Thursday, November 5, 2009

Direct Selling: Taxes

One of the first questions everyone asks me about direct selling is "do I have to pay taxes?". The short answer is yes. The long answer has to do with talking to your CPA, saving all your receipts, etc. I am the daughter of two CPA's but I am not an actual CPA so please contact your CPA for futher details, but here are a few hints for tax time.

Keep good records. It is a pain to have to go back throughout the year to look at all of your sales to figure out taxes. Start from the beginning with tracking sales. I keep track of everything with a very simple Excel spreadsheet that I created.

Bonuses are taxed. If your company offers bonuses, free products, etc. they will be taxed at the end of the year. They should send you a form with all of these listed but once again, keep good records so you will know what to expect.

Mileage adds up. I keep a mileage book in my car so I can write down everywhere I go relating to my business. The ultimate log is in an Excel file on my computer but this allows me to write it down before I forget. Going to and from meetings, parties, buying supplies, deliveries, etc all count towards your mileage and this can add up quickly so please keep track of it.

Keep receipts.
Think of any and every aspect of your business where money comes out of your pocket and keep those reciepts. Here are just a few of those: food (both to demo and food bought at a meeting, etc.), ink, paper, catalogs/flyers, conference fees, etc.

Some people will also be able to deduct items such as computers, cell phone, and a home office. You will need to talk to your CPA to see what you qualify for.

Taxes may seem a little overwhelming at first but if you keep good records, it is not as bad as it seems. Many people find that if they keep track of all expenses, they do not owe or owe very little at the end of the year.


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