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9/2/15
1
Year End Wrap Up Tax & Business Basics
for your Young Living Business
Hosted by: Nan Lloyd, CPA & Certified Tax Coach Carey Locklar, YL Gold Team Leader
Pitfalls • Treat this as a business • Keep good books and records • Set aside 30% of commissions for taxes
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
The Basics • Keep a separate checking account
– Use it for any and all business activity – Best to reconcile your activity to the bank
statement each month • Keep up with your receipts
– Organize them in envelopes and sort by month
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
9/2/15
2
The Basics • Keep a separate checking account
– Summarize and categorize the income & expenses each month in a spreadsheet or spiral notebook
Reporting Options • “Other income” on Form 1040
– Simplest option, if applicable – Ideal for low commission earnings with little to
no business expenses – If commissions are less than $600, Young
Living will not issue a Form 1099, nor inform the IRS of your earnings
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
Reporting Options • Schedule C – Trade or Business
– Additional tax form included with Form 1040 detailing business income and expenses
– Pay Federal, State and Social Security tax (15.3%) on net income (income less expenses)
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
9/2/15
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Determining Income • Commissions from Young Living
– If your commissions exceed $600 for the calendar year, Young Living will issue you a Form 1099 and inform the IRS of your earnings
• Sales to customers • Service income
– Example: Zyto scans • Referral fees
– Example: referral bonus from Zyto company The information provided in this presentation is for general business practices.
For advice specific to your situation, please consult a tax professional.
Determining Expenses • “Ordinary and necessary”
– Per IRS guidelines, an ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.
• Examples: – Supplies – Postage – Promotions or Giveaways – Cell phone service – Equipment for business use
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
Determining Expenses • Purchases from Young Living
– Personal Use • Not deductible for tax purposes, regardless of
commission requirements – Business Use
• Items purchased for samples, promotions, etc • Fully deductible
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
9/2/15
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Determining Expenses • Meals & Entertainment
– Only 50% is deductible for tax purposes • Vehicle Expenses
– Fuel, maintenance, insurance, etc – Prorated to the % of business use – Get an oil change at year end to provide 3rd party
documentation of mileage • Home Office
– Must be space used exclusively for business use The information provided in this presentation is for general business practices.
For advice specific to your situation, please consult a tax professional.
Taxes • Tax liability will vary greatly depending on
entity choice and other factors, including your personal tax situation
• Payments may need to be submitted to tax authorities throughout the year through quarterly estimated payments and/or payroll taxes
• Privilege Tax and Personal Property Tax returns may come into play based on state of operation
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
Professional Tax Consulting
• Professional assistance is helpful for anyone running a business
• Professional assistance becomes critical as your annual net income approaches $30,000 to maximize your tax savings – Actions must be taken before Dec 31
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
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5
Further Reference
By Nan Lloyd, CPA, CTC To purchase visit www.abs1040.com > Contact > Business Owner’s Book
Questions • Please submit your questions using the chat
feature • Refer back to the FaceBook event for this
webinar for valuable follow up information.
The information provided in this presentation is for general business practices. For advice specific to your situation, please consult a tax professional.
Nan Lloyd, CPA [email protected]
(334) 834-1040 www.abs1040.com
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