I have a business degree and do financial research. This article is based on things I have learned and used in direct sales.
Direct Sales Tax Deductions
Direct sales companies (home-based businesses) have many different tax deduction options available that can help you save money when you begin to file your taxes each year. When you have a direct sales business, you should do your best to take advantage of all the tax deductions that are available to you for the direct sales business that you are involved with. Using all your tax deductions can greatly reduce or even eliminate the taxes that you owe each year. In rare cases, you could even receive a tax refund.
I am not a tax professional by any means, but these are things I have learned from personal studies through the internet and other sources. I also have an Associated Degree in Business Management.
You should always consult a tax professional if you are unsure about the deductions for your direct sales business. I personally recommend H&R Block, but do your research and choose someone that is very knowledgeable about your work-at-home situation. Every direct sales or work-at-home business is different. Not all tax professionals are created equal, and some may get you into more trouble than you could have ever imagined. This is your money that they are dealing with, so be sure you make the choice that works for you.
Document All of your Direct Sales Tax Deductions
Before I begin on the actual tax deductions for your direct sales business, I would like to remind you to keep records of absolutely everything that you spend money on to document your direct sales expenses that could possibly be tax deductions.
I find that having a spreadsheet with all your income and expenses works great, then you can attach all your receipts and documents directly to the spreadsheet. This will help you to maximize your deductions, and keep yourself prepared in case you ever have to show documentation of your tax deductions in an audit.
I tend to shop at local office supply stores, such as Staples or Office Depot, to purchase files, binders, and other office items that I may need to keep great records of all my tax deductions. Keeping records for your direct sales business is essential to maximizing your tax deductions each tax season, as well to make your company more successful in general. Find a method that works for you.
Home Office Deductions For Your Direct Sales Business
Your direct sales home office holds the majority of the available tax deductions for your direct sales business. Be sure to keep up with the receipts for each and every purchase so that you can deduct everything that is available to you when tax times come around each year. Even the smallest amount can make a difference in the amount of taxes you may owe during tax season, or possibly the amount you will get in a tax return.
1. Office Space (if used exclusively for your home business)
2. Office Equipment (printer, computer, fax machine, external hard drive, etc)
3. Ink or cartridges for your office printer
4. Printing Paper for documents or flyers
5. Document Files or folders
6. Office furniture (Desk, filing cabinets, chairs, shelves, etc)
7. Pens, pencils, highlighters, etc.
8. Paper clips or paper organizers
10. Notebooks or notepads
11. Stapler and staples
12. Subscriptions to magazines that are about direct sales or the merchandise that you sell. Also magazines or books about running a business.
Marketing and Delivery Tax Deductions For Your Direct Sales Business
Direct sales comes with a lot of marketing for your company and delivering of products, which can be one of the biggest tax deductions for your business. These deductions will include all of your marketing techniques; traveling, ads in newspapers, promotional parties, lunch with potential customers, or even simply printing flyers for your direct sales business. These are just some of the techniques that are used, but not the only deductible items for you.
1. Gas or Mileage for deliveries, promoting, or any business related travel.
2. Business Card for your direct sales business
3. Personalized letter Heads
4. Tolls for delivering products or business meeting
6. Meals (as long as it is a meal discussing the business in some way)
7. Web Hosting or design
8. Online Marketing
9. Entertaining for your potential customers
10. Party expenses (Food, Gifts, Samples, etc.)
11. Promotional Gifts for your customers or non profit donations
12. Logo Designs
13. Logo Printing on your business items
14. Brochures for your products
15. Samples of your products
Other Tax Deductions For Your Direct Sales Business
There are numerous different tax deductions for all direct sales business. The deductions you may choose to use will depend on exactly how involved in the business that you are now or possibly how involved you will be in the near future. This is a list of different deductions that you may or may not have in your particular direct sales business.
1. Lodging while traveling
2. Advertising for your business
3. Business Bank Account fees
4. Checks for your direct sales business
5. Shipping of your products or correspondence
6. Stamps for anything related to your home-based business
7. Cell Phone that you use for your business
8. Home Phone or fax number that is exclusively for your business
9. Business Classes online or in-person
10. Computer Software
11. Tax Software
12. Business Software
13. Booth Rentals to sell your products
14. Online Classes related to business
15. Books that are related to your direct sales business
16. Labels for shipping or promoting
17. Inventory storage at your home or elsewhere
18. Training in any form that will help your business
19. Helpers fees for those that help you grow your direct sales business
20. Shipping supplies
21. Utilities (Portion)
22. Professionals such as tax professionals, financial advisers, or organization specialists.
23. Admission to seminars or shows
24. Legal fees
Your Direct Sales Tax Deductions
I cannot push it enough to help with your tax deductions. If you are in direct sales, be sure to document everything. Having the proper documentation can help you grow your business by showing you what is working. Also, having proper documentation will help you maximize your potential tax deductions each tax year. The one thing I have learned through the years of working at home, every piece of paper should be kept for seven years for your own protection and for the growth of your direct sales business. Good luck on your successful journey in direct sales.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2011 Nona Weeks
SilverLotus1 on August 04, 2014:
BethKilburn on January 18, 2014:
I really like this list! A while back, I linked this page on my team's website. I do wish there was a way to easily get a printer-friendly version.
staceysprague11 on February 25, 2013:
Love this! Thank you!
Shelly Sellers from Midwest U.S.A. on November 25, 2012:
Tax time will be here before you know it! I'm already checking my deductions :)
Nona Weeks (author) from Florissant, CO on November 11, 2012:
@anonymous: Thank you
anonymous on November 11, 2012:
Very good information especially for someone just getting started on the Internet. It is a also a great reminder for those of us who have been in direct marketing for awhile. Good Job.
roony672 on September 09, 2012:
Very informative lens
pantine on July 16, 2011:
Nice lens.Thanks for sharing. Project Management Software