Tax Tips!!!

[PassionDivaTrishia]

Hello All!

This is the email I send to my team each year about this time. I hope you find it helpful!

Tax Tips by Trishia

Taxes can be intimidating! But they don’t have to be. It is simply a matter of keeping good financial records and keeping your receipts. Not only should you be doing this for tax purposes, but as a smart business owner, you should always be aware of your monthly income and expenditures, so you know how profitable your business is and if you need to adjust the amount of purchases you are making each month to increase your profit.

As a home business owner, you will complete a schedule C on your income tax return. This will show gross profit, additional income and then list your expenses, thus arriving at your net income, which is what the IRS considers taxable income.

Corporate will provide you with a 1099 that will list the amount of bonus/overrides paid to you throughout the year.

It is up to each consultant to keep track of their individual earnings from parties. Use the Party Tracking sheet in the back office for ease. Do one for each party and then total your parties for the month.

To keep good records for your taxes, label 12 manila envelopes for each month. Each month put all of your receipts for the month into the corresponding envelope. At the end of the month, total your expenses by category (see expense list) and put totals on the outside of the envelope. Also put your gross profit from your parties and the amount of your bonus check you received that month on the outside. Calculate your net profit for the month by subtracting your expenses from your gross profit.

At the end of the year, simply total up the income and expense from the outside of each envelope and take those totals to your accountant, or input into your tax software if you are using Turbo Tax or a similar product. Save your envelopes with the receipts for 7 years per IRS standards.

This is just a general overview of taxes. I am not a CPA! Please consultant a tax professional for further clarification of allowable deductions and for specific tax questions!

Here is a general breakdown of income and expenses:

Income:

Party Profits
Bonus Checks
Override Checks


Allowable Expenses:

Products used for your display-table cloths, picture frames ect.
Products added to your kit
Products given as gifts up to $25.00
Office Supplies
Hostess Credits/Booking Incentives
Samples
Postage
Bank fees—including Merchant fees
Cell phone (if you use it for business, make sure it says Passion Parties in the message)
Portion of your home phone if you use it for business and portion of your internet charges
Advertising
Printing costs for flyers, business cards ect.
Food for meetings held at your house
Team incentives/training costs
Sales aids purchased in the back office—catalogs, envelopes, order forms, etc.
Travel for business—airfare, hotels, etc.
Meals/Entertainment for business i.e. recruiting appointments, meetings, business lunches
Dues and Subscriptions—DWSA memberships, Tango subscription, etc.
Self-Improvement/Educational material—
Classes related to your biz—ie. Computer, marketing, sexual education
Corporate training events
Professional fees—accountant, lawyer
Babysitting—be sure to write out a receipt
Labor—paying your kids to stuff envelopes, stamp catalogs, etc. is a deduction!
Computer software
Office furniture and equipment
Logo clothing
Out of pocket sales tax (ie out of state parties, web orders)
Mileage--.485 per mile you have driven for business..parties, ,deliveries, meetings, post office. Keep a log in your car and put in with your receipts at the end of the year.


If you own your home and have an office, that portion may be tax deductible. If you have purchased a newer vehicle for your business, that may also be deductible. There may be additional deductions you are entitled to that are not business related, but are still allowed. Please check with your tax professional.

Things that are NOT deductible:

Regular clothing, even outfits that you buy specifically for parties, UNLESS they have a PP logo on it.
Personal care—ie manicures, haircuts, waxing, tanning