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Tax Time for Entrepreneurs
Did you start a network marketing business and now you are shocked and a little perplexed while working on your taxes? Here are a couple of things you can do to help so that when your 2017 taxes are due, you won't have sticker shock!
First, as with any business, you hope to have an income, right? Well with every business, there are also expenses. Expenses can be the difference between you owning thousands of dollars or hundreds of dollars....after all, we want to keep as much of our profits as possible, right?
Where expenses are concerned: document everything. Keep receipts where business was conducted (such as dinner with the family but you were able to present your business opportunity to a restaurant employee or patron). Did you take a prospect out to dinner? Drinks? A round of golf? These are entertainment expenses and can be deducted from your taxes.
Remember, though...document, document, document! On the receipt, write the prospect's name and contact information and keep your receipts.
Going to another city for a corporate event? Keep receipts for everything! Hotel, airfare, meals...it's all deductible. So is your mileage to and from your meetings and events. Write down your beginning and ending mileage...for 2017, you can deduct .535 cents per mile! This adds up at the end of the year!
Want to keep all this organized? Use an Excel spreadsheet to keep up with them all. The government just wants the totals so your receipts won't come into play unless you are audited.
The IRS is Taking How Much?!
Now, let's talk about that income. As a good rule of thumb, the IRS is going to want about 30% of your income. So here's the mindset you'll need to implement: of every $100 you make, $30 belongs to the government in the form of income tax. This might not seem too daunting if you are only making a couple thousand dollars a year...but what if you made $10,000? $50,000? Or even $250,000?
The amount due to the IRS can seem daunting so how can we avoid such sticker shock? Remember when I said to go into this with the mindset that 30% belongs to the government? Well, start that mindset now. With every transaction of income from your e-wallet to your bank account, set aside 30% now. Open up a savings account and with each transaction, go ahead and move 30% into the savings account with the understanding that it belongs to the IRS and is not to be touched.
Putting aside this money now and throughout the year can help alleviate the shock when tax time comes around because you prepared for it at the beginning of the year.
These are just a few tips and tricks to think about...there are many more deductions that can be taken on your income tax return but I'll leave it to you to do any further research. My purpose here was just to let you know that, as a beginning business owner, there are ways to reduce the amount of taxes you owe. As you grow and your asset list also grows, there are other tax benefits that can be investigated if you get to the point that you want to form a corporation. I'm personally not at that point yet, but one day...one day soon, I hope to be.
If anyone has any other tips, tricks, or bits of tax knowledge, be sure to share in the comments.
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