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Blogging as a Business – Business Structures are Key

Posted By Darren Rowse 2nd of November 2005 Pro Blogging News 0 Comments

I’m feeling quite grown up today – I’ve recently hired an accountant and today we’re getting together to talk company structures, bookkeeping, tax and the like.

One of the stressful parts of starting a blogging business has been getting the administrative side of things up and running. I’m not at all wired in this way (I’m more of a dreamer, networker, marketer, creator) and so things have been quite messy. This has largely been because to a large extent I never planned for blogging to become a way of earning an income at all.

When I first started putting ads on my blogs just over 2 years ago it was with the goal of paying my ISP and perhaps even some hosting costs. A cheque (check for you North Americans) would come every few months (if that) and there was very little to account for.

I’ve been very fortunate and instead of a bimonthly $100 cheque the way things are going 2007 could well be a 7 figure year now that Chitika’s tripled (and some) daily income.

To say things have become more complicated is an understatement.

As I look over all of the receipts, cheque stubs, invoices etc that I’ve collected for the accountant today I’ve realized that I now have ten or so regular income streams (in a variety of overseas currencies) – some of which arrive in the form of cheques, others via PayPal and others via direct deposits. Some arrive monthly, others quarterly, some require me to send invoices and others come automatically. Things will continue to grow more complicated in the months ahead with some of the deals I’m working on which could involve stock options, royalties and a variety of other income streams.

While there are not many overheads to a business like this – there are an increasing number of expenses which are tax deductible and provide their own bookkeeping challenges.

Speaking of tax – readers often ask me about it – more specifically they ask whether I pay it or have some way to dodge the system. I’m quite up front about the fact that I do declare my income and pay the taxes I am legally required to pay. In fact until now I’ve probably been a bit stupid and have paid more than I should have due to my poor accounting skills and a lack of understanding of Aussie GST law. I will continue to declare my income – although will be a bit smarter about it with the system my accountant is setting up.

To keep a long and complicated story short – what we’re doing is transitioning from a hobby business with me as a sole trader we’re moving to a company structure.

I guess all that I’m reflecting upon is that things have changed for my business and up until this month the financial and record keeping side of my business has not changed with it. I’m a big believer in the idea that a business is only as strong as it’s weakest link – and I suspect that many ProBloggers out there will be like me in this and need to get their administrative side of business up to scratch also.

About Darren Rowse
Darren Rowse is the founder and editor of ProBlogger Blog Tips and Digital Photography School. Learn more about him here and connect with him on Twitter, Facebook, Google+ and LinkedIn.
  1. Yep, know what you mean about the GST. It’s a real hassle what with the mixed income – I wonder if you have to pay any GST at all seeing that most of your income is basically made overseas – last thing you want to do is pay the Taxman any more than you ought to :-)

    BTW, have you come up with a company name yet?

    Is Chitika that good? I’m doing a big write up on it and I’ve noticed you have written about it quite a bit – no doubt I’ll be sourcing from your posts.

  2. Chitika is better than that good :-) It’s consistantly doubling my Adsense earnings and then some.

    GST – yeah if you earn over $50,000 a year from any source you have to pay GST.

  3. I too am going to have to think about an accountant soon. I don’t think I can fly under the radar any longer.

    BTW, we call them cheques in Canada just like you.

    Cheque please!

  4. Darren, hope you don’t mind me asking, but is this site specifically recieving such a boost from Chitika or do you have certain sites that are doing better than others.

    I am interested in further integrating it into my website (its currently the default backup for adsense) but I have been getting low CTRs with it.

    Perhaps a followup post now that you are generating so much money from it reflecting on how you’ve further tweaked positioning and whatnot?

    Thanks a bunch, keep up the great work.

  5. I hired an accountant years ago when I sold a domain name for $100k USD. Things certainly became complicated! Even though my Web sites barely make $20k profit in a year, I find that my accountant more than makes up for her fee by finding every little thing I can deduct, which no mortal person in the US can figure out on their own.

  6. fred sanford says: 11/02/2005 at 12:51 pm

    Darren — looks like your six figure blogging course is already dated. How much are you going to charge for the seven figure blogging course?

  7. Wow, I wonder if it is possible for someone to earn $1 million JUST from 1 blog.

  8. Thanks Darren, we’d all be lost without you. Whilst so many others try to make money off their blog advice, we appreciate this site where you give it freely.

    It’s interesting with Chitika coz I’m not getting as many clicks with it as Adsense (will have to tweak the placement maybe), but the clicks I do get are worth a lot more than the Adsene ones. On that, I can see how Chitika would have grown your business so much.

    Also, for anyone interested, I have a WORDPRESS plugin that uses the post’s categories as the Chitika keywords. Have a look here:

    Thanks again, Darren.

  9. Yeah, it’s only those Americans that misspell the word “cheque” :-)

    Seriously, you have to be aware of the tax rules in your jurisdiction. Remember, with AdSense you have to fill out some tax forms before Google sends you any earnings, and the information you provide them is available to the IRS, who may or may not share it with your own country’s tax authorities. In general, you should be prepared to declare all of your AdSense income and to pay up on any taxes that come due. But c’est la vie.

    That said, in Canada the AdSense income does not qualify for GST (we have it up here, too), it’s just treated as regular business income.

  10. I think (but am not 100% sure) that GST does not apply for AdSense earnings as they are deemed to be export related (that’s if you’re from Australia).

    #7 – it’ll be pretty good to make 1mill from the one blog – but I think you should realise that Darren runs quite a few more and if my memory serves me correct ProB doesn’t make that much.

  11. yeah – dont have to charge GST on overseas income like Adsense – just the local stuff.

    you’re right Martin – that money doesn’t come from 1 blog – but numerous blogs.

  12. Wow, impressive. Hope chitika will be available soon for blogs in french.. :(

    (we said cheque in french too !)

  13. Darren, just out of curiosity. The earnings you get from chitika, is the biggest part from click-through’s or is the referral programming kicking in as well?

    And almost 7 figures is very nice, congrats!

  14. Ken – mainly from my own sites at this stage. Referals are increasing but nowhere near as big as the income they earn me directly.

  15. Congrats on your success, Darren. We all wish we had the problem of having to hire an accountant to handle our vast earnings *g*

    I’ll have to check out Chitika. I noticed you’re running both it and Adsense on some of your sites. Does Google not have a problem with that? I remember at one time, they wouldn’t allow other text-based ads. Maybe Chitika is graphic enough not to count?

  16. Jacob says: 11/03/2005 at 4:59 am

    Talking about business structures and incorporation are sorely lacking amongst blogging and internet marketing circles.

    I’ve found that a lot of internet marketers sell information products that say how to make money on the internet. Frequently, they say they couldn’t believe how successful it could be, and are passing on what they’ve learned for $49.97 or $997 with a zillion free bonuses, and that you can get started in just a few minutes.

    What they don’t tell you is how much trouble you could get in with the FTC if you follow their steps but don’t have an attorney to draft terms of conditions, privacy policy, etc., check out your advertising claims, and incorporate as an Inc. or LLC. (And virtually all of them are sole managers of LLC’s and Inc.’s that they do business as.)

    Blogging is definitely going to move that direction, and sites such as this need to be particularly careful. Did you know that you could be subject to FTC rules and fines for just one affiliate link?

    There needs to be more dialogue on liability in blogging and internet marketing.

  17. Lindsay – check out my review of Chitika eMiniMalls for answers on running it with Adsense.

  18. Congrats Darren!
    It’s through this blog that I’ve been able to come up with some innovative ideas, and actually put the work in to make it happen.
    We can always dream, but it’s the elbow grease that makes it happen.
    Remember that, gang ; )

  19. 7 figures… my goal was to hit 6 figures in about 5 years… guess maybe I should revise that. congrats on having the balls to put it into action.

    jacob makes an interesting point about structures and blogs. I work as a lawyer in the structuring/company advice side of commercial law and think maybe – well definitely in Australia – there is room for some better advice and planning online.

  20. Lindsay says: 11/03/2005 at 3:17 pm

    Thanks, Darren! I was on a trip for about a month and wasn’t able to keep up with your blog. Should have done a search before asking. I’m excited by your experiences and will definitely be trying the program on one of my blogs.

  21. Congrats on the success Darren. You’ll find that the move towards a more structured organization is well worth the effort, and will open up a world of advantages you might yet to discover. I too can’t make heads or tails out of bookkeeping or taxes, but that’s why we hire CPAs. But the real fun is when you hire a business attorney, and begin the process of incorporation. You want to talk about expenses, SHEEESH!

  22. Hey Darren, just wondering, are you using USD or Australian Dollars?


  23. proph3t – I generally talk here in US$ unless otherwise specified.

  24. […] Sometime last week, Darren posted something about getting an account to do the dirty work for his blogging business. […]

  25. […] And don’t even make me mention lone blogger, Darren Rowse, who wrote recently: “When I first started putting ads on my blogs just over 2 years ago it was with the goal of paying my ISP and perhaps even some hosting costs. A cheque (check for you North Americans) would come every few months (if that) and there was very little to account for. […]

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