Now That Bloggers Are Being Taxed, It’s Time to Ask: Is YOUR Blog a Business?

Whether you blog for fun or profit, you may want to rethink your motives before your elected officials start doing your thinking for you.

According to the Philadelphia City Paper, Philadelphia bloggers are being charged a $300 business license tax, regardless of whether or not their blogs are profitable.  This means even Philadelphia’s casual blogs will now have to conduct themselves as businesses.

And while this news may initially seem comparable to a health inspector shutting down a 7 year-old’s lemonade stand, the truth is, Philadelphia just might have this right.

After all, social media has been begging to be taken seriously for years.

If you attend any PodCamp or other social media meetup, one of the first questions out of anybody’s mouth is, “But how do I monetize???”

And now that the city of Philadelphia is rewarding bloggers by classifying them as businesses (so they can be taxed, and so the city’s underworked accountants can have something else to do), bloggers naturally do what they do best: they complain.

All of which begs the question: why are you blogging, anyway?

At What Stage Does a Blog Become 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?

I don’t know many people who blog and don’t hope for lots of traffic.  But what do you need traffic for, unless you expect to (even indirectly) convert them into customers?

Do I think Philadelphia is being opportunistic, shortsighted and comically petty? Absolutely.

But if the blogging community tries to laugh this off, I think we miss an opportunity to look ourselves in the (collective) eye and ask a question so few of us bother to answer:

Why are we doing this, anyway?

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  • Sarah Wallace

    Great post. My blog doesn’t have any affiliate marketing but a lot of visitors have followed up with inquiries regarding my writing services. So, in its own way, it does make me money. Would I find it outrageous if I had to pay taxes for my blog, no. Would I be psyched to pay taxes on it, not really… but times are changing and if he tax man cometh than such is life.

  • http://twitter.com/Sorgatron Michael D Sorg

    Does Philly really have the resources to track down everyone with a blog in city limits so they could tax them? And to go ahead an make that distinction that it can make someone money? I can’t see this as really enforceable.

  • Caseyhunsaker

    Great post! I have 3 blogs myself, and this article hits home for me! I wouldn’t be to stoked to pay taxes on something that doesn’t make me money… Well see what happens.

  • http://justinkownacki.blogspot.com Justin Kownacki

    I’ll admit, I’m surprised that the vast majority of reaction to thisrnnews has been “oh no!” rather than “let’s fight!” It’s as thoughrncitizens accept arbitrary taxation as an inevitability, rather thanrnsomething to be debated and justified by those seeking to enforce it.rnrnOnce upon a time, we’d have revolted before we’d allow our speech tornbe taxed and regulated as a business. Now we sigh and absorb. For asrnlittle as we allegedly trust our governments, we don’t seem to keen onrnarguing with them, either.

  • Marjorie Clayman

    Very interesting. This will be fun to follow. Or painful. I would have to think that the burden of proof would be on the government. Can you prove that someone’s intention is to run their blog like a business? How?nnGreat post!

  • http://newdaynewlesson.com/ Susie @ Newdaynewlesson

    Do you not have to pay taxes on your blogging income? If so then why would that not be enough? Or of someone files above a set amount of income then they need to apply for a business license.

  • http://justinkownacki.blogspot.com Justin Kownacki

    I’m not a Philly resident, but I believe the gist of this news is thatrnblogs would have to pay an annual business license fee *on top of*rntheir taxes. This is like Pittsburgh, which (when I lived there) hadrnan annual employment fee, AKA a tax on your right to have a job.

  • http://www.marketinghandy.blogspot.com/ Mike Handy

    I have gotten these city letters before I ignored them. If I got a subpoena I would deal with it then… but dealing with it before just doesn’t make sense. It’s just a crazy cash grab!

  • http://johnantonios.com John Antonios

    i’m not sure if this is sad, or funny – or a combination of both. it’s like we’re taxing intentions – i’m on the other side of the globe, and currently this does not affect me but social media trends spreads like wild fire and we’re bound to catch on (pun intended).nHow can they control this? we makes a particular blog property of a certain state? or country? is it the writer’s place of domicile? the readers of my blog are scattered allover the globe – if i follow the same logic, so are my customers? I am currently residing in Egypt, and I blog out of Egypt, but i started my blog out of Beirut – i can go on forever in this strain of logic or the lack of it, but it is quite obvious that my current stance is against this!ni almost forgot to thank you for this great post Justin – but i’m worried i might be taxed for this ;)

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  • http://twitter.com/citythatbreeds The City That Breeds

    I suppose then folks will have to pay a business fee for having an etsy account, linkedin account, cafepress, threadless, online resume, self-hosted art portfolio, amazon associates, facebook page with any form of monetization, etc., yes?nnIt seems readily apparent that no one in the Philly system has any clue as to the fact that 95% of all blogs on the internet make no money whatsover (or far less than $100 a month), and never bothered to check. But hey if they want to hire people to investigate http://www.phillykittensandpuppies.com‘s massive revenue stream with taxpayer money to get their cut, more power to them.

  • http://twitter.com/brightmatrix Mike Zavarello

    Justin,nnIf I recall correctly (I had a short stint as a freelancer in the Philly area), the license is a one-time $300 fee that “entitles” you to conduct business in the City of Philadelphia… you get a notarized document and everything for paying the fee. If you live within the city limits, that’s when you’ll get dinged with the additional wage tax. Otherwise, those folks living outside the city or in New Jersey enjoy a reciprocal agreement to avoid being double-taxed.nnI appreciate this post, among others you write, that prompt me to think around the rallying cry and “ZOMG” headlines in these types of stories. nnMike

  • red_pen_mama

    I do not live in Philly, either, but my fair city’s mayor does like to pick up Eastern ideas (see soda tax, what we would call a “pop” tax here) and run with them, so my antennae are up on this one. nnIt seems patently ridiculous to me, and I would tell anyone trying to tax my personal, ad-free blog to bite me. I don’t make any money from it, and I don’t really care to “monetize” it. If and when I have a business blog that nets me some money and/or business, I would point out that I already pay taxes on that income, and they could bite me. Plus, I probably paid taxes on my computer (on which I blog) and I pay taxes on my house (where I have a home office), and so they’ve gotten about all the taxes they are getting from me, and, you know, bite me. It’s not the most articulate argument, but it’s a little more aggressive than laughing in their faces.nnI think my children would win me sympathy from the jury, so the “I’m not paying” stance would be something I’d stick by.nnLastly “$300″ is an utterly arbitrary amount that shows the city knows very little about the “business” of blogging in any case, and I’d go to the mat to fight the arbitrary nature of a blog tax.

  • http://justinkownacki.blogspot.com Justin Kownacki

    Alas, it’s not the bureaucrats’ job to be logical; it’s their job tornfind the revenue streams that can fund their inefficient systems.rnrnThe question of geography is a good one. Where a blog originates fromrnseems to be the core issue. Although a business can have customersrnall over the world, I would think only the state or nation where thernbusiness has a registered address — e.g., the address the website’srndomain itself is listed at, or a blog’s given mailing address — couldrncollect taxes on that business. But that’s just my inexpertrnobservation.rnrnAlso, since you jokingly alluded to being taxed for comments, I do seernone solution: if this blog tax sticks, shrewd bloggers should startrncharging linkbait commenters an advertising fee, to offset theirrnbusiness losses.

  • Jodee Ferrari

    There could be some interesting implications to this, especially in the current economy. If memory serves me right, when you collect unemployment you agree not to start a business while collecting. Would starting a blog to help your job search be held against your ability to collect unemployment? If you are laid off but have a blog “business” could Philly deny or limit your benefits?

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  • http://justinkownacki.blogspot.com Justin Kownacki

    Good questions. Is there a clear explanation of how much revenue =rn”starting a business?”rnrnOr, the converse: how profitable does a blog have to be for itsrncontributors to file for unemployment in the event that the blog isrndissolved?rnrnOr, maybe this is all just a warning shot to bring the idea of morernclearly defined business classifications to the Philadelphiarnlegislature. But that seems unlikely.

  • Bob Foley

    That was my thought as well. Many blogs are anonymous. They’d first have to who is behind it. Then how do they determine that the blog is actually a business operating within their juristiction? A blog can be hosted and updated anywhere in the world. They’re going to spend a good amount of money to track these things down. Makes me want to start a Philly named blog from Pittsburgh.

  • Whitney Hoffman

    I’ve been talking about this ever since the FCC rulings about disclosure on blogs came out last year. If you want to be taken seriously, now you are- you are a business, and have to treat yourself as such.nnWhat doesn’t make sense, to be honest, is that if I live outside of the City limits of Philadelphia and blog, I don’t need a business license. We’ve had this issue in Wilmington, DE as well- if you work in a co-working space, what percentage of your income should you have to pay in City Wage Tax? Do you need a business license, and under what umbrella does it fall? Are you “computer services” or “consulting” both of which carry very different fees? Calls to the City leads to a lot of “I Don’t know” answers, not helping anyone figure out how to comply with the law even if they want to. (And all it may do is push co-working spaces to cities without business license fees…)nBasically, we need the law to catch up with reality, and its just starting to come to a head. But to be sure, there’s no safe non-taxable income from any source.nnI forsee a time in the dwindling City revenues across the Country where Coffee Shops and other pseudo public work spaces will have someone checking as to whether you are there regularly, doing business, so to speak, and need a business license within the municipality to do so. nnThe nature of untethered businesses tied down to a physical place for licenses and the like will challenge our legal sense of what “jurisdiction” and “meaningful connections to a place” mean, and we won;t see this resolved for years.

  • http://justinkownacki.blogspot.com Justin Kownacki

    Excellent points. And I think this reinforces the need for people tornget involved in local legislation, because that’s where these issuesrnwill get hammered out first.rnrnIsn’t Delaware also the home to most of the country’s corporations,rnbecause their laws only require a business to have a mailing addressrnand a phone number in DE but nothing else?

  • http://www.theburghbaby.com burghbaby

    I’ve been waiting in hopes that more details would surface about the situations involving the two bloggers cited in the original article before I formed an opinion. I’d like to know if they dollar amounts of “profit” they reported were net or gross. I can’t for the life of me figure out why someone would report $11 in AdSense income, unless they were claiming the blog as a personal business on taxes so that they could take the deductions for internet service, equipment, etc. In that case, the actual money made from the ads may be considerably more and I’d argue that they should fall under the category of “business” and be taxed like any other business within Philadelphia is taxed.nnReally, for me, the bigger issue is that there is any sort of business license tax in Philadelphia. Small businesses are the backbone of economic growth and anything that may slow their creation is a problem.

  • http://uptownuncorked.com geechee_girl

    Blogs fall into several categories: diaries/journals, businesses (or hopeful future businesses), resumes/advertisements, and theft (scrapers). I have a diary with ads on it that go to pay the hosting and a business blog, so where would the appropriate tax fall?

  • http://justinkownacki.blogspot.com Justin Kownacki

    Ask your councilman. ;)rnrnThat’s another interesting issue, though — if one company has multiplernblogs, would each blog be taxed?

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