Tax Time: Bookkeeping for the Canadian Blogger.

a stuffed teddy rabbit hanging from a clothesline

A quick guide to keeping track of your well earned money.

So you’ve monetized, your blog is doing really well or you’re blogging on the side and are starting to make some good money. If it isn’t already pinging in the back of your mind, it should be –  what happens at tax time? I know, I know sorry to bring on the bad news but the Canadian Revenue Agency (CRA) wants all Canadians to do their due diligence and report all forms of income, so they can tax you on it. So, what does it mean for your blog, and how do you keep track or your income?

Your blog is now “your” Business and the way it works is this: as soon as you start to bring in money you have started what is called a Sole Proprietorship, which means you are the sole owner of your company. Even the child on the street corner, with their own lemonade stand, could be considered a sole proprietorship. It is the easiest form of business to start and you get to keep all the profits. The only time you even need to register is if you go over $30,000 in revenue in one year. As soon as that happens, you now have to register your blog as a business and start collecting sales tax from your clients (find out what sales tax is charged in your province).

Your blog is now your business.

As a business, you now have to start claiming all income; even the free stuff you get, unless it’s labeled as a gift or corporate sample, is considered income. You will need to get the company to send you the true market value and use that as the income. The good part of being your own business is you get to claim expenses against your business income like: office supplies, fuel (as long as you keep a travel log), travel expenses, a percentage of house expenses (hydro, gas, internet, etc.). This form, the T2125, is the Statement of Business or Professional Activities form which is submitted with your taxes teling you what expenses you can claim and how much and will also be used to calculate the amount to put on your T1 general income form.

How do I keep track of blog income?

So know you know what you have to do, here are a few options you have for keeping track of your income.

First, hire a bookkeeper. This is definitely the easiest but most expensive route, you can drop off a box of receipts to a bookkeeper and pay them to organize, align and produce a package that will help you file your taxes or even pay them to do your taxes if they are a tax consultant. Bookkeepers will typically have accountant versions of Sage 50 or Quick books, both are very powerful and very time intensive to learn accounting programs; they also cost a couple hundreds of dollars. These accounting programs allow your bookkeeper to have complete and up to date records of all your business interactions, produce profession reports and ensure CRA approved books. I highly recommend you interview your bookkeeper before you hire them, they will need access to your bank records and all of your receipts and that is a lot of trust to put into a complete stranger.

Second, which I advise you DO NOT do is: do nothing. If the auditor comes a-knocking and finds out that you have been hiding income from CRA they will charge you fees, late payments and fines. You’ll possibly end up paying a lot of money for something you should have just kept organized.

Third, do it all yourself, this is the cheapest but most time-intensive route. The best thing you can do is start keeping track as soon as possible.  Here are some best practices I tell anyone I meet, if they don’t want to hire a bookkeeper or an accountant:

Recommended Reading:  Accounting for Food Bloggers: A SimpleTax Filing Tutorial

Best bookkeeping practices for Canadian bloggers

1. Create an Excel or Numbers document, which will help you keep track of your income and expenses. There are a ton of templates online. This will help you to really create a working document that you can continue to grow and use for the future. It also allows you to keep each year separate. You also need to follow accrual accounting practices and not cash accounting. Which basically means that when the expenses occurs is when you track them not when you pay them. Another way to keep track of things is to use an online accounting program; some of my favorites are Wave accounting or Fresh books.  These online programs usually have bookkeepers or accountants, as their advisors. These people can help you if you get stuck or have questions or just want advice.

2. Get into the habit of writing on your receipts, what it was for, who you were with, and what type of expense, and the total amount. You will need to prove to the CRA auditor that it’s an actual business expense and heat sensitive paper is easily erased with time. Think of it this way: if they are auditing the last couple years, I know I don’t remember that meeting I had three years ago on December 13 or who it was with. Write it down so you don’t have to remember.

3. Use your smart phone or scanner to take a copy of any check you write or deposit into the bank. You will need to produce them for the auditor and it costs a lot of money to get the bank to send them to you. I take a picture or a scanned image of the check with invoice and put them in my business folder on my computer.

4. At the end of the year organize your receipts not by month but by what type of expense it was. So all the meal receipts go together, all the office supplies receipts go together, all the electronics receipts go together, etc.

5. If you want to claim fuel as an expense, you must keep track of your starting year odometer reading and the end of the year odometer reading, and have a travel long for all the driving you did for business.

6. Don’t give the CRA auditor a box of loose receipts, keep them organized and they will be so much nicer to you.

This quick introduction definitely does not compare to meeting with or speaking to a trained bookkeeper or accountant. It is only meant as a quick guide to get you started with keeping your own books. If you are able to attend a session with a bookkeeper, I highly encourage you to do so. Look for them at conferences or seek out a local bookkeeper, they can be great resources to have. And don’t be afraid to reach out to the CRA – they do have some incredible resources on their website and they do have a phone number for people who are self-employed or own a business 1-800-959-5525. There are also many other phone numbers you can call if you have questions about taxes or other benefits you can apply for.

Brian Baas is the founder of Baas Tax and Bookkeeping. He has had much success in bookkeeping working with a number of bloggers, as well as owning multiple blogs of his own. He has a diploma in business administration and is a certified bookkeeper. Brian has given presentations at multiple conferences on bookkeeping for the Canadian blogger, and loves combining two of his passions – blogging and bookkeeping.
Follow Brian on Twitter.

Hello Summer!

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24 Responses to Tax Time: Bookkeeping for the Canadian Blogger.

  1. Paula November 7, 2012 at 8:09 am #

    This is some very valuable information for all bloggers, even if they haven’t started making money from blogging as yet. One day they may and they should bookmark or print this article out.

  2. Michelle November 7, 2012 at 12:17 pm #

    This is a really great article, and has really opened my eyes to the importance of being organised. I never really thought that the samples we got were considered income and I am glad this has been pointed out.

    • Brian Baas December 2, 2012 at 8:19 am #

      Michelle, that is a common thing that most people don’t know. It has to do with CRA’s definition of income. Thanks for the comment

  3. Jan November 7, 2012 at 12:18 pm #

    This is such an excellent resource! Thanks for sharing your wisdom with us….

  4. Carol Lovett November 8, 2012 at 1:55 pm #

    Thank you for this article. I really need this advice.

  5. A Canadian Foodie November 8, 2012 at 10:36 pm #

    Love the free WAVE website.

    • Brian Baas December 2, 2012 at 8:21 am #

      If you need anything I am listed as an advisor on the wave accounting website if you need any help don’t hesitate to reach out and I am glad you like it, It is an awesome resource.

  6. Asiya @ Chocolate and Chillies November 19, 2012 at 10:49 pm #

    This is really informative. I have a question…does it matter how much you make from your blog? If it’s just a few dollars a month do you really need to be reporting it to CRA?

    • Brian Baas December 2, 2012 at 8:17 am #

      Thank you so much for your question. The answer is yes all income must be reported to CRA. Typically with my clients I will let them know that if they are making less than 1000$ I would report it as “casual labour” which is reported on line 140 of your tax return.

      This line 140 is also where you would report any money you make out side of a business or a T4.

  7. Lisa MacDougall June 2, 2013 at 11:41 am #

    Thanks for the info! This article helped clarify a few things for me. The best thing – the info is Canadian! We need more information on how things work in Canada. I am thankful I signed up for Food Bloggers of Canada already!

  8. Tunazzina Abedin June 12, 2013 at 2:45 am #

    This is great information even though I don’t earn any money from my blog. This will definitely be on my mind should I ever decide to monetize my blog. Thank you for sharing your knowledge.

  9. Megan December 22, 2014 at 7:22 am #

    Great article, very informative, thanks for sharing!

  10. Erika March 16, 2015 at 11:16 am #

    Hi Brian – Great resource and info! So, even if you make under 30k and aren’t registered as a business, you are still considered a business if you make any amount of money right? That’s what I’m understanding from your paragraph on Sold Proprietorship/the lemonade stand. And even if you make 5k, you should still keep track of how much you make/from where and what expenses you have, as if you were a registered business?

    Where does GST come into play when it’s less than 30k and you’re not registered?


  11. Josh June 12, 2015 at 2:27 pm #

    Hi Brian,

    Great info! You mentioned that “free stuff” is included in income. If you only get free stuff, like in my case as a golf blogger, some complimentary green fees and apparel in exchange for writing reviews, does that count? The tricky part is golf courses don’t give receipts for free golf. To date I haven’t received any cash compensation. Only “free” stuff, which isn’t always physical stuff in the case of free golf.

    I’m assuming that if the free stuff counts and should be claimed, than all my expenses associated would also be included in my tax return?


  12. Ashton College June 19, 2015 at 8:42 pm #

    Great tips for bloggers that can easily be applied to other types of freelancers! It’s so important as a freelancer/blogger to stay organized throughout the year in order to avoid chaos at tax time.

  13. Janice October 18, 2015 at 12:42 pm #

    Super article. Am just getting into monetizing my website and was told I should get a CRA business number, but there’s so much more than that! Thanks for sharing! Will definitely bookmark your article.

  14. Heidi April 9, 2016 at 12:52 am #

    What about food/grocery expenses for food bloggers? Can these be claimed as a business expense? I’m just about to publish my blog and wondering if I should be keeping these receipts and calculating which items are for food for the blog.

  15. Sapna August 15, 2016 at 9:37 am #

    I’m planning to start a blog soon and have two tax questions.
    1) You say if you earn over $30,000 you need to charge clients GS/HST. On ebooks, ecourses etc, this makes sense. However, what if you make your income from affiliate programs, advertising, etc? You couldn’t charge GST…so how would collecting sales tax work?

    2) What if you sell your ebook to someone in a different country? Do you still charge them Canadian tax? What if you are selling in US dollars or Euros based on your target market?


    • Melissa (FBC Admin) August 15, 2016 at 11:52 am #

      Hi Sapna,
      I think the best thing for you to do would be to book an hour with an accountant and ask them your questions. But to the best of my knowledge, yes if you are selling an ebook in Canada you must charge your Canadian purchasers GST/HST. But you do not need to charge your international customers. I think affiliate programs would depend on where the affiliate program is based – i.e., is it an American affiliate program or a Canadian one? That’s exactly the kind of question we would call our accountant with! :)

  16. Sapna August 15, 2016 at 12:27 pm #

    Great, Melissa! Thank you! :)

  17. Sarah Price September 14, 2016 at 5:16 pm #

    This was the exact information I was searching for. Thank you 😀

  18. Sandi February 27, 2017 at 11:02 am #

    I’m just starting out blogging, this question is open for anyone reading it. I haven’t made any money … yet… but do have expenses, do I only claim when we have a monetary value coming in?

    • Melissa (FBC Admin) February 27, 2017 at 12:35 pm #

      Hang tight Sandi – Angela has a new post coming tomorrow that covers expenses!

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Hello Summer!