This document provides tips for MLM representatives on organizing their business taxes. It recommends keeping meticulous records of all business expenses and receipts organized by category in a spreadsheet or profit and loss statement. This makes taxes easier at the end of the year. Common deductions include advertising, business education, travel, phone and internet, car expenses, home office, supplies, and meals related to business. Tracking expenses can save thousands in taxes by reducing taxable income. The document provides an example and urges reps to get organized, use tax software, and consult professionals to understand deductions.

1. Tax Tips for MLM Reps
Chuck Holmes
Network Marketing Professional

2. Disclaimer
• I am not a CPA
• I’m not going to teach you about FILING your taxes
• Instead, we are going to focus on how to get organized and set
everything up and talk about WHY you need to educate yourself

3. Organizing Your Business Taxes
• If you aren’t taking advantage of your legal tax deductions, you are
leaving MINIMUM several thousand dollars per year on the table
• The average home based business owner will save at least $3k to $6k
on taxes each year, just by being organized and maximizing their tax
deductions
• You do not need to be an expert on taxes, but you need to have a
basic understanding of what you can and can’t legally deduct
• Talk with your local CPA or bookkeeper if necessary
• Familiarize yourself with Schedule C, 1040

4. How Taxes Are Calculated
• You do not pay taxes on your MLM revenue
• Instead, you pay taxes based on your NET PROFIT
• Income – Expenses = Net Profit or Loss
• This means you take your total MLM earnings minus your deductions. That
determines your profit or loss.
• That profit is added to your other income (employment and investments)
• The loss is subtracted from your other income (employment and
investments)
• Most new businesses show a loss for their first several years in business

5. What I Do
• I put all of my receipts in a drawer throughout the month (you could use a
shoebox)
• On the first day of the month, I take out all of those receipts and organize
them by category
• I then add up the totals for each category
• I then update this information in an Excel Spreadsheet
• This spreadsheet is my profit and loss statement
• I do this every month throughout the year, so I know where I stand with my
business at all times
• This makes it very easy to do your taxes at the end of the year (if you stay
on top of things)

6. Categories on Schedule C

7. Common Deductions for Network Marketers
Advertising
• Business Cards
• Postcards
• Flyers
• Brochures
• Classified Ads
• CO-OP
• Samples
• Leads
Business Education
• Books you buy to learn
new skills
• Tickets for events
Travel
• Travel to and from
events
• Lodging and airfare and
rental car
• Travel to give
presentations
Phone & Internet
• Part of your home or
phone or cell pone (I do
50%)
• Portion of your home
internet
Car
• Mileage
• Interest on Car
• Tolls
• Part or registration fees

8. Common Deductions for Network Marketers
Home Office Deduction
• Educate yourself on this one
Office Supplies
• Ink
• Paper, files, etc.
Meals and Entertainment
• Taking a client out to eat. This must be business related.

9. Example Tax Savings
• You earn $10,000 per year with your MLM Company, but don’t keep track
of your deductions.
• You end up paying anywhere from $2,500 to $4,000 in taxes on your
earnings (25% to 40%)
Or
• You keep meticulous records and deduct everything you legally can
• You come up with $8,000 in legal tax deductions
• You can now deduct that $8,000 from your $10,000 in earnings which
means you would only pay taxes on $2,000 in earnings, instead of $10,000
• Instead of paying $2,500 to $4,000 in taxes on your earnings, you might
only pay $500 to $800
• This is a huge savings

10. Handling Your Day-to-Day Finances
• Have a separate checking account for your business
• Have a separate debit/credit card for your business
• Never EVER misplace or lose a receipt; make a game out of it
• Put aside money for quarterly taxes; if you’re updating your P&L
statement monthly, put aside approximately 20% of your net income
• Pay yourself retail on your personal purchases
• Build up a small customer base to make enough to fund your business
• Reinvest your business profits for the first 1-2 years

11. Suggestions
• Get organized
• Use software like Turbo Tax or hire a CPA
• Keep meticulous records and every receipt you can
• Make sure you use a mileage log
• Make sure you deduct your home office (renters can do this too)
• Hire a bookkeeper or CPA for 1-2 hours and get your questions answered
• Familiarize yourself with Schedule C, 1040
• Set up some type of filing system that works for you
• Create your P&L Statement and update it monthly
• Watch a few SANDY BOTKIN videos on YouTube; he can teach you the ropes

12. Let’s Connect
• My name is Chuck Holmes
• Been in Industry since 2002
• I am a Network Marketing Professional
• Top Recruiter and Top Rep in My Company
• https://onlinemlmcommunity.com
• chuck@onlinemlmcommunity.com
• (352) 503-4816 EST
• http://www.startafunbiz.com