Tax Advantages of a Network Marketing Business
One of the things that many people tend to overlook when they decide to start a home business through network marketing is the associated tax breaks. Like larger corporations, you can take advantage of the tax codes attached to businesses to save on the amount you currently send to the government.
Incorporation of your business
While it may not be a necessity immediately after starting your business, incorporating and running your business through that corporation can result in hundreds of tax savings each year, due to the tax breaks that corporations can claim that are not available for the individuals. It’s best to get the advice of a tax accountant who can help you determine when incorporating makes the most sense, but don’t ignore this tax-saving tool for long.
Common expenses that become tax deductions
There are common expenses that suddenly become tax deductions when you become the owner of a network marketing business. Since most of these businesses now require a cell phone and internet access, these bills can now be deducted at tax time. Likewise, the cost of a new computer, printer, or fax machine become legitimate business expenses. If you have the ability to dedicate a portion of your house or apartment to an office (cannot be a multipurpose room, eg bedroom/office), that percentage of your rent/mortgage and utilities can also be claimed as deductions. .
Products given as samples
While you can’t deduct from taxes items of your monthly autoship spend that you consume yourself, you can deduct the cost of any you provide as samples to potential customers. Let’s say you’re at a health and wellness business and you give a potential customer a vitamin sample valued at $20, you can claim that amount on your taxes, so be sure to keep a journal of which product, the date you gave it away, and the lead name. This information is extremely important in the event of an audit. Plus, during your first year in business, the cost of the starter package you selected to get your network marketing business up and running is 100% tax deductible, since it’s required to get started.
Other deductions
Most network marketing companies hold annual conferences. Your expenses to attend these events, and others that may be held regionally, are fully deductible as business expenses. Travel, hotel, and food are items you can track and claim.
Resume
Any time you have questions regarding what is and is not acceptable as a deduction against your tax bill, consult a professional. But keep in mind that owning a home business is one of the best ways available to the average person to reduce the amount of money they will owe to the federal and state governments at the end of the year. Many items that you are currently paying for out of pocket but cannot deduct immediately become deductions once you have started your network marketing career.
