Paying Taxes In Direct Sales
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A common question asked by prospective consultants is, "Do I have to pay taxes when I join a direct sales company?" The tax fear is enough to turn them away unless your response is quick and educated. Sharing these tax deductions with your potential recruits can diminish their tax fear, which eliminates the "tax" excuse.

Answer with a simple, "Yes, because you will be operating as a sole business." But then follow up with an explanation, "However, homebased business owners pay fewer taxes than the average worker because of the business tax write-offs given by The Internal Revenue Service."

Business owners are expected to keep track of their sales and expenses, not just for tax purposes, but for survival purposes. No matter how small a business is, the owner must treat it like an empire. Such empire should have its own banking account, debit card, computer, filing system, and office space―even if it's a corner of a room to start.

Every business owner should also track his/her sales and expenses in order to analyze the success of the business. If you are not monitoring these things then you can’t possibly keep your business on the right track. The process doesn’t have to be elaborate, but the process must take place. Besides, keeping proper business records makes reporting taxes a cinch.

Tax Write Offs
Below are some of the most common business tax write-offs. These tax write-offs can make a huge difference in your bottom line―the amount of tax you pay the IRS, if any. Deductions are taken off of your gross income before your taxes are determined so while you may have grossed $10,000 for the year, the total you use in determining your taxes would be far less. For instance, if you gross $10,000 but had $5,000 in business expenses, the amount you pay taxes on is only $5,000.

• Bank fees,
• Shipping costs like postage stamps, packing supplies, and freight fees,
• Mileage to business related events and errands,
• Office supplies like paper, pens, printer ink, envelopes, invitations, etc.,
• Office equipment like computer, printer, copier, desk, chair, etc.,
• On-line services, like web hosting fees, Internet service, domain names, etc.,
• Advertising and marketing materials like catalogs, business cards, and flyers,
• Display merchandise,
• Hostess gifts,
• Food bought for a show or a meeting,
• Child care so you can work,
• A portion of car repairs and maintenance,
• A portion of your telephone, electric, heat, mortgage, and water bill―if you have a home office,
• Business related conferences: registration, hotel, airfare, and a portion of your meals.

• Most direct sale companies offer direct deposit; your commission should be deposited directly into your business account. Let the bank keep your records; it’s free with your account and every month they send you a statement of all of your transactions.
  
  
• Get a separate business checking account with a debit card.
  
  
• Deposit every sale into your business account. Immediately following every deposit, write on the deposit slip what the deposit represents.
  
  
• Do not use cash for business expenses, use your debit card or a business credit card. If you use your business debit card for all expenses, you automatically develop a solid record of sales versus expenses.
  
  
• Write what that purchase is for, on every register receipt, immediately following each transaction.
  
  
• When you pay yourself use the debit card or write yourself a check. Make sure you write “Owner Draw” on the debit receipt or memo line of the check.
  
  
• Hang a large envelope behind your office door and put all of your receipts for the month in the envelope. Then once a month, take down the envelope and do your bookkeeping, placing the receipts in the proper month's file.
  
  
• Track your mileage, the IRS website posts the most current rate which can change quarterly. Keep a small note pad in your car to track your mileage.
  
  
• Keep and file all household expenses. Some of these expenses may be deductions, too.