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Gold Medal Software 5
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Gold Medal Software - Volume 5 (Gold Medal) (1995).iso
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TAX.TXT
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1994-10-26
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Making MLM A Less Taxing Experience
How can you make the most of the tax advantages
that come from being active in MLM? Most important,
keep careful records. Show all of your income --
hiding income is the surest way to incur the wrath of
the IRS. But record all of your expenses, too, to
offset as much of that income as possible.
Your deductible expenses include your office
supplies, phone expenses, travel (including auto
costs), entertainment, and so on, as long as they're
business-related. The better your records, the more
deductions you'll be able to sustain.
In some circumstances, you'll be able to take a
home-office deduction. If you use 10% of your house
for business, you can deduct 10% of your expenses for
heating, electricity, home repairs, security systems,
insurance, and so on. However, there are a few
standards you must meet to qualify for this deduction.
First, you must have a section of your house (a
room or part of a room) that's used regularly and
exclusively for business. You can't deduct your
kitchen just because you work on your kitchen table.
To qualify for deductions, your home office must
be your principal place of business (for your MLM
activity) or a place you use regularly to meet with
prospects, distributors, or customers. Also, the
allowable deduction is limited to the gross income
generated from the use of your residence. There's a
complicated method of deducting various expenses, but
the bottom line is that your home-office deductions are
essentially limited to your gross income from your at-
home businesses.
Can you deduct losses on MLM, counting all your
expenses? You may be able to, but only if you
demonstrate an honest attempt to attain profitability.
If you're haphazard in your record keeping and your
approach to your business, the IRS may claim you're
only doing this as a tax dodge and disallow deductions
for losses.
The key to taking the deductions mentioned above
is your status as an independent contractor. To be an
independent contractor, you need to be truly
independent. Set your own schedule; work as you want
to work, not as the parent company directs you to work.
If you work for more than one MLM company, you're more
likely to qualify as an independent contractor.
Do you owe sales tax on the products you
distribute? Check with a local attorney; your parent
MLM company may be able to provide you with a legal
opinion that applies to your state. If you need to get
a "tax number" to avoid sales tax, do so.