4 Practical Ways That Bloggers Are Saving On Taxes Before The New Year

byNathanConner

1.8K followers

3 years ago

Every year, bloggers are faced with the overwhelming task of ensuring that they file their taxes correctly.

The last thing you want is the government knocking on your door, telling you that you didn't pay them their fair share.

I am not a tax accountant, so the advice in this blog post isn't one-size-fits-all. Especially since many of you are coming from countries other than the US, which is where I live. You should hire a tax accountant, and do your own research, to make the best informed decisions about your unique tax situation.

Yet here a few tips tailored to affiliate marketers and bloggers, that have safeguarded me from paying an unnecessary amount of my businesses revenue to the government.

How Employees Earn vs. How Businesses Earn

Before getting into the tips, it is important for you to understand how a business earns money, as compared to being an employee.

As an employee, you Earn - Taxed - And Then Spend Whatever You Have Left

As a business, you Earn - Spend - And Then Get Taxed On What You Have Left

This can be quite a surprise to the unsuspecting employee with an affiliate marketing side-hustle. They aren't used to keeping such a close eye on what they are spending and what they are earning.

As an affiliate marketer/blogger, the key takeaway is in order to lower your taxable income, that you need to focus on wise spending, in things that will help grow your future business, and save you money ultimately in the long run. If you don't spend wisely, unfortunately you'll just end up paying an unnecessary share of your business income with the government.

1. Keep A Ledger In A Spreadsheet

Keeping track of where your income and expenses are coming from, is going to help you determine how much you of a budget you have to make additional investments, and also makes it easy to report your financial statements to the government if and when you need to.

2. Invest In Annual Subscriptions

We just passed up Black Friday, and several of you invested in the Annual Subscription to Wealthy Affiliate. Not only is it a great investment in yourself, and your business, but it can also help you reduce your taxable income by paying upfront for the services that you will use in the coming year.

Some other annual subscriptions you might consider might be:

- Canva Pro

- Microsoft Office Suite

- Cloud Storage Services

- Video Creation Software

Not only that, but many of these services will give you a nice discount, for paying for an annual subscription.

3. Top Off Your Account Credits

Some services that you regularly utilize allow you to prepay for services in advance or keep an account balance with them. A great example here at Wealthy Affiliate would be Buying Cash Credits for things like SiteFeedback, SiteComments, and Domain Registrations. You can write off buying cash credits in the year you purchased them.

But this also applies to places where you get other services rendered, such as Content Mills, SEO Marketplaces, and SEO agencies that you use to manage your sites. Just make sure that the company has a good reputation before you just send them a lump sum of your funds.

4. Pay With Unpaid Affiliate Commissions

One of my more recent discoveries is that certain affiliate programs allow you to keep a "Wallet Balance", and withdraw your unpaid affiliate commissions at any schedule that suits you. For me, this has been incredibly helpful at controlling my cash flow, since the commissions aren't taxable until they "cut you a check".

Additionally, they also will allow you to purchase their products & services, and deduct them from your unpaid affiliate commissions instead of charging your credit card. This means that you are able to buy select products and services with money that has not been taxed.

Something that I would like to see implemented with the Amazon Affiliate Program, since they own Whole Foods Grocery, is to be able to receive Whole Foods Gift cards with unpaid affiliate commissions instead of them doing direct deposit on my unpaid earnings.

As large as that company is though, I doubt something like that would ever happen. But being able to buy groceries with pretax money would be phenomenal.

My Final Thoughts

I'm sure there is a lot more helpful tips out there for preparing for tax season, but these are just a few tips that I have found helpful. Is there anything loopholes that you have discovered when doing your taxes? Let me know in the comments.