Today food blogging has gone from being a hobby to a full-fledged career option. Thanks to the booming resources on the internet, many people are turning towards blogs to earn as much as possible. Owing to various blog monetization tools such as pay-per-click advertising, product marketing, affiliate marketing, etc. food bloggers are not just writing about food but also earning their due share. Organizations such as the Food Bloggers of Canada (FBC), ensure there are enough resources and opportunities for food bloggers to flourish.
Their website offers a wide range of blogging resources such as recipe development, food photography, social media, blog monetization, technology platforms, and much more. They also offer opportunities to work with national, local and international brands in the food world. With the rise in monetary sources, food blogging has turned into a respectful way of earning. And the moment you start earning you need to find ways to manage the money that is coming your way. This is where, accounting services play a role. Now, you can either choose to manage your finances on your own (if you are a pro at handling money) or choose to hire an accounting professional to help you out. If you plan to expand your blog and turn it into a profitable website, then taking the services of an accounting professional is the ideal way to go. Still not convinced? Read on to learn more.
The first thing you need to understand is why you need to keep track of your expenses by saving all those receipts. Well, the Canada Revenue Agency (CRA) views your money-making, food blogging endeavor as a business. The CRA defines a business as any activity you conduct for profit or with a reasonable expectation for profit. So, you might delay the process of keeping track of your expenses until you start earning an income, but that may not be the best way to go about it. The FBC website explains this well through this example.
“For example, you’re likely going to need to register your domain and pay for hosting before you have many readers or are earning money. If your intent is to make this your business (and earn income) then you’ll be able to deduct those expenses required to get your business up and running.”
So, how do you go about expensing? First, consider if a particular expense you make is somehow related to your business. If yes, then find out how. Understand if these type of expenses are common and accepted in the world of food blogging. If you are in doubt, then you could consider hiring an accounting professional to do the job. And, always bear in mind that these expenses should be helpful to your business and should help you yield potential returns in the future. Some of the things that can be expensed include hosting costs, internet related expenses, meals and entertainment, groceries related to recipe development, etc.
Long-term use articles such as a camera, laptop, camera lens, cannot be expensed. These items are considered Capital Expenses. In some cases, if you plan to buy articles exclusively for your business, then think again. Maybe renting could be a better option. Even if you plan to purchase these products, make sure they are useful even if you don’t use it for your business. You can refer to the list of current and capital expenses on the federal website to get a better understanding of what you cannot expense.
Once you have figured out how to track your expenses, you need to do the same with your income. This goes a long way in making your tax filings a hassle-free process. Regardless, whether your business is a sole proprietorship, partnership or a corporation, you need to have a systematic way of tracking your income. Your way of doing this can be as easy as maintaining an excel sheet with separate sheets for earnings and expenses. But, once your business expands, you might need a sophisticated way of keeping track of your income and expenses. There are many bookkeeping methods that can help you with this. Ask a knowledgeable tax preparer to help you with this task.
As mentioned above, the CRA views your food blog or website as a business. So, the rules that apply to taxation of a business would apply for your blog as well. You will need to meet CRA’s filing requirements and file your taxes. If you are a sole proprietor or are in a business partnership, you must report your business income on your personal tax return by filling out Form T2125: Statement of Business or Professional Activities. If your business is a corporation, you will need to file a T2 return. This article addresses the use of Form T2125. Filing your tax return is a systemic process and most business owners outsource the job to an tax specialist. There are essentially two ways of filing. You can either download the tax return package for the year for which you are filing or use software programs that are certified by the CRA to do the job.
Whatever the case, accounting requirements are an essential part of food blogging the moment you decide to turn it into a business. And, regardless of how much of a pro you might be, you may want to focus entirely on your food blog and the food fraternity. So, it maybe best to hire an accounting professional to help handle your finances.