Here’s a major downside to hobby
Posted: Tue Dec 24, 2024 7:11 am
Here’s a major downside to hobby blogging—you can only deduct your expenses up to the amount of profit you make. So for example, if you purchased a $1,200 laptop to work on your blog, but only made $500 in profits for the year, your total deduction allowance is just $500.
If you’re running a more formalized blog business that has an official legal entity (even if it’s a part-time business), you can deduct all your business-related expenses each year.
Tax Overview for Side Hustle Bloggers (Schedule C)
A side hustle blog is very similar (from a tax perspective) to a full-time armenia phone number library blog, but it does require a little less work to manage.
If your main source of income is still a regular job or series of blogging jobs (that technically classify as freelance gigs) which add up to significantly more income than what your blog is generating today, your tax filing process will be pretty easy and straightforward. You should still think of your blog as a separate little business entity—keeping detailed records of all your income and related expenses.
If you’re the sole owner of your side blog, then you become a Sole Proprietor. Filing your blog taxes as a Sole Proprietor only requires you to attach a Schedule C to your Standard 1040 tax form.
In other words, if your blog is generating a relatively small proportion of your total annual income, you can file your blog taxes along with your personal tax return (on a Schedule C that details your blog-related income and expenses). You won’t need to file a separate tax return for a business entity.
Tax Overview for Full-Time Bloggers (Separate Business Entity)
As a full-time blogger, you’re all in. Your blog is your primary source of income and you spend most of your working hours growing and improving it.
At this stage, you’ll want to establish a formal legal entity to operate your blog business under—like an LLC for both the tax advantage and additional legal protections (more on that next).
When running a formal business, you’ll be expected to file:
Your personal income tax return (as per usual)
A separate business income tax return
Self-employment taxes
Payroll taxes (if you hire help to run your blog)
There are some notable exceptions—like the ability for single member LLCs to file taxes as an individual (making it the ideal business entity for established bloggers without employees) vs being taxed as a corporation that requires a separate business tax return. We’ll break this down in more detail below.
Lastly, it’s worth noting that as well as taking tax into account, there’s a lot more to consider when hiring your first employee. Being aware of broader HR requirements as your blogging business grows is crucial in this context.
If you’re running a more formalized blog business that has an official legal entity (even if it’s a part-time business), you can deduct all your business-related expenses each year.
Tax Overview for Side Hustle Bloggers (Schedule C)
A side hustle blog is very similar (from a tax perspective) to a full-time armenia phone number library blog, but it does require a little less work to manage.
If your main source of income is still a regular job or series of blogging jobs (that technically classify as freelance gigs) which add up to significantly more income than what your blog is generating today, your tax filing process will be pretty easy and straightforward. You should still think of your blog as a separate little business entity—keeping detailed records of all your income and related expenses.
If you’re the sole owner of your side blog, then you become a Sole Proprietor. Filing your blog taxes as a Sole Proprietor only requires you to attach a Schedule C to your Standard 1040 tax form.
In other words, if your blog is generating a relatively small proportion of your total annual income, you can file your blog taxes along with your personal tax return (on a Schedule C that details your blog-related income and expenses). You won’t need to file a separate tax return for a business entity.
Tax Overview for Full-Time Bloggers (Separate Business Entity)
As a full-time blogger, you’re all in. Your blog is your primary source of income and you spend most of your working hours growing and improving it.
At this stage, you’ll want to establish a formal legal entity to operate your blog business under—like an LLC for both the tax advantage and additional legal protections (more on that next).
When running a formal business, you’ll be expected to file:
Your personal income tax return (as per usual)
A separate business income tax return
Self-employment taxes
Payroll taxes (if you hire help to run your blog)
There are some notable exceptions—like the ability for single member LLCs to file taxes as an individual (making it the ideal business entity for established bloggers without employees) vs being taxed as a corporation that requires a separate business tax return. We’ll break this down in more detail below.
Lastly, it’s worth noting that as well as taking tax into account, there’s a lot more to consider when hiring your first employee. Being aware of broader HR requirements as your blogging business grows is crucial in this context.