As we all know, it’s that dreaded time of the year-Tax time! In honor of tax season, I have a new series called “Ask An Accountant”. Send in your tax questions each week to firstname.lastname@example.org and I will post the question and give an answer from an experienced accountant.
Since I am a blogger and know how confusing tax time can be, I thought it would be appropriate to share some questions I have received from fellow bloggers this week. I inserted my name and blog name to keep the situation anonymous. Also, due to the number of blogger tax questions I have received, I will be including 2 questions this week.
I’m a bit lost on the EIN and the company name thing and if I need to do it as a business or what…. I got an EIN but its for my name…do I need one for the blog? Do I need to get a business license? I know some have their blogs as corporations or LLC. ???
The blog and you are one in the same (unless you incorporated or filed LLC registration with the state). Essentially the blog name is a d/b/a for you personally (sharon ____ d/b/a momondealz.com). What this does is allows you to get paid under your personal name for income of the business without putting your social security number for all to see.
If you plan to generate revenue or sell anything (advertising, tangible items, coupons, etc…) you do need a business license. Along with this comes an annual registration fee as well as Tangible Business Personal Property Tax for the city you live in (computer, camera). Tangible business personal property is any asset or item with a useful life used to produce income. The tax is similar to your personal property tax on your car. Without this, the IRS would consider your venture a “hobby” and limit the deductions you can take.
Is it true that if you make under $600 you don’t have to report it? And is it $600 per source (this affiliate, that affiliate) or $600 from all sources?
Per IRS guidelines you are required to report ALL income from all sources whether you receive a 1099 or not.
The $600 threshold is for the “payer” or in this case the affiliates. The IRS mandates that the “payer” fill out and send form 1099 to each un-incorporated entity/person (blogger in this case) that they paid for services (no tangible items). The reasoning behind this is two-fold. One is to remind the recipient of the income they received from each source they received income from, and two, provides a “paper-trail” for the payer to substantiate payments they will deduct from their business. In the event of an audit, this is one of the first things the IRS will ask a business for in order to allow the deduction.
Keep in mind, even if you are incorporated or received less than $600, you may still receive a 1099 for services you performed, as $600 is the IRS threshold, not necessarily the company’s threshold
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.