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[Connie Seagle Company: Magnetic Sponsoring Contribution Level: 2]

We are quickly coming down to the end of the year and people will be thinking about filing their taxes for this year and how they can tweak their record keeping for next year. What types of deductions do you take and how do you keep your records?

This is my first year in Network Marketing so I'm sure I will learn a lot this year about tax deductions. But, since I am an Office Manager for a manufacturing facility, I do have some sense of what can be deducted.

One of the things I did though was get a credit card from Advanta for my travel business. Anytime I have to spend money on my business, I put it on that card. I keep all of my statements in a file and attach the receipt with an explanation of the business expense. I think it will make getting ready for tax time much easier.

[Justin Christianson Contribution Level: 2]

I am not an accountant nor is this advice in any matter, you should talk to a tax professional, I talk to mine alot... ;)

Basically since you own a home business you can write off almost anything you can tie to business...

I do the same but I use an AMEX card... anything from Gas, oil changes, meals, travel, internet, cell phone, advertising, computers, hotel rooms etc...

I keep track of all my mileage used for business in a binder in my vehicle... Keep track of all my expenses for my vehicle as well... And which ever is more that is the deduction that is taken...

you can write off a percentage of your mortgage or rent if you have a home office... Percentage of your internet if you do business online... If you have a home phone and use your cell for business you can write some of that off as well.

If you can tie it to business, then you can probably write it off...

I have my CPA keep track of my books, but I keep my statements, and my receipts all together and just have him keep a running tally of where things are...

Also if there is something that I paid for persoanlly that is for business then it is kept track of as well.. Just be sure you keep records of EVERYTHING!

Just my 2 cents, and be sure to talk to your favorite tax professional as I am not one, and don't portray this advice as binding in anyway...

Just be sure you talk to a CPA ;) This is just what I have learned over the past few years...

[Karen Umstattd Company: Herbalife International of America, Inc. Contribution Level: 2]

Having been in a "traditional" business before I started my mlm business, I learned personally that a CPA was too much for what I needed. A CPA (in my area anyway) was more in tuned for large corporations whereas an Accountant was more in tuned for small business/home based businesses.

A CPA can do audits with the IRS whereas an Accountant is not licensed to do audits but, they can have an affiliation with a CPA that can do audits with them should the need arrive. Otherwise, they can do everything else a CPA can do.

When I reached a certain point in my business where it mattered how much money was coming and going, for tax purposes, my Accountant recommend we incorporate as an S corporation. Because of this, we do get "paychecks" from our company, not "draws" as we did as a sole proprietor. And because we do get paychecks, we do pay payroll taxes on a monthly basis.

I do send my accounting to my Accountant on a monthly basis for tax purposes.

Me personally, I would NOT recommend doing any of this yourself (taxes) because there's too much to know and I personally don't want that responsibility.

An Accountant should be able to tell you what you need to do to keep records, what you can write off as a business expense and anything else you need to know to keep things legal and legit. (and for many, it can be more than you realize!)

Hakuna Matata
Karen Umstattd

[Justin Christianson Contribution Level: 2]

I have all my businesses set up as an LLC... I didn't want the hassle of having an S-Corp and filing payroll taxes...

And the other main deal with S-Corps is that you can save on self employment taxes... But if you have an LLC and you make over, I think, $97,500 you save on self employment taxes as well, with an LLC...

Definitely don't handle it yourself... always consult a tax professional... There is WAY more to it than you think...

Justin

[william whitlow Contribution Level: 1]

The thing to remember is to convert as many regualar expenses to business expenses.

Example: Drive to gym, post advertisement on community bulletin board. drive home. write it all off. Drive to get coffee, post on community bulletin board, drive home, write it all off.

1) I use my wife as an employee of my business, she has a log of her duties, i pay her a salary, and pay her benefits such as medication, over the counter medicine. And of course I include the family in the medical benefits, so I write off all my medication, and my sons.

2) Used my 2 year old son as a $500 tax write off for some photo shoot advertisements he did for me.

3) If you rent write off that room you do business in. If it's 1/5 of the home. write off 1/5 of utitilities, 1/5 water, 1/5 gas, etc.

4) Write off cell phone, internet, leads, ppc, mailing costs, tools such as cd's, dvd's, if you attended any trainings/vacations write it off, gas, car repairs, clothes to look professional, etc.

I use a network of cpa's that specialize in home business tax write offs. Just like if you were going through a divorce, you wouldn't hire a criminal attorney. Cpa's specialize in different types of tax returns, some for C-corps, some for personal returns, and some for home business tax write offs. I've provided a link for you to search for one in your area.

http://www.cfotoday.com

Happy Prospecting,
William Whitlow

[Reginald Stinson Contribution Level: 2]

How ling do you recommend keeping tax records just in case the IRS decides to audit? And has anyone ever been audited on here.

[Jim Yaghi Contribution Level: 3]

Most countries have as part of their tax laws the minimum number of years to keep tax records. I believe in NZ it's something like 7 years.

You should be able to call up a free business tax consultant at the tax office and ask that question. Find out how long you are legally required to keep records.

Jim

[Reginald Stinson Contribution Level: 2]

On my phone bills, I just been keeping the front page that has the total cost on it. It that OK to keep or should I have kept the entire bill? Also on the credit card statements, do you all keep just the front page of the statement which just show how much you spent or is it necessary to keep all the papers in the statements?

Thanks,

Reginald

[Connie Seagle Company: Magnetic Sponsoring Contribution Level: 2]

I personally keep copies of everything. Keep this in mind for telephone bills. The regular monthly bill part of your phone bill is not deductible, only the long distance calls associated with your business or the flat rate long distance whichever way you pay for your long distance. If you want your entire phone bill to be deductible you have to have a business phone that is separate from your home phone and it can only be used for your business. Your cell phone is deductible if it is a business phone.

I agree with the other posters though, you need a tax professional to guide you. My company has a phenomenal tax and legal department who is there anytime I need them. Because I have been a bookkeeper for all of my professional life I will probably file my own tax return simply because I have the resources available to me if I need them. But generally speaking, I would recommend seeking a professional to guide you.

Post edited by: cseagle, at: 2007/12/07 02:00

[Reginald Stinson Contribution Level: 2]

Thanks for the immediate response. I personally have a business line and my cell phone is used for business as well. I don't keep the detailed summary of the bills. I just keep the statements, is this ok. Also, has anyone ever been audited?