Tax Credits for an Avon Lady
When you run a small business, several tax credits or deductions can help reduce your business tax liability. The Internal Revenue Services lists the kinds of deductions you can take to help ease your tax burden. Because Avon provides good records, use its system to track your business purchases and expenses and make note of other expenses incurred for year-end tax purposes.
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Vehicle Expense
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The IRS allows you to declare business vehicle expenses. You have several ways to do this, but the easiest is the standard deduction. Keep a log of all business mileage in the vehicle. When using the car to conduct business, start with writing the date in the log, enter the beginning odometer mileage and then the ending after the business is complete. This provides the number of miles for each business transaction. Add this at the end of the year to obtain the standard mileage deduction or transfer it to a spreadsheet to make it easy to calculate.
Samples
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Samples purchased for use in the business are also tax deductions or credits. Any samples or items used during a presentation provide opportunities for tax deductions because using the items for displaying the products and generating business sales was necessary. Sometimes an Avon lady will use makeup products for a makeover; use the purchase price you paid Avon for these items as expenses incurred during business. Tabulate all these purchases and summarize on IRS Form Schedule C, Profit or Loss from Business Sole Proprietorship.
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Tax Credit for Home Office
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The IRS allows you to take a tax credit for business use of your home. If you have a dedicated area in which you work, such as a desk or office where you also store Avon inventory and use the computer to make your purchases of Avon supplies, use this area as a tax deduction. The IRS uses the square footage to determine your business use tax credit for your home, and unless the entire room is dedicated solely for business, don’t use the whole physical area for the tax credit. If there is a bed in the room for guests, then you cannot deduct the entire room on your taxes.
Business Supplies
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Business cards, mailers, printed materials and any costs generated for providing clients with the regular Avon advertising biweekly circular are part of your business expenses used to reduce your tax liability. Cards and postage sent to clients, client gifts for hosting Avon parties and other gifts used for promotional purposes are all part of the deductions you can use to help reduce your tax liability at the end of the year.
Spreadsheet
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If you don’t have a home accounting program, use a spreadsheet to keep track of your monthly income and expenses generated. This way you’ll have summarized information easy to transfer to IRS Form Schedule C at the end of the year.
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