Tax Deductions for Network Marketing Home Business
March 14, 2020
As a network marketer, you are eligible for large tax deductions, just like a traditional business owner, assuming you are treating your business like a real business and Intentional to make a profit. The IRS has clear rules about the difference between a hobby and a business. To be eligible for tax deductions, you must make sure that the IRS considers your business to be a business (in your mind, your game plan, and your efforts). So now we will talk about the main tax deductions for network marketing home business.
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Top tax deductions for network marketing home business
This may include business cards, lead purchases, brochures, participation in your front line advertising sample products, newspaper ads, postcards, pay per click ads, or any type of online or offline advertising. What you could do to generate leads, get leads, or make more sales.
Advertising is one of the biggest costs you will incur as a multi-level marketer. Advertising may include a magazine, newspaper, the Internet, and other advertisements that you use to market your business to others. Be sure to keep track of all advertising costs throughout the year. Keep all vendor receipts in an envelope. This way, you will have easy access to them when you compare them to your records.
2. Car and truck costs
You can make a standard mileage deduction for your vehicle or you can make an actual cost deduction (the IRS site explains the differences). We strongly recommend that you obtain a mileage log and track your business, personal and commuter miles every day. Sign in to your mileage log. If your car is used for your MLM business, your mileage may be a tax deduction expense. There are two methods to deduct car expenses: (1) use the mileage limit and (2) use actual expenses / receipts. Most independent contractors use the standard mileage rate to deduct your car’s costs from your taxes, method one from above.
According to the IRS, the standard mileage rate for the operating cost of your car for commercial use is 53.5 cents per mile. With this method, you cannot deduct the actual expenses of your car, including: depreciation, maintenance and repairs, gasoline, oil, insurance, or vehicle registration fees. If you drive your car for personal and commercial use, it is recommended that you use the mileage log to track the actual mileage used for non-personal businesses.
3. Commissions and fees
This category may include fees you paid to set up a booth at a trade show, fees for your company’s replication website, renewal fees with your company, etc. This would also include the PayPal fees you paid for the money sent to you electronically.
4. Hired labor
This category is for any independent contractor you employ to help you with your business. For example, you may have hired someone to write you some blog posts, create a custom e-book cover, or do a freelance project. This is the category where these tasks would fall. Whenever you pay more than $ 600 to a person in a calendar year, you must provide them (and the IRS) with a Form 1099-MISC.
5. Deduction from home office
This is a legal tax deduction, although many people are afraid to use it! Essentially if you have a home office space used exclusively for your network marketing business. You can take a home office deduction. For example, if your home office space was 5 percent of the total space in your home. You could deduct 5 percent of your home costs such as utilities, gas, water, sewer, etc. You definitely want to take some time and educate yourself on this network marketing deduction. The IRS website does a great job of explaining how it works.
6. Legal and professional services
As long as you hire an attorney, accountant, accountant or any other professional service (for business purposes), the fees would be included in this category.
7. Meals and Entertainment
This category is “nice”. You can’t deduct your own meals, but if you take a customer to lunch and pay for their food (and your own) you can deduct 50 percent of the cost of the food on your taxes, if the food or entertainment was business related. Deduct any food you buy exclusively for national holidays to promote your business. Some foods are 100 percent deductible, but most meals are only 50 percent deductible.
8. Taxes and licenses
This category applies to any business license you must purchase to operate a business from your home. Every county is different, so be sure to find out if this is the need to live.
9. Telephone and internet costs
This may include your cell phone, landline or internet bill used exclusively for your business. If not used exclusively for business, it must be prequalified.
10. Health insurance
If you are a full-time Networker, you will likely pay your own health insurance premiums for yourself and your family’s health care. If you have a business and how to make a net profit for a given year, you may qualify to claim the health insurance deduction on your own. This is generally classified as an adjustment to your income for the health insurance premiums you pay, and check with your CPA for details and possible changes.
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