Like a lot of parents, I’m super busy and don’t have time to trawl the Internet researching a topic, let alone understanding it in my sleep deprived brain fug! So I’ve done the work for you, breaking topics down to the essentials you need to know plus more detail if you need it.
Accounting for Bloggers and Vloggers
The number of bloggers and vloggers is increasing year on year, with many now seeing it as their main source of income. Brands and PRs are using bloggers and vloggers more and more for promotion purposes, with over one third of bloggers receiving seven or more ‘pitches’ from PRs every week.
However, many bloggers and vloggers are unaware of the accounting that is required for their business, which leads to the inevitable panic at tax return time!
To help avoid this, we are outlining the fundamental concepts that bloggers and vloggers should be aware of:
If you are new to blogging or vlogging, or are already in employment, you need to review whether you will need to register for self-assessment with HMRC. Although there are no hard and fast regulations specifically for bloggers and vloggers, HMRC looks for a ‘badge of trade’ ie. Are the transactions being carried out an act of business? In most cases, if you are receiving payments for any kind of activity (such as AdWords) then you are a business and will need to register.
Deciding on what counts as income, and how to value it, can be a very grey area, with many bloggers and vloggers being ‘paid’ with products rather than cash. The following items all count as income and are easy to track –selling advertising space or AdWords, affiliate sales and cash payments. If you have received a product in exchange for review, this is more complicated. As a general rule, if you are going to keep the product for personal use then it does not count towards income. If you are going to sell the product on, or use it to drive further income in to your business, it does count.
The rule here is that you can deduct expenses from your income if they are incurred wholly and exclusively for your business, ie. You only incurred the expense because of your blogging or vlogging. Good examples include phone bills, internet and website costs and marketing expenses. You can not include any entertainment costs, or subsistence (food and drink) unless it was for an overnight stay for your blog/vlog.
You may also be able to claim for the costs for working from home. This needs to be calculated carefully and is likely to be scrutinised by HMRC, so you won’t be able to claim the cost of your new extension!
This is a key principle, and is much harder to do after the event (or at year end). You should be keeping records of all income and expenses, however small and ideally with receipts. If you are unclear on whether a transaction meets the income or expenses thresholds, keep a record anyway as it is easy to rule things out when you tally up at the end of the year.
It will make your life a lot easier to have a separate bank account for your business transactions, and this can also act as a reality check to whether you are making a profit!
Save for the Future
You should be putting aside an amount of your income regularly to cover future large bills such as tax and National Insurance. These will be due on the 31st July and 31st January each year.
You should also look into contributing into a private pension plan if you do not already have one through your employment.
Seek Professional Help
Accounting for bloggers and vloggers may seem straightforward on a day to day basis, especially if you are being paid in cash. However, when you do get to self-assessment time, there can be some tricky concepts where it would be beneficial to seek an accountant’s help. Things such as claiming for capital allowances, VAT and working from home expenses can be maximised with the help of a professional! Plus the tricky decision of whether a bunch of flowers counts as income….