Incredible Tax Benefits in Owning Your Home-Based Network Marketing Business
By Ken Li
Owning your own home-based network marketing business has major tax
benefits. (However, always consult your tax professional on such
matters.) Tax laws, and the interpretation of them, change from year to
year. Every person’s tax situation and needs are different.
You can normally deduct the costs of the starter kit package and the product sampler
kit, giveaways you offer as sample products, your telephone bill, auto
expenses (actual expenses versus the standard IRS cents-per-mile rate),
parking, tolls, travel, and lodging from the taxes of a network
marketing business. Meals and
entertainment are 50 percent deductible.
Your business training, opportunity presentations when you invite new
guests to join the network marketing company, and convention expenses
are normally deductible. You can usually deduct for use of your home in
your business, your home office furniture and business equipment,
accounting and tax fees, postage, gifts, and promotions.
Let’s talk about the business use of your home. You can deduct a
percentage of the cost of your mortgage or rent. Your mortgage interest
is always deductible under current tax law (and it is not likely
Congress will mess with that deduction)! The deductible percentage of
other home-business expenses is the amount of the total square footage
of the home or apartment that is used “exclusively for business.” (The
IRS can get sticky about that “exclusively for business” qualification;
ask your tax professional how to assure that your deduction is legal
according to the IRS. You don’t want to get burned should you be
targeted for one of those nasty IRS audits!) You can deduct your
real-estate taxes, water and sewer charges, insurance, utilities, heat,
repairs, maintenance, landscaping, a visit by the exterminator, and so
on. Ask your tax professional what you should list and make sure you
didn’t miss anything.
Let’s say your mortgage payment (including
interest) is $2,000 a month and you use 20 percent of your house
exclusively for your business. Therefore, $400 a month can be deducted
out of your $2,000 a month payment. Twenty percent of your real estate
taxes, water and sewer charges, homeowner’s insurance, utilities, heat,
repairs, maintenance, landscaping, exterminator, and more can be
deducted. You can deduct 100 percent of your real-estate taxes in any
case. But when you file a business return, the “business use” portion of
your home will show that percentage of your real-estate taxes as a
business expense, which affects your business income, while the balance
is an ordinary deduction. (Yes, it gets complicated; that’s why you must
use a tax professional!)
You must use an appointment book or diary as an expense log, and you
must obtain receipts for every expenditure you deduct. You are not in
business to have problems with the IRS, so the advice of a good tax
professional is worth every penny you pay him or her!
You can deduct for business furniture and equipment, business
accounting and tax preparation fees, postage, and all marketing
expenses. You can’t deduct calls to Aunt Harriet – unless she’s working
in your network. Christmas cards to members of your network (even if
they are relatives) can be deducted as marketing and promotional
expenses. This is another area where it pays to check with your tax
professional to assure everything you claim is legal.
Let’s say your telephone bill is $1,200 a year and your auto expenses
are $6,000. Meals and entertainment are $2,600. Fifty percent of the
cost of your meals and entertainment for business purposes is
deductible, so that’s $1,300. Your house or apartment expenses are
$24,000. That adds up to $32,500. Assuming 20 percent of that is
business expense, your deductible amount (20 percent of $32,500) is
$6,500. Assuming you are in the 35 percent tax bracket, 35 percent times
$6,500 yields a tax savings of $2,275. That’s a very powerful tax
write-off just for owning your own home-based business!
Now let’s talk about your automobile. Your car payment (or lease
payment) along with your auto insurance, repairs, maintenance, gas,
etc., can be deducted to the extent that the mileage was for business
purposes. Let’s say you drive your automobile 30,000 miles a year. If 30
percent (9,000) of those miles are business miles from driving meeting
to meeting, then 30 percent of your insurance, gas, repairs,
maintenance, and car payments can be deducted using certain formulas.
You can deduct whatever percentage of your actual expenses is equal to
your percentage of business use. Your tax professional will look at
whether your actual expenses or the standard per-mile rate will give you
a larger deduction. Normally actual expenses will be a better
deduction.
Please take a look a closer look at EPXBody. Do your research. Join a great home business.
EPXBody
1485 W Hill Field Rd Ste 202
Layton, UT 84041-7342
+1 888-216-3575 Domestic
+1 801-206-4178 International
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Kevin and Maria McConnell
Skype: mcconnellkevin
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