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If I Have an LLC, Must I Pay for All My Business Expenses with My Business Account?

Q: If I have a LLC, must I pay for all my business expenses with my business account?

A: That’s a good question. But lets talk about best practices first and see if that doesn’t clear it up. 

No matter what type of business you have – LLC, corporation, or sole proprietorship – an accountant or financial business advisor will usually recommend that you have a separate business account.

There’s a few reasons for this. First, it simplifies things by keeping business and personal finances separate. Less mingling means less confusion and less paperwork come tax time.

Sure, we could track all the money back and forth and have receipts and documentation for how the money was spent and from which account, but you can eliminate the hassle and the headache if you just stick with funding business activities from the business account.

Second, when you mingle your accounts you’re weakening the legal liability protection an LLC provides. With an LLC, the courts basically consider you and your LLC two separate entities. This is a huge advantage if you’re taken to court.  Someone can sue your business, but they won’t be able to sue you personally, unless you’ve personally guaranteed something.

If you mingle your business and personal accounts, the courts could potentially go after you as an individual, citing that the fact that it looks less like you’re running a separate entity and more like your personal finances and business account are one and the same.

Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that.

Interested in Learning More?

Schedule a free consultation with our team!

Q: Can I count product samples or digital products I give away for review as an expense?

A: Yes. But there are some qualifying factors you’ll need to meet to do so. 

1. If it relates to business you reasonably expect to gain in the future, you can usually deduct the cost of institutional or “good will” advertising that is meant to keep your name before the public.

If you gave away digital product so it could be reviewed and your product and/or name will be kept in front of potential customers, then you meet the requirement.

Examples of good will or institutional advertising include:

  • advertisements that encourage people to contribute to charities, such as the Red Cross or similar causes
  • having your own business sponsor a Little League baseball team, bowling team, or golf tournament
  • giving away product samples
  • holding contests and giving away prizes

 

2. The amount you expense has to be actual dollars. Time and labor that you give away as an advertising expense doesn’t count – so the time you spend reviewing other people’s product can’t be a deduction, nor can the time you spent in creating the digital product. Only the cost in dollars, or the price of the actual product, can be deducted.

Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that too.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

If I have an LLC, must I pay for all my business expenses with my business account?

Can I count digital products I give away for review as expenses?

What can I deduct for this blog conference? Are clothes deductible?

What is the best way to keep track of the little expenses that add up over the year?

What potential business expenses might I have as a blogger?

What do you suggest bloggers do when given free stuff as compensation?

What percentage of my work time do you recommend I spend on accounting?

Q: What can I count as deductions for a blog conference? Are clothes deductible?

A: You’d be surprised by the number of deductions you can take from attending a blogging conference. The simplest way of looking at potential deductions is that if it relates to or promotes your blog you can deduct it.

As far as clothes go – unless you’re required to wear a uniform, or wear safety gear, like boots or a hard hat – the IRS doesn’t count buying new clothes for a conference as a tax deduction.

Here’s the short list of what’s deductible.

Conference Registration Fees

You can deduct conference registration fees for a blog conference where you network and learn to improve your blog.

Licensing Fees

You can also deduct, licensing fees, as long as they pertain to your blog topic. (i.e. You blog about hairstyles and you pay a licensing fee to maintain your stylist license)

Training

Any training you receive, as long as it pertains to your blog or the topic you blog about, is a valid deduction. The cost of that online class you’re enrolled in about SEO  is tax deductible. or the crash course you’re taking in graphic design so you can start that design blog you’ve always dreamed about all count as tax deductions. Even if you attend a virtual blog conference it still counts!

Make sure you print and file receipts, or if you’re really organized, start a simple spreadsheet with date, purchase amount, who you paid, and what it was for. Still stash your receipts so you have them as proof if by chance you’re audited.

Travel & Meals

As long as travel and meals are related to your blog or business, then you can deduct them on your taxes. Keep receipts for bus passes, plane tickets and taxi cabs. Even keep a mileage book of your travels if you’re driving to the conference.

Coffee & Drinks

Coffee dates and drinks for business meetings or to meet with potential clients, are also deductions – again, a receipt stash and a simple spreadsheet will make your life that much easier come tax time.

Check out our more extensive list of deductions for bloggers or contact us if you have specific questions regarding your taxes.

Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that too.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

What can I deduct for this blog conference? Are clothes deductible?

If I have an LLC, must I pay for all my business expenses with my business account?

What potential business expenses might I have as a blogger?

What percentage of my work time do you recommend I spend on accounting?

Can I count digital products I give away for review as expenses?

What is the best way to keep track of the little expenses that add up over the year?

What do you suggest bloggers do when given free stuff as compensation?

 

Q: What are known business expenses for bloggers?

A: One way to increase your blog profits is to sit down and make a list of all your known expenses for the year. It will take about 10 minutes, but it can help you save quite a few dollars and make sure you have plenty of green saved to cover your costs.

business expenses for bloggers

Here’s an accountant’s list of potential business expenses for bloggers:

  1. Domain name and registration fees
  2. Internet access fees
  3. Font, photo, or music downloads for your site. (Music? We know. But there are quite a few professional photographer sites out there that have background music playing with their main page slideshow.)
  4. Hosting fees
  5. A portion of your computer, iPad, or iPhone (whatever tool helps you blog/do your job) Read more about deducting your computer here.
  6. A fancy new camera or even your point and shoot.
  7. Software programs  – time management or appointment software, Photoshop, etc.
  8. Purchasing ad space on other sites and blogs.
  9. Self-sponsored giveaways
  10. SEO services
  11. Books, magazines, online subscriptions that relate to your blogging topic
  12. Transportation to blog conferences, blogger meet-ups and the hotel fees that go along with it.
  13. Up to 50% of dining charges that are blog-related – meals while you’re at a blog conference, coffee dates, etc.
  14. Blogging conference attendance fees
  15. E-book purchases, online class fees – if it helps you learn more about your blog topic or business – it counts!
  16. New office furniture
  17. Marketing materials – business cards, letterhead, etc.
  18. Fees for professional licenses – maybe you blog about hair and you’ve got fees to keep up your stylist license.
  19. Giving away products and services
  20. Mileage – if you’re running errands that are blog-related, keep track! (i.e. you sell product that you ship to your customers – those trips to post office count)

expenses for bloggers

Looking for more tax and catch-up bookkeeping tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that too.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

If I have an LLC, must I pay for all my business expenses with my business account?

Can I count digital products I give away for review as expenses?

What can I deduct for this blog conference? Are clothes deductible?

What is the best way to keep track of the little expenses that add up over the year?

What potential business expenses might I have as a blogger?

What do you suggest bloggers do when given free stuff as compensation?

What percentage of my work time do you recommend I spend on accounting?

Q: What is the best way to keep track of the little expenses that add up over the year?

A: A purple envelope. We’re a little biased around here and believe that a Vyde Purple Envelope is the best way to track expenses. However, any color of envelope will do. 

There’s essentially 2 parts of tracking expenses.

  1. Keep your receipts. You’ll want them as reference points in case your small business bookkeeping method or spreadsheet tracking fall behind. Plus, you’ll need to keep them in case you’re audited by the IRS.
  2. Getting the info from those receipts into  a spreadsheet of some form so we can see how much you spent and where. Then we start figuring out where to take deductions and how much.

Even if you don’t use an envelope system, we’d recommend keeping up on tracking expenses and keeping your receipts. Checking in at least once a month on your financial health is key for any business. It’s easier to correct overspending or save so you have enough to cover your expenses or taxes rathe than be surprised later.

If a spreadsheet isn’t your style, go old school. Use a mileage book to keep track of trips or errands for your business. Envelopes or a simple expandable file folder for receipts are great to hold and/or categorize receipts by type or month.

Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that too.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

If I have an LLC, must I pay for all my business expenses with my business account?

Can I count digital products I give away for review as expenses?

What can I deduct for this blog conference? Are clothes deductible?

What is the best way to keep track of the little expenses that add up over the year?

What potential business expenses might I have as a blogger?

What do you suggest bloggers do when given free stuff as compensation?

What percentage of my work time do you recommend I spend on accounting?


Q: How do I figure out if I deduct all or part of my new computer?

A:Some of the most frequently asked questions we receive are about deductions. And when it comes to bloggers, how to deduct technology, like cell phones, tablets, and computers is at the top of the list. That makes sense, because your phone, camera, cell phone and computer are at the heart of how you get your posts written and your work done.

So how do you figure out if you can deduct that computer? And if so, how much?

IRS Publication 529 (2014) gives us all the details on Miscellaneous Deductions, but here’s the general idea.

First, you need to establish that computer is necessary or a convenience to completing your work. You’re a blogger, so that’s pretty easy to establish- without it, you’re not going to get your blog posts up very easily.

Second, you’ll have to figure out what depreciation method you should use. That depends on whether you meet the “more-than-50%-use test”.

According to the IRS Publication 529 (2014):

“…You meet this test if you use the computer more than 50% in your work. If you meet this test, you can claim accelerated depreciation under the General Depreciation System (GDS). In addition, you may be able to take the section 179 deduction for the year you place the item in service.”

…If you do not meet the more-than-50%-use test, you are limited to the straight line method of depreciation under the Alternative Depreciation System…”

Have more questions regarding technology deductions? Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that too.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

If I have an LLC, must I pay for all my business expenses with my business account?

Can I count digital products I give away for review as expenses?

What can I deduct for this blog conference? Are clothes deductible?

What is the best way to keep track of the little expenses that add up over the year?

What potential business expenses might I have as a blogger?

What do you suggest bloggers do when given free stuff as compensation?

 

Q: What is the biggest tax mistake bloggers make?

A: Not keeping track of your expenses.

That seems like a pretty simplistic response, but when it comes to tracking expenses we find that although there are plenty of good intentions to do so, there’s often a disconnect when it comes to actually getting it done.

So what’s the best way to track expenses?  There are plenty of great ways to do it, but here’s what we recommend to make keeping track of expenses easier.

  1. Spend 10 minutes right now and write out a list of any expenses you’ll know you’ll incur over the next year – domain name & registration fees, hosting fees, design & advertising fees. If you know general amounts, jot that down too.
  2. Use whatever tracking system you’ve got. Or at the very least, set up a simple spreadsheet. Track money in and money out.
  3. Add one additional column to your spreadsheet and add notes to your expenses – what was it for, etc. You’d be surprised how often we get a stack of receipts and find that our clients don’t remember exactly which items they bought – and sometimes the notation on the receipt isn’t all that helpful in jogging their memory.
  4. Keep your receipts. Stuff them in an envelope or file folder. Snap a pic or scan them. But whatever you do save them.
  5. If all of this seems absolutely overwhelming look into hiring an expert. You can write this down on your list of known expenses. Hiring an expert will more than likely yield you a bigger return so it’s almost as if the service pays for itself.

Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

What can I deduct for this blog conference? Are clothes deductible?

If I have an LLC, must I pay for all my business expenses with my business account?

What potential business expenses might I have as a blogger?

What is the best way to keep track of the little expenses that add up over the year?

Can I count digital products I give away for review as expenses?

What do you suggest bloggers do when given free stuff as compensation?

What percentage of my work time do you recommend I spend on accounting?

What is the biggest tax mistake bloggers make? The answer is so simple it may surprise you. Click through for an accountant's advice and avoid this mistake.

 

Accounting for Bloggers

Most bloggers focus their time and creative energy on their actual blog posts and ideas, but some neglect the “business” of blogging. Accounting & taxes for bloggers can be especially overwhelming. To help, we’ve put together a FREE Accounting & Taxes 101 Course, just for bloggers. It’s simple and straightforward and provides you with what you need to know to better manage your blogger business.

You don’t have to worry or dread the business aspect of your blog for another minute! The following articles will take your through accounting & taxes for bloggers.

Accounting for Bloggers

Accounting 101 for Bloggers

3 Blogger Accounting Tips to Increase Blog Profits

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

I’m a Blogger. Can I Pay my Family for Their Help?

I’m a Blogger. How Do I Pay my Employees?

Taxes for Bloggers

Taxes for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

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

Do I Have to Report My Blogging Income? What if I Chance it?

I’m a Blogger. Can I Deduct Hosting, Web, and Design Fees?

I’m a Blogger. Can I Deduct Conference Registration Fees, Travel, and Meals?

How Does the IRS View Sponsored Blog Posts?

Do you have any other accounting for tax questions about your blog you’d like answered? Give us a call, send us an email, or let us know on our Facebook page and we’ll be sure to offer professional accounting advice from one of our certified Vyde accountants.

Before you read on, take a quick guess at how many small business start-ups fail within the first five years. No reading ahead!

According to the Small Business Administration, about half of all businesses fail within the first five years. 50% of businesses make it, and 50% don’t. Are you shocked? Maybe feeling a little unsettled about your new business venture?

If you’ve found a way to make money and suddenly it feels more like a business than a hobby or side-job, you’ve got a business on your hands. Congrats! Here are a few quick accounting tips for making sure you’re business is among the 50% that are still around five years from now.

  1. Keep it simple. Get organized, get legal, and get to work. The simplest entity you can form for now is a called a sole proprietorship. This means your business is owned and run by person and there is no legal distinction between the owner and the business. No employees, no payroll, no fuss.
  2. Obtain proper licenses and tax information. Since you’re going to be the owner/entity of your sole proprietorship, you’ve got a few other tasks to take care of. You need to acquire an occupational license (if mandated in your area) and you must remit all state or city tax collections on retail or sales your business collects.
  3. Concentrate fiercely on your business, but don’t be irresponsible. Now is the time to buckle down and build your business—find ways to market to your customers and clients, improve your products and services, and build your brand. As a sole proprietor, the IRS won’t even know you exist until after you file your first personal income tax return. You’ll file your personal taxes (like usual) and also a Schedule C form where profits and losses of your business are reported. If you don’t quite have a streamlined process of doing business yet, not to worry. For a sole proprietorship, a separate bank account is not mandated as it is for an LLLC or Corporation. If your business claims a loss during the first few years, those losses can offset your day job’s income and provide a possible tax refund.
  4. Develop an organized way to pay yourself. Another advantage of a sole proprietorship is that there are no payroll taxes taken out, and no set way you have to pay yourself. You can set up a certain percentage of profits you plan to pay yourself, or you can simply keep what’s left over after paying all business expenses. Often times, S corps don’t have to pay quarterly estimated taxes either. Click here to learn about specific scenarios when they do.
  5. Keep track of expenses and income. You don’t really have to do much with your receipts until tax season comes along, but definitely keep them in a safe place. Perhaps an easier method of tracking expenses and profits is to use a simple two-page Excel spreadsheet, one with incoming money, and the other with outgoing. You can use your business expenses as write offs at the end of the year which deduct from the amount of money owed on taxes.
  6. Plan to succeed, but be prepared for the worst. Remember that statistic from the beginning? If your business fails, no special forms are required to be reported to the IRS, you just simply stop doing business. All you have to do is file one final Schedule C and you’re done.

business experiences significant growth

After your business experiences significant growth or you hit the five year mark, talk to a CPA about changing your entity type to one that could save you more money and be more efficient for your business. Vyde offers free accounting and small business bookkeeping advice all year long. Contact us with your sole proprietorship questions and we can offer some accounting tips and point you in the right direction.

FAQs:

What is the simplest business structure for a small startup?

A sole proprietorship is the simplest entity, where the business is owned and run by one person without legal distinction between the owner and the business.

What licenses and tax information are required for a sole proprietorship?

Owners need to acquire an occupational license (if mandated) and must remit state or city tax collections on retail or sales their business collects.

How does taxation work for a sole proprietorship?

Profits and losses of the business are reported on a Schedule C form along with personal income tax returns. Losses can offset other income, possibly leading to a tax refund.

How should a sole proprietor pay themselves?

Sole proprietors have flexibility in paying themselves, either by setting a percentage of profits or taking what’s left after business expenses. No payroll taxes are deducted.

What’s the best way to track expenses and income for a sole proprietorship?

Keep receipts safely stored for tax season. Utilize a simple Excel spreadsheet to track incoming money and outgoing expenses. Business expenses can be written off at year-end to reduce tax liability.

Hosting, Web, and Design fees

Do hosting, web, and design fees count as deductions? Yes, as long as they’re specific to the running of your site or blog, they count.

Here’s the quick list if you’re running short on time:

  • Design fees  – a new logo or look for your site, even business cards.
  • Hosting fees – unless you’ve got blogspot.com or wordpress.com in your site address you’re paying for your own little piece of the internet.
  • Web Management & SEO

Read on for the fine print on deducting these fees and expenses.

There are a lot of hidden expenses for bloggers. Design fees, hosting, web management, SEO. The list goes on and it can get terribly expensive – but with a little knowledge about what is or is not a valid deduction, you’ll end up saving yourself a dime or two come tax time.

Whether you write a fashion blog, a foodie blog, or a blog about web design you’re probably paying for domain names, and site hosting. Seeing that you’re already paying the bill, why not save the receipt and have it be a write off at tax time?

It doesn’t matter if your blog isn’t about tech stuff, the behind the scenes stuff of running your blog are still related, so they count.

Don’t forget the fees you pay to a graphic designer for your logo and business cards. It may only make your site appealing, but it’s an element meant to build your blog and network so it’s a valid deduction as well.

We find that trying to come up with ideas for deductions as you’re trying to file makes things harder. Take just a few minutes right now and start listing off recent expenses that are blog related. If you’ve got a few more minutes to spare, start tracking down receipts for specific dollar amounts and update your small business bookkeeping with what you find. And from here on out, print off or save all receipts – that way you’re that much closer to finishing your taxes when April 15 comes rolling around again.

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 Pay My Family For Their Help?

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