Portions based on conference call training with Vicky Collins, CPA
Sponsored by the Direct Selling Women's <NS0><NS0><ST1><ST1>Alliance</ST1></ST1></NS0></NS0>

As the owner of a home-based business you are entitled to a lot of money-saving tax deductions.  Vicky said that most direct sellers overpay their taxes by thousands of dollars each year!  There are usually two reasons for overpaying your taxes: <O></O>

• Fear (of the IRS) <O></O>
• Lack of knowledge (not knowing what is deductible) <O></O>

Vicky stated that as the owner of a home-based business, you are entitled to  these benefits - it's one of the major advantages of this business!  She stated that the most important thing is to keep good documentation for your expenses.  Take it from my own experience, if you keep track of your expenses on a daily or weekly basis, you will be very thankful to yourself when tax season rolls around.  You can make up your own simple spreadsheet or purchase an expense log at any office-supply store.  A great online tool to help you with all aspects of your taxes and record keeping is Quicken Home & Business (soon to be released as Quicken Premier).<O></O>

       Internet Fees

POSTAGE
       Hostess packets, thank-yous, flyers, etc.
       Bills related to PC<O></O>

       Newsletter mailings to customers, consultants, etc.
       Customer Care<O></O>

TRAVEL EXPENSE
      Hotel costs
      Monthly meetings (mileage, food expenses, etc)
      Out-of-town shows (airfare, etc.)
      Meals (50% is tax deductible unless you prepay for gift cards in advance, then 100%!)
      Taxi's or airport transfers (just ask for a receipt!)
      Tips for bellmen, etc.<O></O>

DUES AND SUBSCRIPTIONS
       Cooking magazines, recipe clubs, etc. (online or magazines)
       Business related dues (chamber of commerce memberships, etc.)
       Meeting and Conference registration fees<O></O>

ENTERTAINMENT EXPENSE
(Entertainment and meal expenses are deducted at 50%)<O></O>

       Recruiting interviews (buy a potential lunch, coffee, etc.)
       Planning meetings with spouse other consultants, etc.  Be sure to document your agenda (If you meet for lunch with another consultant to share ideas, etc.)
      Entertainment expenses.  Vicky gave the example that if your husband  golfs, you can give him some catalogs to pass out at his golf game, and he can legally deduct his golf fees!

HOME OFFICE EXPENSE
       Office equipment such as computer equipment, fax machines, calculators, scanners, etc.  Percentage based on how much time it is used for business vs. personal
      Internet expenses - based on percentage of how much it is used for business <O></O>

      Computer Software used for your business<O></O>

It is extremely beneficial to have your own "home office".  A home office does NOT need to be a separate room - it can be a corner of a kitchen, bedroom, etc.  To qualify as a home office the area must be used "regularly and exclusively" for your business.  When you have a home office you can deduct the following:<O></O>

       A percentage of your real estate taxes, mortgage, and utility bills. (based on square footage used for business use) To determine the percentage, calculate the square footage of your home and your home office.  Divide the footage of your home office by that of your home.  This is the percentage you can deduct.  For example, if your home is 2000 square feet and your home office is 100 square feet, you can deduct 5% of your expenses. (that's more than you can do now!)
       Mileage to and from your shows.
       Mileage to another job you may have, with restrictions.  In order to  take this deduction, you must do some type of Pampered Chef work at home before you leave for your other job.  The tax law reads that you can deduct mileage "from your first job to your second job".  If you are working on Pampered Chef as your first job in the morning, then you leave for your other job the mileage is deductible.  This could be as simple as sending out
a few emails or entering orders on your computer.
       All computer-related expenses, considering that your computer is only used for your business.  This includes Internet connection fees.
MILEAGE AND TOLLS
       To cluster meetings, conferences, grocery store, post office, bank,  etc.  For shows, check with your accountant: this may be deducted if you  stop on the way for food or if you have a home office).  See note under Home Office Expenses <O></O>

       Current rate is .375 per mile!!!

ADVERTISING AND VENDOR FAIRS
       Logo clothing, hats, pins, etc.
       Newspaper ads, church bulletins or newsletter ads
       Free gifts to vendor fairs, etc.
       Vendor Fair booth fees<O></O>

       PC LOGO apparel.  (deduct this as advertising, not work clothes!)
(all of these are considered advertising.)<O></O>

<O></O>

GROCERIES
       Any food you use to practice Pampered Chef recipes (According to Vicky, you can deduct grocery expenses more than once for a particular
recipe if you are working on "perfecting" it- like feeding it to your family all the time!)
       Any food you take to shows, meetings, etc.<O></O>

INTEREST AND FEES
       Tax Preparation Fees (business portion on Schedule C at 100%,
personal portion on Schedule A - Itemized deductions)
       Bank fees
       Credit card interest that relates to any business expenses<O></O>

PAYROLL EXPENSES
       According to Vicky, this is an incredible way to reduce your taxes!
If you have children between the ages of 6 and 18 you can pay them
for helping you with your business.  There is some work involved, but the
benefits are great.  You will need to get a Federal ID number (your
tax advisor can help you with that).  Then you should pay your children a
normal salary for age-appropriate work (i.,e., a 6-year old could be paid $5
for stamping catalogs for hour but not $50 for an hour of host coaching
calls!)
       You can pay each child up to $4,750 per year.  It is TAX FREE to the  child, and FULLY DEDUCTIBLE for you, You should write a paycheck to your child and document the time spent and tasks completed <O></O>

RETIREMENT CONTRIBUTIONS
       As the owner of your own business you can set up special retirement  plans for yourself.  There are SEP's (Self-Employed 401K's), Simple IRA's,  etc.  Contact your financial or tax advisor for details.  This is a great  way to save money for your retirement TAX FREE! <O></O>