It’s Important To Track Income And Expenses
Network Marketing is a business, not a hobby, and one day you may need to prove that it’s a business to your friendly tax collector!
Get used to tracking your income and expenses. Income is usually pretty easy to track. Even when your commission checks grow to tens of thousands of dollars every month, it still arrives only once a month – or at most, once a week.
At the end of each calendar year, your corporate office will send you a Form 1099, which gives information about the amount of gross income you received for the year. This is given to you, and to the IRS.
Get in the Habit of Tracking Your Expenses Every Day
If you want to keep all the income that you’re legally allowed, make it a habit to track your expenses every day. No matter how much you are making, it is always in your best interest to reduce the amount of taxable income as much as possible.
Use a journal or a software program and consult with your accountant. I keep mine in an Excel Spreadsheet.
There are many things you are allowed to write off, but be sure to discuss this with your accountant.
For example, if you use the newspaper to find certain types of ads, you can write off the newspaper cost.
Mileage is usually a deduction if you use your car to deliver products, or to drive to parties and presentations you conduct. If your business is at home, you may be able write off a portion of your utilities.
Almost everything you spend to maintain your business is tax deductible.
Keep an envelope with you in your planner or purse, and put all your receipts in that envelope as you go about your day. Then when you get home, you can categorize them.
When tax time rolls around, you will be so glad you kept this up daily. Now your tax reporting will be a breeze!
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By Lynn Huber
p.s. The trick with bookkeeping is to establish a system early to help you stay organized. By “system” I mean a simple process for organizing your receipts and files, as well as having bookkeeping software set up and configured. Once you have a system in place, you’ll definitely be able to handle most or all of your bookkeeping tasks, even if you’ve never done them before.
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