what can you deduct for a mary kay business?

Question

I'm considering starting a Mary Kay business and wanted to know all the tax deductions that are possible. I know there are 41 but I can't find any.

Answer 1

Check with the I.R.S. and the Small Business Administration for some free advice.
You can deduct business expenses like advertising and travel. Check out Allocation of Income and Expenses, schedule P form 5735 at: http://www.unclefed.com/IRS-Forms/2005/f5735sp.pdf. This is the basic form you are looking for.

You can deduct any equipment that is used exclusively for the business, like a file cabinet, which can be depreciated, usually over seven years, where you recover the expense of the equipment over time. You can also deduct the expenses for your car when used to travel for the business. You must keep a mileage log to qualify. If you use a computer and deduct it then that computer must be devoted entirely to the business, any personal programs on it will cancel this deduction

You can deduct part of your home expenses for the area of the home that you use exclusively for your business, but this is a red flag for the IRS, and can force an audit. If you want this deduction then make sure that part of the house is used only for business. I knew an Amway dealer that had a system of shelves in the garage for storing his stock. That would be a legal deduction, and you will may need some space to store stock and samples.

You will need to use the 1040 tax form and remember to pay the self-employment tax (Check out lines 13, 24, 27,28, 29). You will need to fill out Schedule SE Self-Employment Tax (instructions are found at: http://www.unclefed.com/IRS-Forms/2005/i1040sse.pdf the form itself is found at: http://www.unclefed.com/IRS-Forms/2005/f5735sp.pdf) Use Form 8829 Expenses for Business Use of Your Home.

These forms are pretty daunting so you might want to find Tax Preparation software, make sure it can handle a small business. Or you might want to go to a Tax Perparer like H&R block. I recommend the later because they will know what deductions are legal and accepted by the I.R.S.

Answer 2

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Answer 3

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Answer 4

Don't think of it in terms of 41 deductions, think of it in terms of what am I spending to further my business. Those are the items that are deductible. Costs for travel, marketing, meetings, lunches, etc. Save all your receipts, and have a tax professional help you. Depending on the business, you may only be able to deduct up to your gains. So if you make $1,000 in sales, you can only deduct $1,000 in losses. See a tax professional.

Answer 5

Case Law implies that no MLM related deductions are allowable.

1: Sit down with a CPA, and have them setup your books. They will also tell you what records you need to keep, to be able to claim any deductions that you _might_ qualify for.

2: Sit down with a lawyer, and have him/her go thru the contract with Mary Kay, so you know what you can do that is legal, and within the bounds of that contract. [This is something that you _should_ have done, prior to signing up with them.] Plan to spend an hour per month with the attorney, running thru different suggestions on how to increase your business. The idea here is that you do not violate federal, state, or local laws. [Something that a significant percentage of suggestions from nationals tend to do.]

If you haven't signed up with MK, go thru their contract, _prior_ to signing up. Do not be surprised if you are told that the contract is in your worst interests, and you should look for another business to be involved in.

If you can't afford to spend the money on those two people, you can not afford to start your own business. Especially in an industry where 0.02% of the people in it do _not_ lose money.

Assume that everything your director, senior director, and national tell you about taxes is, at best, wrong. [At worst, it gets you five to ten yers for tax fraud.]

If you haven't signed up yet, tell the recruiter that you will make a decision _after_ 1 July.

One _major_ point: Forget about tax deductions, and figure out how you can make a profit.
[Hint: The $3 600 'profit level" is profitable, only if you sell that much every week. Start with $200 wholesale. That way you have a fighting chance of showing a profit. A "full store" is profitable only to your upline, and only if you do not return it.]

Mary Kay (Canada) Annual Income (2004)
Consultant $140
Director $16 000

An unofficial Mary Kay (USA) source claimed the following:
Team Manager $19 000
Sales Director $30 000
Senior Sales Director $50 000
Executive Senior Sales Director: $75 000
National Sales Director $250 000
[I'm aware of the statistical error in that claim. But that is from an unofficial Mary Kay (USA) source, and as such, has to be treated as accurate, even though it is obviously inaccurate. ]

Estimated weekly sales per MK Consultant:
1983 $59.18
1993 $86.98
2003 $53.26
2005 $52.88
2% of the consultants in Mary Kay reach director level.

What makes you think that you can sell enough product to make this a profitable venture for you? Especially since to do so, you will need to sell several orders of magnitude more product than the average MK Consultant.

Answer 6

The IRS prints pamplits for small business, and that is what you will be. They will give you a 1099 at the end of the year and you will file a scedual C. Keep good records of expences and milage. You can review all forms and publication at irs.gov. you will not nead to file for any tax numbers. You will use your SS# on all forms

Answer 7

There are SO many deductions that you have with an MK business: clothes (as long as it's professional wear, and no pants!), dry cleaning, travel, dining out, gas, utility bills (if you have a home office, which you should), office supplies, postage for all of your MK mailings, and much, much more. Contact me directly and I can give you more information [e-mail]

Answer 8

Gas, Car Payment, Rent for a part of your home as office, phone calls, cell phone, product used for demonstrations, dry cleaning, car repairs, business clothes, medical expenses, office supplies, computer, printer, fax machine, lunches with clients or prospective clients, dinners with clients or prospective clients.

Answer 9

well , the mary kay buisness has already been started . you would just be the operator of a franchise. when and if you become a mary kay rep. , i'm sure the company has all the info that they will give you regarding tax breaks.

Answer 10

a few... gas, car insurance,life insurance, all depending on how far and often you travel doing business,cost of supplies, ie: the samples you give out, the cost of the parties, ie: supplies,gifts,etc. the cost of tires,wear and tear on your vehicle, flyers, advertisement. hope this helps.