Online Marketing Blog Roundup

When Is a Blog Like a Business? When It Gets Slammed with Fees & Taxes

By Elisa Gabbert August 27, 2010 Posted In: Online Marketing Blog Roundup Comments: 7

income tax

Bloggers love a controversy, and that includes me. The big controversy this week was over a new "tax"—more accurately, a business license—being imposed on bloggers in Philadelphia. Last week, Philly's City Paper reported that owners of small, low-traffic blogs were receiving letters from the city "demanding" they pay $300 for a business privilege license.

This license applies to all businesses in the city, not just blogs, but only recently, it seems, has the city attempted to enforce it with blogs. There does seem to be an inherent difference between a blog and a brick-and-mortar business—the latter is probably benefiting from services that the city provides, but a blog run by someone who happens to live in Philadelphia wouldn't seem to. But the license, city officials claim, applies either way.

Naturally, outrage and cries of first amendment rights violation ensued. I first heard about the controversy via Marketing Pilgrim, where Frank Reed writes, "Imagine you live in Philadelphia and you have a blog. You are like about 99.9 percent of the world’s bloggers so you make no money and the blog is a labor of love. Now imagine that you are going to be charged $300 for the privilege of having your blog start from the City of Brotherly Love." He adds that he wants to "go on record as saying that this is completely ridiculous."

Justin Kownacki reacted less emotionally—he claims this is an opportunity to ask yourself if your blog is in fact a business:

If you’re blogging as a creative outlet, but you have sidebar ads … is your blog a business?

If your blog is a self-promotional tool, but it leads to direct consulting or marketing work … is your blog a business?

If you’ve never written a post in your life, but you employ autoscripts that crawl, steal and repost other people’s content to drive up your SEO ranking so you can charge for more blog ads … are you a business?

Computerworld ran a story with the somewhat inflammatory headline "Philadelphia wants bloggers to start paying taxes," subtitled "Those who make money with their writing better get out their checkbooks." But the story contradicts that: "There's no specific blogger tax, as some media outlets reported today." (Yes, some media outlets are so disingenuous.)

Shit didn't really hit the fan until Lisa Barone of Outspoken Media blogged about the "tax." In typical Outspoken fashion, Lisa didn't pull any punches—she said bloggers should "put up, shut up and pay their tax" and later "'Hobby' is often another way of saying 'I’m scared to fail'." Lisa says if bloggers don't take themselves seriously, no one else will:

My biggest issue with bloggers and blogging is the lack of credibility assigned to the medium. And a big part of why bloggers are looked at as a joke and or imposters is because they treat themselves that way by half-assing content and not committing to what they’re doing. When you don’t take what you do seriously, you give other people license to disrespect you in the same way. I don’t think that a $300 lifetime blogger license is going to make people heed the power of the keyboard, but I do wonder if maybe it’s not a step in the right direction to make people take what they’re doing more seriously or at least question it. If you’re appalled by the idea of having to pay a one-time lifetime fee of $300 then maybe you shouldn’t be blogging. I don’t think a fee would fix blogging but maybe it would shine a light on some people who shouldn’t be there. If your blog isn’t worth $300, total, in your lifetime, then I don’t want it clogging up my Internet.

As of today the post as 185 comments, many quite heated.

Taxing Bloggers

Most arguments centered around the definition of "business" and the question of "double-dipping," or being taxed twice for the same income. In other words, if you make money by placing ads on your blog, you have to declare those profits as income and pay state and federal taxes on it. Why should you have to pay the city again? These arguments are rather beside the point since the $300 is not a tax, but a flat license cost. However, it does seem a bit absurd to ask bloggers who only make a few dollars per month from their AdSense ads to pony up the fee.

What about the first question—when is a blog a business? Lisa and her Outspoken teammate Rae Hoffman argue that the second you put ads on your blog—regardless of whether they make significant money—your blog is a business, and you should take that business seriously (i.e., pay your fees) or get the hell off the Internet. Some commenters seemed to agree, such as Joe Hall:

If you blog because you think your ideas have value, then shouldn’t you do everything possible to make sure your ideas are delivered to your readers? Even if that takes paying money to a hosting company or government??

If you aren’t willing to invest in your ideas, then you have no right to share them.

People in this camp are saying, "What's the big deal, it's $300, just make the money and pay the fee!" Joe suggests mowing lawns to make the money; Rae said on Twitter that when she was starting a business she "sold shit on eBay." But how is this any different from trying to make money with your blog? Couldn't starting a lawn mowing business or selling stuff on eBay be seen as a small business too, by Philly's standards? Wouldn't that just require you to pay for another license?

Other commenters argue that there should be room for middle ground—some hobby bloggers use AdSense not to earn a living but to recoup hosting fees. One commenter noted:

I’ve never considered blogging a business. You’re not selling anything or providing any services. I don’t think a business license should apply here, however I do think paying taxes should.

If you make enough you get a 1099 every year at tax time from Google, Casale, Adbrite, TribalFusion, RockYou, or whatever ad network you use. I declare my earnings on my taxes, and make sure I write off all the hosting, domain names, and other expenses.

For many (the authors of this blog excluded) blogging is a hobby, not a business. the real issue here is the business license, not the fact that bloggers have to pay. They should pay, just not in the form of a license.

To me, poker and blackjack are hobbies. I make money each year at casinos. I pay taxes on it like I should, but I don’t think I should have to register myself as a business.

I just don’t believe that all blogs are actually a “business” – many can be hobbies, and there are plenty of hobbies out there that make a small profit (bowling, pool, darts, softball tournaments, etc..) Those shouldn’t be businesses either.

Several took issue with the tone of the post, which was seen as elitist:

What surprises me is the tone of your post. In poopooing amateur bloggers you are displaying a certain type of classism that I didn’t realize existed within the blogging community. Of course such a federation and the solidarity therein is a myth; still the fact you choose to target the little guy rather than the misguided lawmakers, reeks of elitism.

Another, in response to the idea that bloggers who aren't serious about business are just clogging up the pipes, wrote sarcastically:

A lot of the things people do to try to make money need to be taxed more. A $300 licensing fee for babysitters would weed out the slackers who just watch TV with the kids till the parents get home, and help those who aspire to do better to focus more on honing their craft.

And we should tax neighborhood basketball. That’d force those punks to get serious about the game. Either they’ve got the skills to get to the NBA, or they should stop fooling themselves and go do something else. Street ball would go way up in credibility if all players were licensed.

Alan Bleiweiss commented:

All this high and mighty talk from so many people bitching about the whining is, itself, whining.

Another aspect of the pro-"tax" argument I find troublesome: the attitude that whether or not you agree with the law is immaterial—it's the law, that's the way it is, stop complaining. For example: "The law is the law … Bitching about it won’t do a whole lot of good." But a little healthy dissent is often in order when it comes to law. That's how laws that prevent women from voting and gays from marrying get overturned. Some laws are stupid—complacency is how stupid laws get entrenched.

At the end of her post, Lisa adds this note:

In June Philly council members Bill Green and Maria Quiñones-Sánchez introduced a proposal that would that would reform the current Business Privilege Tax and make it so that businesses wouldn’t have to pay taxes on their first $100,000 profits. That’s a compromise that would likely make even the angriest of bloggers happy.

This is confusingly worded, but I assume she means bloggers wouldn't have to pay for a business license until they made 100K in profits (regular old taxes still apply). Certainly, a cut-off point below which a license isn't necessary makes a lot of sense, even if it were lower than that. As it stands, I say leave people who make a couple bucks a month from AdSense or selling homemade jewelry on Etsy alone.

Internet Marketing Highlights This Week

Aaron Wall collects his favorite Eric Schmidt quotes, the best of the worst from the Google CEO and PR nightmare. There's, of course, the old classic: "If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place." New to me, however, was this gem: "Brand affinity is clearly hard wired ... It must have a genetic component." That explains why all my ancestors preferred Coke to Pepsi.

Google is testing a new feature that updates search results as you type. Which sounds kind of terrible.

Ontolo is building a huge guide to writing huge guides. This post names 62 types of queries that show information-seeking intent, from "how to" to "pitfalls" to "checklist."

On ViperChill, Glen writes the manual on self-employment with 13 lessons he's learned while working for himself, from home, and online.

SEOmoz brings you five actionable takeaways from SES San Francisco, including how to find out exactly who is sending you traffic.

Have a great weekend!

Photo credit: http://www.flickr.com/photos/alancleaver/4105756012/

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Comments

Saturday August 28, 2010

Angie Perez (not verified) Said:

Well, I am glad I don't live in Philly! I blog for clients as an extension of my business. Of courses I have ads on my site to pay for my hosting and my time . . .you offer Free and paid for exposure to other SBOs in my network.

Imagine becoming a vendor on the crowded NYC or other Big City streets. I would pay for such a privilege because I don't have to generate the traffic. Hence the word CROWDED. As oppose to a blog where I am generating all of the traffic myself. That's just wrong, Philly. Shame on You!

Monday August 30, 2010

Elisa Gabbert Said:

Hi, Angie, thanks for commenting! I've heard that Philly isn't considered a good environment for small businesses. I'm glad we don't live there too!

Saturday August 28, 2010

Warner Carter (not verified) Said:

Too many Government bodies in the USA currently are corrupt overpaid parasites looking first to enrich themselves on the back of working people. The recent scandal in Bell, CA where the City Manager was being paid about $750K a year is an extreme but hardly isolated example. I find the City Manager in the 2 square mile town I live in, Hermosa Beach, CA with a population of about 19,000 is being paid $270K a year which is at least twice what that position is worth. Not to mention the whole city staff takes Friday off since the 1974 oil embargo to help reduce oil use. When you add in the gold plated for life pension these over-paid Government parasites get and the fact that most obligations are unfunded and written into unbreakable contracts, you and everybody can just get ready to pay more taxes on more things, unless bloggers and people get in their face in a big way. (by the way the captcha you use is almost impossible to read)

Monday August 30, 2010

Elisa Gabbert Said:

Oh dear, I hate CAPTCHAs.

Thanks for your comment -- our blogger Ken Lyons had a government job a while back and has some great stories of silly waste ...

Sunday August 29, 2010

Country Side Homes (not verified) Said:

Wow, that is outrageous. I totally agree that many laws are ridiculous and the result of no one standing up for what's right. I hate that kind of attitude.

This is like requiring a $300 license for a lemonade stand. Someone in Philly's government needs to get a clue.

Monday August 30, 2010

Elisa Gabbert Said:

I agree, and I hope no kids are getting letters from the goverment about their lemonade stands!

Sunday August 29, 2010

Frank Apokwu (not verified) Said:

This is absolutely ludicrous.

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