So you are earning money with your blog, now how do you keep track of it?
There are many great ways to do this, it all depends on what works best for you. Since so many people have asked me for tips on how to do it I’m sharing my method today.
*disclaimer* I’m not a tax or financial expert, this is what has worked for me so far, but in no way represents professional financial or tax advise for your blogging business.
First off, I have a separate bank account for my blog. I went and set myself up an account at a different bank (I found a local one with free checking) and I use it for all of my blog income and expenses. This makes it easier to keep things separate from our personal account and I also don’t have to worry about our personal bank account with all our savings somehow being hacked into. Other than paying for preschool I don’t touch the blog money until after tax time. This is simply to keep myself covered and make sure that I don’t have any surprises at tax time. I’m sure it would be find to just keep a percentage in the bank, but I like to be on the safe side, and since we’re not living off my income (just using it to pay off our house) it’s fine to let it wait until after taxes each year
On to the record keeping!
I keep records in two places. One for taxes and the other for my own personal tracking. Since there are delays on a lot of payments (some don’t get paid out for 30-60 days) I like knowing what I earned in a month, even if it hasn’t made it’s way to my bank account yet. My personal tracking sheet tells me this.
We’ll start with the tax records though.
You must record everything. From that free bottle of shampoo you got for a review to the $200 you got as payment for a post. Products and money must be recorded along with expenses. This is a huge reason I tend to decline most “review” type posts. Since I will be taxed on it, I’m not going to take a “free” item that I wasn’t going to be purchasing myself anyway (Just my personal rule).
I do my tax records on an excel spreadsheet. I made the following as an example to show you how I track everything. You can click the image to view it larger.
Starting on the left I record the type of monetary income I receive. Payment for posts, ads, sponsored tweets, affiliate sales…all the money goes in the first set of spaces on the left.
Type of income – I record what I’m being paid for. Be it affiliate sales, a sponsored post or something else
Payment from – This is what the check or paypal transfer will read. Sometimes it’s different than how I found the lead so I record this so I can keep my records straight with my bank and paypal account.
Offer found through – I want to keep track of where I’m getting the most offers. Social spark, direct email, and so forth. I fill in this field only when it differs from what was typed in the “payment from” field. This way there is no confusion later on.
Date paid – This is when I get the money in my bank account. I might have done the work months ago, but I write down whatever day the payment gets to me in this field.
Amount – Simply the amount I was paid for that particular job.
Total – In this column I keep a running total of my earnings so far in the year. Frequently this number is different than the amount in my bank account because I track expenses in a separate place. Since tax forms ask for earnings/income apart from expenses I do it this way on my spread sheet too.
If you keep going to the right you’ll see a few more columns
Products – This is where I keep track of that free meal we got for blogging or the toy that a brand sent me for my son. I write down what the product was in this space.
Value – Sometimes this is approximate, but filling in the value of your freebies allows you to put a dollar amount to them at the end of the year. I believe your total monetary income and the value of your free products will be added together at the end of the year, so having a cash value for each item is helpful to keep a running total here as well.
Expenses – There are a lot of expenses that come up! From domain renewal to paying for hosting and even to the hotel I’m staying at for the upcoming blog conference. All business expenses are tax deductible so I keep track of them here.
Total – What each expense cost me.
Date – The date I paid for each expense
I keep this spreadsheet on my computer and update it frequently. I also separate it out by month, though this wouldn’t be required.
That is how I keep records for taxes. But it doesn’t tell me how much work I did last month, only how much money I received for work I did in prior months. This is why I keep a small notebook on my desk as well. In it, I keep track of my work per month and what I’m making.
It looks something like this:
$35 – Social spark referral
$200 – (topic) Sponsored post
$50 – (topic) tweets through Blogher
And so on down the page. As soon as I am accepted to a campaign I jot it down in my notebook. This also helps me to track if I am on schedule to meet my earnings goals for the month. If I receive a product I write in the amount and the product received in the opposite page. Each month has it’s own page in my book.
At the end of the month I add up the total earnings and put a total at the bottom. This helps me track my earnings growth from month to month as well.
And that’s how I track my income! This is how my mind works so it makes the most sense to me. There are LOTS of great methods to do this, and as long as you are tracking everything you need for taxes, whatever makes the most sense to you is perfect!
How do YOU track your blogging income?
If you are looking for more ways to make money blogging check out this post which explains how to go from no income to $1,000 a month in blog earnings in just a year!
Looking for information on how to track your income and the basics of what you need to know about taxes and blogging? Check out this book we wrote with becky’s husband Mickey! The unofficial tax handbook for bloggers!