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Monday, January 10, 2011

Taxes and Avon


Well, here we are another year gone!  Here is an article I wrote in 2010 about Avon and Taxes.  I thought now was a good time to re-post it for the upcoming tax season.
What do taxes have to do with selling Avon?
by Karen Whitney

Before I start, I need to mention that I am by no means an expert on taxes so please take what I have to say as a guideline and talk to your local IRS office or tax expert for the current rules and regulations.  However, this will give you a head start on what kind of records you need keep to make tax reporting time go more smoothly.

Unfortunately, when you own a business, you must deal with the Tax Man.  Your Avon business is no different.  Having said that, each individual's circumstances will vary.  So it is very important that you speak with your local IRS office, a tax expert. 

Because you are considered an indepedent contractor, Avon does not withhold taxes from your earnings, and tax reporting is solely your responsibility.  But don't let taxes scare you away from selling Avon.  In fact, it will give you a lot of tax deductions to use on your personal tax return.

Recordkeeping for your business doesn't have to be difficult and if you keep good records, you can ensure that you will receive the benefit of every tax deduction you have coming your way.  Here is a short list of some of the items to keep:


  • Avon invoices (which list all your products, demos, samples and supplies),
  • All your receipts for other purchases such as ink, paper,
  • Keep track of your mileage when making deliveries or any other Avon related business (meetings, post office, etc),
  • If you entertain customers, keep the receipt (lunches, dinners, coffee, etc.)
  • Motels, airline tickets, meals if you attend out-of-town functions
  • Reciepts for any type of training you might pay for (online coaching classes, college classes, etc)
  • Any office furniture or equipment you may purchase for your home office
  • Electricity and/or gas bills on your home/apartment (you can deduct a portion of them . . . see your tax expert for more about home office deductions)
  • Your mortgage/rent (you can deduct a portion of them . . . see your tax expert for more about home office deductions)
  • Your taxes and insurance on your home (you can deduct a portion of them . . . see your tax expert for more about home office deductions)
  • If you think it might be deductible, keep it.  Then you can ask your tax expert about it.
  • and, last but, surely not least, keep the Representative Business Record  (see below) updated each campaign.  Keep this with all of your other receipts and paperwork. 
Your record keeping system doesn't have to be expensive or elaborte.  It can be an empty Avon box.  If it's business related, throw it in the box and keep it handy.  Use the KISS method - Keep it Simple Stupid! Then when tax time comes, you have everything all in one place.

On http://www.youravon.com/ you can find a nice easy to fill-out form to use during the year to keep track of your sales and expenses.  You can find it under the tab called "My Account".  In the left-hand column click on "tax information" and then on the "2010 Tax Flyer/Q&A".  You will then get the form called "2010 (or whatever year it is) Representative Business Record" that you can print it out keep track of each campaign thruought the year.  On the last page are some questions and answers most often asked by Representatives about Avon and their taxes.

Some of those questions answered are:
  • Should I file an income tax return?  (In short, yes if your earnings minus business expenses equal more than $400.00*)
  • If I have to file an income tax return, does that mean I have to pay income tax on my Avon earnings?  (In short, generally, yes, but not necessarily.*)
  • How can I figure out my earnings from my Avon business? (Your earnings are the amount you sell to your Customers, minus the amount you paid Avon for the merchandise, minus all your business deductions*)
  • What information does Avon provide for tax-reporting purposes? (Avon informs the IRS only if you have $5,000 or more in purchases from Avon and when you win prizes, awards, recommendation earnings or other bonuses that total $600 or more, the IRS, by law, must file an information return (Form 1099).*)
  • What deductions/credits can I claim? (Use the Rep Business Record from above to find items that are deductible.*)
* See the back of the "Representative Business Record" that you printed above for more detailed information.

Happy Selling and Happy Tax Day!

 Karen Whitney

BUY/SELL AVON
www.youravon.com/karenwhitney

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