31 Tax Write Offs For Network Marketers
While network marketing business owners earn profits, they incur heavily on expenses, unlike other business owners. Therefore, network marketers are eligible for certain tax write-offs for a wide range of expenses. As such, business owners can lower their tax bills by claiming the write-offs relevant to their work.
Like other legitimate organizations, network marketers can benefit from tax write offs. If you are into the network marketing business, this post on tax write offs for network marketers helps you understand how to maximize these deductions and reduce the amount that you owe to the government.
WHY TAX WRITE OFFS FOR NETWORK MARKETERS?
The first and foremost reason for tax write offs for network marketers is because the federal government considers them legitimate. Therefore, they qualify for tax deductions the same way other businesses tend to enjoy. Besides, they are a great passive income source as well.
In addition, the more people you hire for your organization, you need to take care of less workload that you would have to personally shoulder otherwise. However, they need a significant amount of capital and expenses to maintain business. That way, it benefits you when writing off certain expenses in your tax report.
HOW DOES YOUR NETWORK BUSINESS QUALIFY FOR WRITE OFFS?
The first thing to get started is to make sure that your organization is registered with the IRS as an official business. Some of the guidelines include opting for a corporate structure, following state business regulations, and making your employees file Form W4 and Form I9.
However, if you operate your network business from home, don’t forget to file the same under home business forms. You can save on your income by opting for Form 8829 which allows you to write off expenses for the business use of your home.
Apart from that, you can file for Schedule C which keeps a record of income and losses. On the other hand, the independent distributors are treated as self-employed. Therefore, they have to file Form 1040 and Schedule SE. The former keeps track of individual tax information, whereas the latter determines the self-employment tax.
TAX WRITE-OFF FOR YOUR NETWORK MARKETING BUSINESS:
The best part is that IRS considers several costs as tax deductions for businesses and that includes network businesses as well. Both independent distributors and organizers of the network business can deduct certain expenses. Here they are explained in brief.
1. PROMOTIONS AND ADVERTISING
As you know, promotions and advertising constitute the largest expenses that you may need to incur as a network marketer. These might include newspaper ads, flyers, information packets that are delivered by hand, free samples, business cards, CDs, videos, and product testing.
2. FEES AND COMMISSIONS
Certain types of fees are provided either monthly or yearly. Also, there are commission structures that needed to distribute to up line or down line.
3. OFFICE EXPENSES
Office supplies constitute another big expense head and you can fully deduct the same for your network marketing business. The supplies might include legal pads, paper clips, index cards, staples, staplers, pens, pencils, file folders, and many more. Other office expenses include bank charges, computer supplies, form and receipt books, printing, postage, internet, day planner, and web pages.
The amount of money paid to children when they help with things such as cleaning the office, stuffing envelopes, delivering products and flyers, and so on.
5. COSTS OF SOLD GOODS
The costs of products sold in terms of both retail and wholesale. Also, they include the products that are bought for introduction into business.
6. SHIPPING OR DELIVERY CHARGES
The costs incurred to ship or mail products.
7. OTHER SUPPLIES
Supplies that demonstrate products, refreshments for meetings, product samples, tapes, motivational materials, brochures, catalogs, and different types of order forms.
Meals with certain potential clients or even associates or buying tickets to events or movies with clients or arranging for them separately comes under entertainment expenses.
9. TRAVEL EXPENSES
Parking, car hire, cab fare, airfare, hotels, trip log, or even cleaning your home while away are included.
Repairing done to equipment such as computers or other office equipment.
Lease or rent of the building, refreshments, handouts, etc.
All kinds of equipment, vehicles, computers, or office furniture that costs more than $200.
The rental fees incurred for rooms for meetings, technical equipment, booth for shows, equipment, etc.
Seminars, conferences, classes, books, and tapes.
15. TRADE SHOWS OR DEMONSTRATIONS
Rent for a booth, gifts to downline and hostess, sample, and so on
16. SUBSCRIPTIONS AND DUES
The subscription fees are due to organizations and magazines that are a necessity for your business and trade.
Receipts for your tax preparation, computer programs, and accounting kit.
Purchase of initial kits required to join and other additional kits purchased as well.
The amount of money returned to the clients when they give back the products or damaged products.
20. TAXES & LICENSES
Taxes on sales, payroll, and property. Also, as professional, business, city, and state licenses.
21. CLEANING AND LAUNDRY
The expenses include protective clothing and uniforms. Also, it includes clothing when they are worn out.
Property, health, vehicle, liability, professional, and in some cases, life insurance as well.
All kinds of equipment, vehicles, computers, or office furniture that cost more than $200.
These might include long-distance calls or cell phone calling on home phone and extra phone lines on home for internet, fax, or business.
25. HOME OFFICE
Typically, it is a separate room in your house where you conduct business and accounting. Also, it includes a percent of office décor, cleaning supplies, mortgage interest, property tax, homeowners insurance, utility bills, etc.
26. VEHICLE EXPENSE
It involves the mileage when picking up products, office supplies, meetings, and other expenses.
27. LEGAL SERVICES
Appraisers, inspectors, accountants, attorneys, etc.
Specific gifts to downline, associates, and clients.
Machinery, car, etc. usage over some time.
30. WAGES AND BENEFITS
Salaries, benefits, or vacation pay
31. CHARITABLE CONTRIBUTION
Donations to qualifying organizations can help you with your corporate tax return.