Over the last few months I have been diligently reading the posts from John Chow. Maybe I should say reading most and skipping over the articles about Chow living the high life in Vegas and dining out. Why? If I want to read about Vegas and look at pictures of food I can think of better places to do it. Once again I expect that Chow is demonstrating that he is a genius when it comes to making money from blogging.
I know John Chow is paying his taxes on the profits from his blog, or at least if he hasn’t been he will be soon. Media coverage of his blog, and the increase in traffic will not go unnoticed. I can guarantee that one of the agents of the tax man has read one of the articles and performed a query on his computer to check to see if Chow has been paying his taxes on the income from his blog.
Chow has managed to integrate his life and the business of blogging. In Canada, you pay taxes on your worldly income. Against this income certain deductions are allowed. I am no tax expert and I am only attempting to provide food for thought, not advice. We are at the time of year when everybody is digging through shoe boxes trying to find missing receipts and when you do, see a tax professional and see if you can write off the expenses associated with your blog.
Part of the reason I think Chow is a genius is this. Chow goes out for dinner, Chow writes an article, suddenly he has a write off. May only be a portion of the meal and this probably depends on the structure used to run the blog, sole proprietorship or corporation but no matter what, a good meal is better. Chow goes to Vegas and gives away the free gifts he receives, Chow gets increased traffic the enjoyment of the trip and a write off. Suddenly a good portion of Chow’s life is not only providing pleasure and income, but tax deductions. That equals money in his jeans.
Chow has provided some great tips on structuring your blog. Incorporate for example.
Chow showed us his mobile office to run his blog on the road. Maybe he did a post about it but I would like to see Chow’s home office. You have to have one and there is a possibility that it is a write off. According to Revenue Canada
if you are self-employed and use part of your home to run your business, you can deduct a corresponding part of the operating costs of your home. For example, if your home office takes up 10% of your total floor space, you can deduct 10% of your home maintenance costs, such as heating, electricity, and cleaning materials.
Of course, don’t forget the equipment and furnishings. If you are just starting your blog or making minimal amounts for advertising get some advice before running out and spending a tonne of money on swank furnishings and equipment. Different types of expenses are treated differently and the rate at which a legitimate expense can be deducted varies by its class. For example, a computer is a capital cost of which a certain portion is deducted each year. Consumables used to run your blog, like the electricity to run your equipment can be deducted one hundred percent in the tax year it is consumed.
Chow is possibly missing some additional opportunities to make money by further integrating his life with his blog. Post on his home office, test a fancy new big screen, could be a write off. A penny saved in taxes is a penny earned. I must admit I would rather see a couple of shots of his home office rather than his dinner last night.
If you are making money from your blog, you better bet the tax man will want a piece, if you are losing money but have a realistic prospect of making a profit within a reasonable period you may be able to write off your losses against other income, like from that job that is sucking the life out of you, to reduce your overall taxes. Suddenly that blog is paying for itself. The point of this post is this, dig out your receipts, anything that is anyway related, take a description of your blog or site to the person doing your taxes and see if you can save yourself some money.
John would be the expert, I hope we see some more creative suggestions on how to make money blogging and steps that can save at tax time. Also, John what was the taxable benefit charged for feeling up JLo?
