Tax Benefits of a Network Marketing Business
Wednesday, October 8, 2008 at 03:17PM If network marketing distributors really understood the tax benefits of a network marketing business, they would recruit more people. Since most households typically work jobs there are a number of tax benefits they currently do not qualify for.
With the state of the economy , we all want to save money anywhere we can.
As a network marketing business owner many expenses you currently have can be converted into tax deductible expenses. This reduces your overall taxable income, which in turn reduces the total amount you have to pay in taxes.
When prospects claim they can’t afford to get started in a network marketing business, show them they can’t afford not to. If a network marketing business can reduce the total tax paid, the prospect can actually save more in taxes than they invest to start the network marketing business.
Deduct Expenses You Already Have With Network Marketing
With a network marketing business instead of taking the standard deduction you can deduct all of your business related deductions. In many cases these deductions can be significantly more than the standard deduction.
Typically you can deduct a certain percentage of your living expenses assuming you use part of your home to conduct business. This is certainly possible with a network marketing business because you likely have an office as well as entertain prospects and team members in your home.
Suppose your rent is $1000 a month and you use 10% of your living space for your network marketing business. This means you can deduct 10% of your rent. That one deduction alone is $1200 for the year.
This 10% of deduction also applies to utilities related to your home . This includes 10% of your electric bill, 10% of your heating, 10% of your water and any other utility associated with the house. If your utilities come to $3000 a year, that’s an additional $300 a year in deductions.
If you drive you can write off a significant amount of mileage as long as you make sure you are conducting business when you drive as much as possible. Deducting 10,000 miles a year at the current deduction rate results in an over $4000 deduction just for driving.
Chances are good that you have a house phone as well as a cell phone. If half of your phone calls are business related, half of these expenses are deductible. So $2000 for phone expenses results in $1000 in deductions.
Most people these days have high speed internet access as well. Whatever percentage of the internet you use for business also becomes a deduction. So if your internet bill is $500 a year and you use it for your network marketing business half the time you can take a $250 deduction.
One of the best tax benefits that business owners get is the ability to deduct all travel related expenses for business trips. As a network marketing business owner you can do business anywhere that your company operates.
Network Marketing Business Tax Loopholes
Here’s one of the biggest loopholes you can take advantage of to significantly reduce your taxes. Instead of taking vacations, you should take “business trips” that you also happen to do vacation type activities on.
For instance, suppose you want to take the family to Disney World in Orlando, Florida. Your network marketing company probably has events in Orlando. Therefore, you should travel to Orlando, spend some time building your business there and also make time to spend with your family.
Obviously you can’t deduct your Disney World tickets. However, flight, rental car and lodging costs are deductible. So for instance if these costs come to $4000, you can take a $4000 deduction.
Just with these network marketing business deductions alone we have matched the standard IRS tax deduction. Keep in mind we haven’t even talked about expenses related to the actual business yet (i.e. buying marketing tools, attending events, etc.)
Keep in mind this information is provided for illustrative purposes only. You should speak to a Certified Public Accountant that specializes in small business taxes and have him or her assist you with this process. Deductions can be a rather foggy area and you don’t want to take deductions that you don’t qualify to take.
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