Top 4 MLM Tax Tips for Network Marketers

Are you looking for some MLM tax tips? Did you know that network marketers have many of the same tax advantages that traditional business owners have? When you have your own network marketing business, you can legally deduct your expenses, which offsets your taxable income.  As long as you treat your business like a business, and not like a hobby AND you have the INTENT to make a profit you are safe.

Although I am not a licensed accountant or bookkeeper, I’ve done my own taxes for years (11 years now). This includes taxes for my network marketing business. And I want to share my four favorite MLM tax tips with you. These tips will simplify your day-to-day accounting efforts and will make life much easier at tax time. Best of all, you will be organized and will be able to monitor your business’ cash flow on a monthly basis. Let’s get started:

lose weight

1. Educate Yourself: If you have never owned a business before, you need to educate yourself about small business tax. The best way to do this is to order a few books on small business accounting. Although you don’t need to be a guru, you need to have a basic understanding about what you can legally deduct and what you should track.  There are hundreds of good “small business taxes” books on Amazon that you can order.  Or, you can visit your local library.

mail order business

2. Keep Every Receipt: When I first started my own business, I had a hard time keeping every receipt. I just wasn’t used to saving receipts. Within a short few months I formed new habits. Once you know what expenses you can legally deduct, you will know what receipts to keep. Whenever you get a receipt, write on the receipt the category it belongs in, what the business purpose of the expense was, and any other critical information you can think of. Just remember that every receipt you save, saves you money on your taxes!  Think of your receipts as FOUND money!

3. Develop a Filing System: You need your own filing system. It doesn’t have to be complex either. It just has to work for you. Personally, I use my desk drawer and folders.  I throw all my receipts into my desk drawer throughout the month. On the first day on the following month, I sort the receipts by category and stick them in folders.

4. Create a Monthly Profit and Loss Statement: You MUST keep a monthly profit and loss statement for your business.  Don’t wait until the end of the year to do it. This allows you to keep a pulse on your business and monitor your monthly cash flow. Don’t make the common mistake of not knowing where your business stands financially until you do your taxes. Minimum once each month, you need to input your numbers into your accounting software and print out a profit and loss statement. I keep it simple and use a Microsoft Excel Sheet.

Final Thoughts

In conclusion, these are my four favorite MLM tax tips. I’ve found that the most successful network marketers realize the importance of knowing their numbers. They always keep a finger on the pulse of their business and know where their business stands financially each month. They do this by educating themselves about taxes, by getting organized, keeping their receipts in one place, developing a filing system and maintaining a monthly profit and loss statement. If you are serious about your business, you should follow these recommended MLM tax tips.  It’s time well spent!

best health product
Please Share Our Content If You Enjoyed It:

8 thoughts on “Top 4 MLM Tax Tips for Network Marketers

  1. Many network marketers have no idea just how many deductions that are possible. With network marketing being a business, the majority of same deductions available to traditional businesses can also be taken by network marketers.

    I have found that even as an author and self publisher, I have deductions I can take that I had no idea about until I spoke with my Father who is a retired CPA. The key is, like you said, keep all receipts. I do also recommend having the Quickbooks program. It is very helpful and can make tax time go much easier.

    I agree that everyone should research all the possible deductions you may have. Don’t trust that your tax preparer will catch them all. It is up to you to ask that they look into them.

    • Educating yourself about tax deductions is a very smart move. Unfortunately, most network marketers don’t take the time to do it.

  2. I don’t do my own taxes because I absolutely hate them and find it challenging trying to understand them, though I still make an attempt to be actively engaged in the process. What has helped make the process easier for me and the person who prepares my taxes is my organization. I keep and file everything in an organized system by type and date so that when tax time comes I can easily pull out expense forms, receipts, etc. It makes the process quicker and more pleasant for everyone involved.

    • That’s great. Having someone else do your taxes is a good move for a lot of folks. Have good advisors. It’s money well spent.

  3. This is a great article. Of your points, perhaps the most important is: Keep your receipts! Having prepared income tax forms for a number of small business owners during this past tax season, I was surprised at how many of them did not keep their receipts. Some of them were very good about entering their actual expenses into their Quickbooks, or what ever other data management system they were using, but then they just threw their documentation away. I explained to many of them that should they get audited, the IRS will be asking for those physical receipts. A filing system is nice, but even if they just keep those receipts in an old shoe box, that is better than throwing them away.

    • Yeah, you definitely need to be organized and keep your receipts. I stick all of mine in a drawer every day. At the end of the month I sort them and file them away.

      • Another little trick with receipts I have found is to scan them by the day and this way you can have files of them in your computer. You still do not want to throw them away, but by having them in files in your computer, it can make things much easier. I also suggest that if you get any receipts that don’t have the product on them, just a code, just write what the product is next to it. This can make things a lot easier too.

  4. HI Chuck, these are some great tips. I have pretty much implemented them all in my business though I could do a better job on the P and L statements. but a new year is around the corner…. and I will start fresh.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.