The start of a new school year always makes me want to get organized, despite the fact that I haven’t been in school for longer than I’d like to admit. I know I’m not the only one because I have been seeing a ton of getting organized posts lately. And I want to talk to my fellow bloggers today. It’s time to face what most people want to ignore- your bookkeeping. Now is the perfect time to start to gather up all that information you have been putting off dealing with all year. I know it sounds daunting, but I have a simple system that can get your blog bookkeeping in order in no time. (And a handy cheat sheet to print out!)
Why do I need to do this?
First of all, you might be wondering why you even need to worry about this. If you are blogging for fun and as a hobby, it might not be too big a deal. There are a lot of free tools to use and you might not be looking to make any money. But if you do spend money on your blog it is a good idea to keep track of it, just like with any hobby. It comes down to being smart with your household budget. And you never know, you might decide to look into money making options at some point. Then you will already have a system in place to keep track of your blog finances.
If you are trying to make some money off of your blog, this is definitely something you need to do. A lot of bloggers follow the idea that they need to treat their blog like a business. Well, no good business can succeed without acknowledging the financial tracking aspect. Come tax time you will be happy that you have this information organized and ready to go, confident you have what you need to report. (And if you are thinking you don’t need to report that info, well, remember it was the IRS that finally brought down Capone.)
You might be wondering how I know what to do with blog bookkeeping. I have been working as an accountant and bookkeeper for over seven years now. I run my own bookkeeping business that specializes in helping small businesses, mainly those run by a sole proprietor. This means my clients are usually a single person running their own business but needing someone to keep track of the financial aspect for them. Bloggers that are just starting to monetize fall perfectly into that category. Before I did this bookkeeping work I worked as a chemist. What does that have to do with anything? Well just like in accounting, in chemistry if you don’t document it, it didn’t happen. I have over thirteen years of experience in properly documenting and maintaining information in accordance with government guidelines. I’ve been doing this for awhile. (And a legal note: I am a bookkeeper, but I am not your bookkeeper. All financial decisions should be discussed with your legal and/or financial professional. This is simply an organization system, not tax advice.)
Basic Bookkeeping Organization
Receipts and Income Tracking
This is seriously the easiest system ever. Get 12 large envelopes. I use the big brown ones you can fit a whole sheet of paper into without folding it. Write the months of the year on them, one per envelope. Every time you make a purchase for your blog- buy a theme, take a course, use a paid scheduler, etc- print out the receipt or write it down. Then pop it in the envelope. Anytime you receive payment for anything, such as from AdSense or an affiliate link, print out the receipt and pop it in the envelope. Make sure it is actual, received income, as in you have received a payout you put into your bank account. If you receive a product for free, you need to write that down along with the retail value of it. Yep, that free product is income.
What information do you need to document?
- Date. When did this transaction take place?
- Who. Who did you make a payment to or who did you receive a payment from?
- Method of payment. Did you use your credit card (note which one), a check, or cash? How did the payment come to you (PayPal, check, free product)?
- What. What did you spend the money on? What exactly did you receive payment for?
- Amount. How much did you spend? How much did you make?
I know it seems like these are very basic, but the more detail you include the better. When you look back on this info at tax time you don’t want to be left wondering what a payment was for and having to search for the information.
If you prefer not to use a physical paper system, you can create email folders for each month of the year and simply email yourself copies of what you need to know. As a bookkeeper, I prefer the paper system. With envelopes, you have your packets to give to your bookkeeper if you are using one, and you don’t need to send a ton of emails. It makes it easy to organize and move things around if needed. (It’s easy to fix if you put a receipt in the wrong place for example.) When you are actually entering your information into your books it is much easier to have pages to go off of instead of flipping between browser tabs on the computer. And just in case something happens to your email, like accidentally deleting a folder, you have what you need to know.
Once you have all this information together it is so much easier to track your monthly expenses and income. Once a month (or however frequently you review your blog finances) you can pull out your envelopes and you are good to go. As your business grows this system makes it easy to hand over your data to your bookkeeper. It’s what I use and what I encourage all my clients to use.
Additional info needed
If you are just starting out as a blogger you are probably just using your personal bank and credit card accounts. If you have business accounts or cards you will want to add a copy of those monthly statements into your envelopes so you can reconcile them monthly. Yes, I said the ‘r’ word- reconcile. Reconciling doesn’t have to be a scary thing. But as I said, if you are just starting out and only have a few payments and income sources it isn’t something you need to stress over.
I give my clients a cheat sheet with all the info I am going to need to do their bookkeeping. You can print this out and tape it to your envelopes to reference when you are adding receipts.
So now I have to ask. What issues are you facing when it comes to handling the bookkeeping on your blog? Is this organization system helpful? What do you want to know about this topic? I want to help out, so let me know!