What to do when your podcast makes money – TAP162

How to handle money from podcasting

Play

You’ve finally started making money podcasting! Now you must decide how to handle that income. Here are ten tips for what to do with podcast profits.

1. Document it

When you receive any kind of money, you need a record of the details. This will be important for tracking your income and expenses, filing taxes, and budgeting.

Approach your documentation with “who, what, when, where, how, and why.”

  • Who gave the money—What affiliate, sponsor, or ad generated the income? Who donated?
  • What podcast generated the income—If you have multiple shows, it’s important to track the performance of each one. Have different forms, check boxes, or email accounts to help. Also use affiliate tracker options to separate show incomes.
  • When you received it
  • Where it went and how it was paid—Did it come through PayPal, cash, check, or something else? Did you spend it on something?
  • How much you received
  • Why it was given—Was it donated for a specific reason? Was it income from a specific ad?

2. Include it in your taxes

Check with a tax professional! I am not a tax professional. But I do know that all income is subject to income tax in the United States of America. Generally, this will go under line 21 of Form 1040 for most USA taxpayers. This may be different if your podcast is or is part of a business.

3. Cover your regular expenses

The best use of podcast profit is to pay for your habit. Unless you’re trying to podcast for free, you probably have some fairly regular expenses.

  • Web hosting
  • Media hosting
  • Domains
  • Licenses

4. Share with your cohosts

If you have cohosts, I highly recommend that you decide how income will be handled before you have any. There are a few basic ways you can share this with your cohosts for compensation before or after expenses.

  • Percentage split—Do you split it equally, or does someone get more than someone else?
  • Flat rate compensation—Will each person be paid a specific amount?
  • Attendance earnings—Will you pay cohosts for episodes they couldn’t attend?

Remind your cohosts to also include the income on their taxes. If you pay them more than $600 in a year (as of 2013), you must provide them with a Form 1099.

5. Upgrade your equipment

It seems we always have our eyes on better podcasting gear! Don’t buy stuff just because you have the money, but plan carefully.

Generally, your purchases should help you achieve one of the following results

  • Better quality
  • New abilities
  • Easier workflow

6. Buy helpful software

Podcasters are quick to consider hardware upgrades, and I agree that those are more important. Sometimes, you software may be just as important to upgrade or purchase.

  • Editor—Would switching audio or video editors make your editing workflow faster?
  • Helper apps—Consider an ID3 editor, media converter, asset manager, show notes app, and more.

7. Add new podcast “features”

What new “features” can you give your podcast if you could spend a little money?

8. Get more resources

Sometimes, the money can help you produce better content for your show.

  • Training materials—Books, videos, or other resources that help you think or do something better.
  • Conferences—Network with others in your field, get inspired, and find new partners. I think conferences are totally worth it! (Go to the ultimate podcasting conference by podcasters and for podcasters!)
  • Content inspiration—Here’s your opportunity to buy more stuff to review! It could be movies, TV show downloads from iTunes (so you can stop illegally downloading them—we’ve probably all done it before), books, magazines, music, games, and more.

9. Host giveaways

Consider giving back to your community. Give gifts to those who have volunteered their time to help you . You could also host a fun contest or giveaway for your community. Just check the applicable laws for giveaways.

10. Enjoy it

There’s nothing wrong with simply enjoying the money, no matter how you received it. Buy yourself some ice cream, pick up a new video game, go see a movie, or put it in your bank account.

You may be allowed to deduct these expenses

If you run your podcast part of or as a business, check with a tax professional to see how you may be able to deduct your expenses from your taxes. Stuff like equipment, subscriptions, training, travel, conferences, and software are easy to deduct; but content inspiration (books, movies, etc.) may be harder to justify.

Announcements

  1. Attend the Podcast Movement conference.
  2. Subscribe to Podertainment magazine.
  3. Visit Noodle.mx Network in iTunes and subscribe to our all-inclusive feed.
  4. Watch for our new podcast about ABC’s TV show Resurrection.

I can help you launch or improve your podcast

I'm available for one-on-one consulting to help you launch or improve your podcast.

Ask your questions or share your feedback

Please connect with me

Find more podcasts about technology on the Tech Podcasts Network.

Check out more Noodle.mx Network shows

Disclosure

This post may contain links to products or services with which I have an affiliate relationship. I may receive comissions or bonuses from your actions on such links

Learn how to improve your podcast from average to amazing in Podcast Master Class
  • Marian Pierre-Louis

    Daniel, you briefly mentioned contests and giveaways as well as making sure you are following the laws in each state. I would love to see you expand on this for another podcast episode. I give away books each week on my podcast. I didn’t even realize there were laws regulating such things. I think a show focusing on contests and giveaways would be very helpful! Thanks! –Marian Pierre-Louis

  • Carl Valeri

    One thing I did once my podcast started making money was hire a virtual assistant and have found him to be invaluable to the growth of my podcast. Most importantly, I am able to enjoy more free time for myself and my family.

    • http://DanielJLewis.net/about Daniel J. Lewis

      I’m at that point, too. Not because the podcast was directly making money, but because some of the work was preventing me from doing things that do make money.

      So now, I have VAs who write my show notes or edit my audio and video stuff as needed.

  • Pingback: News Recap: Podcast Answer Man Joins Podcast Movement, 31% of Americans 12+ Use Pandora, Audacity-To-Podcast on Monetizing Podcasts - Podcast Junkies

  • http://caroltoppcpa.com/ Carol Topp

    Daniel, I am a tax professional (CPA), author and podcaster, and I congratulate you on a wonderful, accurate post/podcast.
    Folks, when Daniel says you usually report your income on Line 21 Other income, he means if your podcast as a hobby. He correctly stated that if podcasting is a business (or, as in many cases, part of a business), then you report your income on a business form, usually Schedule C for sole proprietorships.
    The disadvantage of being a hobby podcaster is that all of the income is taxable, but rarely are the expenses deductible. You can deduct hobby expenses as Miscellaneous Itemized Deductions (Schedule A) subject to a floor of 2% of your Adj Gross Income(AGI). That means that only the misc deductions over 2% of your AGI are deductible. Very few of my tax clients have enough misc itemized deductions to get over that 2% floor. So, in reality no hobby expenses are deductible. Bummer.
    But if your podcasting is a business, your expenses are deductible. Yeah!
    How do you know if your podcasting is a hobby or a business? It’s not always easy to tell. The IRS has 9 (vague) tests. I wrote a brief blog post on it here: http://taxesforwriters.com/hobby-or-business/

    • http://DanielJLewis.net/about Daniel J. Lewis

      Thanks for sharing, Carol!

      The first issue of Podertainment magazine has a nice article from Dan Franks about whether podcasting is a business or hobby.