I attended Blissdom Canada in Toronto a few weeks ago for my fifth time—I haven't missed a year yet—and I led three micro-sessions on the topic of "Blogging and Taxes." I promised those at my sessions (and those who wanted to come but couldn't), that I would write a post here at YMC to summarize what was asked and what we talked about. All three sessions had people asking similar questions, and five of them were prevalent:
1. What income do I need to report?
The technical answer is: everything. But when I first started blogging, the Partner I worked for said that if I was making coffee money from ads, that was more of a hobby, and I didn't need to report that income. But! If you're writing posts for pay or submitting articles and getting paid, that's income and it's taxable. Also, if you're given items to review or sent on trips, you're supposed to report the market value as income. (I KNOW.) The CRA likes to take their piece of the pie and you have to report anything that you're given as income. On the plus side . . .
2. What expenses can I deduct?
When you report income, you can also report the expenses you incur to make said income. Conference costs, travel costs, web-hosting costs, printer ink, pens, and so on and so on. You can claim your office use of home expenses, and your automobile expenses, as well. I outlined those deductions in this post.
3. When do I have to register for GST/HST?
When you've made $30,000 in a three month period, you are required to be registered for GST/HST . . . from the beginning of that three month period. CRA doesn't mess around. So, if you know you're getting close, just register to save yourself interest and penalties. You get to deduct the GST/HST you paid against the GST/HST you collected as well.
4. Should I be incorporated?
If you're making a small amount of income, probably not. If you're making full-time income, probably. There are more opportunities for tax planning, and there is also a shield against any legal liability if you're incorporated. An incorporated company is a separate entity. It's you cloned yourself, so any issues can be dealt with your clone.
5. What's the best way to track my income and expenses?
This should be a post on its own (And it will be!), but there are a number of programs that are easy to use and will help you keep track of the money coming in and coming out. I prefer Sage (formerly Simply) accounting, but Quickbooks is a close second.
Let me know if there's another question I can help you with!