Tax time, and a time dreaded by most people. It isn’t uncommon that professionals are exhausting every possible deduction or charity donation they possibly can. In some cases, money is hiding in all sorts of fun places. So what if we told you, that network marketing tax deductions are like gold. There are so much different (and subject to change) tax deductions that can be taken advantage of, simply from having a home based business.
Now, please note, I am not a tax expert or professional, just someone who has seen success in the network marketing industry and has learned to take excellent advantage of all the tax deductions available.
Tax Deductions Definition
Excerpt from Online Dictionary reads; ‘Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income. The difference between deductions, exemptions, and credit is that deductions and exemptions both reduce taxable income, while credits reduce tax.’
What is also important, is the IRS or CRA (Canada) and other government tax operation in your residing country, will take note of what is, in fact, a business and what may qualify as a hobby. So although there are plenty of tax deductions to take advantage of, make sure that if you are claiming network marketing as a business that you are also treating it as such.
So, be sure to speak with your accountant or tax professional before making any claims (this is what we call my disclaimer) and please note that these deductions are not network marketing specific, but are ones that can be taken advantage of under that umbrella.
Network Marketing Tax Deductions
Home Office Deduction – In simple terms, if you have an office that you use at home, for your network marketing business, it’s a deduction. So for example, if your office makes up 10% of your home living space, then it too is eligible for deductions like 10% of the heat, hydro, water, etc. This is among one of the best deductions yet under claimed ones available.
Meals and Entertainment – Did you meet your prospect at Starbucks by chance? Perhaps you took them out for a meal or a drink? Entertain others in your home for home parties and presentations? Great news! All of the above can account for up to a 50% tax deduction providing it was related to your network marketing business. Now, what’s interesting is you can not claim your own food or drink (in most cases) but if you are out there hitting the pavement with your prospects, clients or team members, be in the know about this one for sure! Trust me when I tell you, you would be surprised at all the personal tax write offs just waiting for you.
Travel, Meals, and Entertainment – Relatively similar to the category above, but in this case includes your meals as well. So remember that event you attended for your business? the plane tickets or bus passes? Even the ticket to your convention? Those are all eligible network marketing tax deductions that you want to check out and find out more.
I mean, it’s already such an amazing experience to be away for business, with all your favorite people the deductions are simply a bonus to the whole deal.
Commissions and Fees – This category encompasses a variety of different things. It may include the fees (if any) that you paid for a company replicated website. It also refers to fees you may have paid to be at a trade show or craft market for your business. Can also include renewal fees (generally annually, or in this case a start up package) and what is also covered is if you have had to pay any merchant fees (tax deduction examples: PayPal fees, replicated websites, etc.)
Car Expenses – Probably among the favorites! It is likely that when you are out and about and are working your network marketing business, like a business, you are using your vehicle. The best place to start for this category is a mileage log. you can stick to the traditional pen to paper log, or there are several different electronic ones, like TaxBot for example.
In addition to mileage, you are also able to deduct portions of your insurance, maintenance such as oil changes, parking, tolls (if applicable), and all things in between. Driving to that meeting doesn’t feel like such a chore when it’s possible you will see a return in your tax deductions now, is it?
Network Marketing Tax Deductions Not As Well Known
Insurance – This includes any insurance that you may have purchased for your network marketing business.
Depreciation – Let’s say for example you purchased an expensive item like a laptop for your business. In the event you are only able to claim a smaller portion of it as a tax deduction, you may be able to claim it again as the other portion in following years. There are a lot more ins and outs with this clause, but definitely, one to inquire about.
Employee Benefits – It is possible that you have a variety of people that you outsource work to in your business, depending of course on how they are described (legally) this may also be a great tax deduction for home based business in general.
Network Marketing Tax Deductions Tips
- Consider hiring a CPA or other tax professional for a few hours where you can sit with them a be informed about all the tax deductions available to you through your network marketing business.
- Create a system to organize your receipts and/or mileage logs, that will serve you best when tax time rolls around.
- Consider keeping a profit/loss sheet. This will help you stay on top of expenses going out, and profit coming in. A great way to also help you manage your expenditures (or need for) throughout the year.
- Become familiar with common tax deductions and even keep a handy log to share with your teams – they’ll appreciate it I’m sure.
Lastly, if you are someone who is in desperate need of tax deductions and you do not have a home-based business, be sure to reach out and I would be happy to help you get you started.
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I look forward to hearing from you!
And, definitely, check this out in the event you are looking to see how it is I have changed my life through the Network Marketing Industry over the past 12 years (and how you can too!)
COACH. TRAINER. HOME BUSINESS ENTREPRENEUR.