well and is simple to use.

Bring in an Expert. If you’re really looking to be profitable it might be time to consider bringing in the experts. An accountant will save you hours when it comes to filing taxes and they can advise you on what you can and cannot write off. If you’re needing more than an advisor, consider hiring that expert to complete and file your state and federal taxes or even reconcile your accounts and provide you with a monthly report. Bringing in an expert will provide you with peace of mind, extra time, and hopefully save you a few dollars!

Here at Vyde we’ll do your bookkeeping and taxes and you won’t have to hardly lift a finger. Vyde clients simply upload their receipts and bank statements and we’ll take care of the rest – that way you’ll have more time to focus on what you do best!

It might seem like extra work up front, but following these 4 steps will keep you and your blog fiscally fit and save time in the log run so you’re not buried in piles of receipts and tax forms.

To learn more about accounting for bloggers, visit these posts:

Taxes for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

3 Tips to Increase Blog Profits

How Do I Pay My Blog Employees?

Can I Pay My Family For Their Help?

Can I Deduct Conference Registration Fees, Travel, and Meals?

Can I Deduct Hosting, Web, and Design Fees?

 

Best Benefits to Offer Employees

If your business has outgrown your garage and you’ve become more than a one-man band, well, congrats! But you may also be a little confused when it comes to hiring employees and exactly what to offer upon hiring. Choosing which benefits to offer employees is a critical and important task for small business owners. Speaking practically, and assuming you’re not yet offering free on-demand back massages like Google, or fancy scooters to ride around the office like Dropbox, let’s break down the most valued benefits for employees.

Many small business owners find it advantageous to look out for their employees first, and then their customers. After all, happy employees will look after customers which reduces demands on you and keeps your company growing. Thus, it only makes sense to offer as many benefits to employees as reasonably possible, without hurting your business.

Not surprisingly, some benefits are required by law. Plan on allowing your employees time off to vote, to serve on a jury, perform military service, and to have a baby or use FMLA (Family and Medical Leave). You must also comply with worker’s compensation, withhold taxes, and offer retirement and disability benefits. State and federal unemployment taxes are also mandated.

1. Health Insurance

The most sought-after and common benefit for employees is insurance. Unfortunately, as an employer, this is also the most expensive benefit to offer. The Affordable Care Act has changed the requirements for many businesses regarding health insurance and expanded coverage to a wider number of Americans. As of 2014, business owners with fewer than 50 employees are not required to provide a health coverage plan. However, those employees are still required to obtain health insurance whether it be a private plan or through your company.

If you have less than 50 employees and you do choose to offer health insurance, use the Small Business Health Options Program Marketplace (SHOP). Businesses that offer insurance through SHOP and have fewer than 25 employees may be eligible for certain tax credits. Businesses with more than 50 employees are required to offer health insurance.

While the decision is ultimately yours, providing healthcare for employees tells prospective and current employees that you care for their wellbeing. Healthy workers are happy workers, which translates to higher productivity, less stress, and less sick days.

2. Retirement and Life Insurance

Many businesses that begin hiring employees also like to offer 401k retirement plans, as well as life insurance. These are fairly inexpensive benefits to implement and are almost always taken advantage of by employees. These two benefits give employees a sense of security in their present position, as well as for their future.

3. Paid Leave

Most employers are surprised to learn that they are not required to give employees paid vacation, sick days, or holidays. While in the short term not offering these benefits can save you money, generous leave pay attracts high-quality employees and improves morale. Basically, if you choose not to offer any paid leave, you may find yourself without any employees to offer it to. The majority of employers offer some kind of paid leave to their employees.

If you choose to offer vacation pay, you’ll also need to determine a clear and thorough explanation of what is to be done with unused vacation time. Some employers choose to carry it over into the next year, some will pay it out in cash, and others abide by a “use it or lose it” policy. Find what works for you and make sure it is clearly outlined in your company handbook.

4. Health and Wellness Plans and Incentives

An increasingly popular perk employers are offering employees are wellness plans. These often come in the form of gym memberships, pool passes, memberships to various fitness classes, and the like. Many offer an incentive program for employees to set a fitness goal and receive compensation for meeting that goal within a certain time period. Some even join in the fun of offering prizes or money for an office weight loss program. Wellness benefits are a relatively inexpensive perk to offer to employees, and many are thrilled at the prospect of a little extra incentive to meet their existing goals.

Health and Wellness Plans and Incentives

5. Childcare Assistance

With a changing workforce and evolving family dynamics, more and more companies are assisting employees with childcare. Many offer child care referral services, and some even offer contracted daycare or in-office childcare.

Visit more posts in our Payroll 101 series:

What is Payroll?

The 1099-Misc Explained

Setting Your Own Salary as a Business Owner

The W-2 Explained

How Often Should You Pay Employees?

What are the Costs Associated with Payroll?

The Power of the Employee Pay Stub


In the infant stage of any business, your salary basically consists of what you earn in sales, minus your costs and taxes. Most businesses start out as a sole proprietorship with no employees and very little business overhead. However, as a company grows, many business owners choose to take on employees or enter a partnership, which ultimately complicates things when payday comes for a business owner.

So how do you “pay the boss” when the boss is you?

Because so much depends on how profitable your business is at the time (which often fluctuates throughout the year), there is no magic formula on setting your own salary. Financially savvy business owners may not see a lot of increase in their own bank accounts at first because they simply pay themselves what is left over after payroll, expenses, and operating costs. While their actual take-home pay may lack in the beginning stages, a successful business with strategic small business bookkeeping will grow over time and profits will increase.

 

When your business starts to show consistent profit from month to month, you should then be able to set a salary based on a percentage of those profits. Most businesses cannot predict their profits for the year ahead of time. However, after you have been in business for a few years, you can use those profits to review and make predictions about the future. Use your business costs, taxes, and planned investments to determine a reasonable salary for yourself. Most small business owners limit their salary to 50% of the profits.

If you depend on a set amount of money each month, you may choose to research the industry and set yourself a salary in accordance with those standards. The US Small Business Administration offers great comparison charts for salaries across all occupations and may be useful in helping you set a yearly salary and making adjustments over time.

successful business with strategic small business bookkeeping

As your business grows, surprisingly, setting or adjusting your own salary can become even more complicated. You’ll want to avoid overpaying yourself and raising red flags with the IRS, but you are also entitled to an increased salary as your profits increase. An accountant or financial consultant can help you determine a reasonable salary based on your company’s growth and financial circumstances.

While entrepreneurship is perhaps one of the greatest freedoms we have as Americans, it also requires a certain level of flexibility. When funds are low, your employees will still expect the same pay. It is you that will take the cut. However, as profits increase, the business owner will likely see the most advantage. If you keep your focus on the long-term growth of your business, having a paycheck that fluctuates depending on how the company is doing can have lasting advantages.

Visit more posts in our Payroll 101 series:

What is Payroll?

The 1099-Misc Explained

The W-2 Explained

How Often Should You Pay Employees?

What are the Costs Associated with Payroll?

5 of the Best Benefits to Offer Employees

The Power of the Employee Pay Stub