Tax Tips for your home-based business, specifically with Cookie Lee Jewelry
By Tereasa McKee Cookie Lee Consultant
*This article in no way bypasses the professional advice and help of a tax person. It is merely a quick tip guide for some areas you may not have thought about in your write-offs.
*Note: when searching for a tax person make sure they are familiar with a home-based business in Direct Sales. Not all tax people are familiar with Direct Sale companies and more importantly with Cookie Lee. We don’t have to pay taxes on our sales because we already pay for taxes through our Cookie Lee purchases. The best way to find a good tax person for your Cookie Lee business is to ask other consultants whom they use for their taxes.
Cookie Lee gives us reports on-line no matter how much is purchased for our records of purchases made monthly as well as yearly.
Tip #1: Keeping Track
Keeping track is an important process for many reasons. First off when you visit your tax person they will need accurate TOTALS of each write-off category. Second you need to keep track of your receipts for your personal budget with your Cookie Lee business and third if you do ever get audited you need receipts and accurate records.
So what’s the best way to keep track? Each year I ponder this and each year I brainstorm on a more efficient method of storing my receipts, calculating my receipts, and budgeting my business from my receipts. Each year I think I’ve hit the mark but the following year I again think ‘there has got to be an easier way’. It’s a tedious process no matter how you look at it but when you get a nice return you decide it is all definitely worth it.
Step 1: Create Folders – using just regular folders, tape the sides together of each folder so your receipts don’t slip out.
Step 2: Label each Folder – you will want to label an individual folder for the areas you use more or have more receipts. The areas or categories that are used less you might want to combine 2 categories. (If you combine 2 categories just remember that before you visit your tax person you will need to separate these 2 areas and total).
Step 3: Storing your Folders – keep your folders somewhere convenient so you actually use them. If they are in a bottom drawer covered by napkins and tablecloths you probably won’t dig them out just to put that lunch receipt you had at Marie Calendars with a potential recruit in the folder. I keep my main more common folders on my desk. I have a wire container that I picked up at Staples for about $5.00 that is multi-level so the labels on each folder are visible and easy to read quickly. My seldom-used category folders are kept in my file drawer.
(Note: before I came up with this method I put all my receipts in a box and each month I would separate the receipts and then put each category into a manila envelope. I like to work smarter not harder. I try to always find ways to do tasks with less time and energy. That way I can spend my time in a more constructive way.)
Tip #2: Accurate Receipts:
Step 1: ALWAYS, ALWAYS, ALWAYS GET A RECIEPT! No receipt = no write-off! So always get a receipt. KEEP EVERY RECIEPT OF EVERYTHING.
Step 2: When you get a receipt write on the back of the receipt any notes you may need. Example; if you took a new recruit out to lunch to begin some training write that down. Or maybe you conducted an interview with a person interested in your business and treated her or him to coffee at Starbucks. Write that down. It is much easier to write what you were doing at the time you are doing it than trying to remember 11 – 12 months later!
GAS receipts are a bit different. I will talk more about gas and mileage further down the page..
Step 3: Put your receipts in the appropriate RECIEPT FOLDER.
Step 4: Often 1 receipt has several categories on it. For example you might make a trip to your local pharmacy and pick up batteries for your radio that you use for your home-shows, as well as some thank you cards and stamps to send to your monthly Hostesses, but you also pick up a prescription and some Advil and Milk and Cheerios. When this happens I slip the receipt in a “Multiples Folder”.
• Tape each Receipt that has several categories on a piece of paper. 1 paper per receipt but you can use front and back. Then off to the side of each receipt/paper write the totals of each category. Don’t forget to include tax!
• You can then add these category totals onto your Master Category Totals Sheet that you will give to your tax person.
Tip #3: Requesting Separate Receipts
One quick tip to avoid the hassle of separating receipts with multiple categories is to request separate receipts when checking out. Simply run your Cookie Lee items through and get a receipt and then run your medicines through and get receipt and run your personal/family items through and get receipt. Sometimes the cashier isn’t too happy and sometimes people in line might not be too happy but more and more people have home-based businesses and receiving separate receipts for business expenses is more common. But if the line is too long and you don’t want to hold everyone up just tape the entire receipt to a sheet of paper and total out each category WITH TAX and put it in your MULTIPLES FOLDER.
Tip #4: MASTER CATEGORY TOTALS SHEET
Step 1: In January take each manila folder and dump out your receipts. Pop in a good movie and begin adding each category. Write the totals of each category down on a separate piece of paper. . It need not be fancy and you don’t even have to enter it into your computer and print it. Hand written is fine. And if you have additional notes in your categories include them on your MASTER CATEGORY TOTALS SHEET. That way you will have your notes in front of you when you meet with your tax person.
The Master Category Totals Sheet is what you will give to your tax person. That’s easy enough.
Tip #5: Gas/Mileage
With GAS or MILEAGE you will want to keep a LOG. A log is simply writing down on a piece of paper where you are driving and why as well as the actual miles. Whenever you driving for your Cookie Lee business log it. Such as driving to the Showroom, or Convention or delivering products to customers, going to your Home-shows, getting food for your Home Shows, or decorations, etc. I like to keep my MILEAGE LOG in the car that way I am reminded to use it.
Even though you are keeping a MILEAGE LOG you still need to keep your gas receipts in case you are audited.
KEEP EVERY RECIEPT OF EVERYTHING
Step 1: Keep all your gas receipts and put them in your gas/mileage folder no matter where you went and no matter for what. If you get audited you may need these receipts.
Step 2: Keep a MILEAGE LOG. A mileage log is simply a spiral notebook where you keep track of your mileage. It is best to keep your mileage logbook in the car so you remember to write down your miles.
In your Mileage Log you will want to write down 4 things;
DATE, WHERE you went and WHY you went there, and the actual MILES to the location. Here is a quick example.
Date Where (include address) Why Miles TO
12-1-09 Ann’s Bakery Bristol St Cake for party 1.3 mi
12-1-09 Sheila’s house “ same Delivery&Party 7.3 mi
12-3-09 Von’s on Barker St Home show food 3.1 mi
Notice on the Von’s entry for the address I just put the street because I don’t know the actual address but we do have about 15 Von’s stores in our town so I need to jot down which one I went to. Ann’s Bakery the address was on the building so I jotted it down when I picked up the cake. Do what you can as far as writing down information at the time you are doing it. It will make it that much easier for you when tax time comes.
Also when you enter your MILES from your miles log to your Master Category Totals Sheet you want to ADD the actual miles to a location twice to include ‘from’. You get a write-off for driving ‘to’ a location as well as driving back or ‘from’ a location. Since the miles ‘to’ and ‘from’ will be the same just double the entry on your Master Category Totals Sheet.
You don’t need to put a lot of information just basic information is fine.
*Note: If your car mile gauge is too difficult or its just a pain to calculate because your car doesn’t have a mileage reset button then skip the miles to the location on your log. You can calculate these easy enough another way. By using a computer, go on the Internet and type in Mapquest. Besides giving you driving directions, Mapquest will give you the actual miles to and from any location.
Tip #6: Debit and Credit Cards and Bank Statements
Having a separate bank account with a separate debit card keeps your business expenses separate but if you cannot do that you will need to keep all credit card bills and bank statements and review them when you are preparing your Master Category Totals Sheet . Highlight entries that apply to your business and be sure to add them into your Master Category Totals Sheet. *Note: Be careful not to ‘double’ entry. A double entry means you included the actual receipt and then you doubled it by adding it again from your bank statement or credit card. The best way to avoid this mistake is by ALWAYS ALWAYS ALWAYS GETTING A RECIEPT and using the receipt. But sometimes when you are purchasing something on-line you must use your bank statement or credit card statement. Just be careful not to add the item twice.
Tip #7: CATEGORIES
Your tax person will tell you what you can and cannot write off. This is merely a general category list to give you suggestions. Be sure to include all incoming monies as well as out going monies. In other words, include money you received like commissions as well as out going that you paid like shipping charges, or bank charges. I put my incoming money on a separate sheet of paper labeled Master Category Totals Sheet INCOMING MONEY and it includes any commission checks, profit from sales or anything that gave me money.
Accounting
Advertising – do you have a website & email account that you pay for?
Answering machine
Bad debts from sales or service
Bank charges – besides your normal bank account monthly services do you pay for checks? Do you pay another company to have customers credit cards ran?
Car and Truck expenses (not included somewhere else) – repairs, tires, etc
Commissions and Bonuses
Contract Labor
Convention
Delivery and freight charges – did you pay shipping for business items?
Donations
Dues and subscriptions
Employee benefits programs
Gifts to customers and hostesses
Insurance (other than health) – did you attend a craft show or some event where you had to purchase additional insurance?
Internet
Janitorial – did you have to pay for a cleaning service for a special event?
Laundry and cleaning services
Legal and Professional services
Medical/Doctors/Hospital
Miscellaneous – if you aren’t sure of an item write it down and ask your tax person when you meet
Mortgage interest (paid to banks, etc)
Office expenses – office furniture & equipment
Other interest (not entered elsewhere)
Outside services – did you have to hire someone to help you create a website, a form, business card, flyer, banner? If you hired anyone to help you with some aspect of your business write it down.
Parking and toll pension and profit sharing plans – contributions, admin. and education costs
Postage
Prescriptions/Medicines
Printing
Rent – vehicles, machinery, and any equipment
Rent – other
Repairs
Security
Supplies
Taxes – real estate
Taxes – payroll
Taxes – sales tax included in gross receipts
Taxes – other
Telephone charges
Tools
Training – classes, books or manuals, etc
Travel
Total meals and entertainment
Uniforms
Utilities
Volunteer expenses
Wages
*Check with your TAX person for updated and OFFICIAL tax write-offs. Your tax person knows exactly what you can and cannot write-off as well as the percentages. In some areas you can only deduct a certain amount or percentage of your overall total but your tax person will do that for you.
Tip #8: Great Tax Man in California
Get a referral to a great tax person from a Cookie Lee consultant in your area. In Southern California I highly recommend Steve Freeman. He knows Cookie Lee and is an honest, real guy. My up-line, Janet Grossman recommended Mr. Freeman to me. If you live miles away, all I can say is he is worth the drive!
Steve Freeman and Associates
2251 E. Thousand Oaks Blvd.
Thousand Oaks, CA 91362
805-495-4211
http://www.stevenfreemancpa.com
Mr. Freeman’s team may be able to recommend someone as well. Give him a call – you’ll be glad you did!
And finally – if you have a better, easier tip regarding taxes please send me an email! I am always looking for an easier way to do these darn taxes and your tip will be greatly appreciated by all of us who have a home-based business in Direct Sales and specifically with COOKIE LEE FINE FASHION JEWELRY!
Tereasa McKee
www.tereasamckee.com
tereasamckee@cookielee.biz
By Tereasa McKee Cookie Lee Consultant
*This article in no way bypasses the professional advice and help of a tax person. It is merely a quick tip guide for some areas you may not have thought about in your write-offs.
*Note: when searching for a tax person make sure they are familiar with a home-based business in Direct Sales. Not all tax people are familiar with Direct Sale companies and more importantly with Cookie Lee. We don’t have to pay taxes on our sales because we already pay for taxes through our Cookie Lee purchases. The best way to find a good tax person for your Cookie Lee business is to ask other consultants whom they use for their taxes.
Cookie Lee gives us reports on-line no matter how much is purchased for our records of purchases made monthly as well as yearly.
Tip #1: Keeping Track
Keeping track is an important process for many reasons. First off when you visit your tax person they will need accurate TOTALS of each write-off category. Second you need to keep track of your receipts for your personal budget with your Cookie Lee business and third if you do ever get audited you need receipts and accurate records.
So what’s the best way to keep track? Each year I ponder this and each year I brainstorm on a more efficient method of storing my receipts, calculating my receipts, and budgeting my business from my receipts. Each year I think I’ve hit the mark but the following year I again think ‘there has got to be an easier way’. It’s a tedious process no matter how you look at it but when you get a nice return you decide it is all definitely worth it.
Step 1: Create Folders – using just regular folders, tape the sides together of each folder so your receipts don’t slip out.
Step 2: Label each Folder – you will want to label an individual folder for the areas you use more or have more receipts. The areas or categories that are used less you might want to combine 2 categories. (If you combine 2 categories just remember that before you visit your tax person you will need to separate these 2 areas and total).
Step 3: Storing your Folders – keep your folders somewhere convenient so you actually use them. If they are in a bottom drawer covered by napkins and tablecloths you probably won’t dig them out just to put that lunch receipt you had at Marie Calendars with a potential recruit in the folder. I keep my main more common folders on my desk. I have a wire container that I picked up at Staples for about $5.00 that is multi-level so the labels on each folder are visible and easy to read quickly. My seldom-used category folders are kept in my file drawer.
(Note: before I came up with this method I put all my receipts in a box and each month I would separate the receipts and then put each category into a manila envelope. I like to work smarter not harder. I try to always find ways to do tasks with less time and energy. That way I can spend my time in a more constructive way.)
Tip #2: Accurate Receipts:
Step 1: ALWAYS, ALWAYS, ALWAYS GET A RECIEPT! No receipt = no write-off! So always get a receipt. KEEP EVERY RECIEPT OF EVERYTHING.
Step 2: When you get a receipt write on the back of the receipt any notes you may need. Example; if you took a new recruit out to lunch to begin some training write that down. Or maybe you conducted an interview with a person interested in your business and treated her or him to coffee at Starbucks. Write that down. It is much easier to write what you were doing at the time you are doing it than trying to remember 11 – 12 months later!
GAS receipts are a bit different. I will talk more about gas and mileage further down the page..
Step 3: Put your receipts in the appropriate RECIEPT FOLDER.
Step 4: Often 1 receipt has several categories on it. For example you might make a trip to your local pharmacy and pick up batteries for your radio that you use for your home-shows, as well as some thank you cards and stamps to send to your monthly Hostesses, but you also pick up a prescription and some Advil and Milk and Cheerios. When this happens I slip the receipt in a “Multiples Folder”.
• Tape each Receipt that has several categories on a piece of paper. 1 paper per receipt but you can use front and back. Then off to the side of each receipt/paper write the totals of each category. Don’t forget to include tax!
• You can then add these category totals onto your Master Category Totals Sheet that you will give to your tax person.
Tip #3: Requesting Separate Receipts
One quick tip to avoid the hassle of separating receipts with multiple categories is to request separate receipts when checking out. Simply run your Cookie Lee items through and get a receipt and then run your medicines through and get receipt and run your personal/family items through and get receipt. Sometimes the cashier isn’t too happy and sometimes people in line might not be too happy but more and more people have home-based businesses and receiving separate receipts for business expenses is more common. But if the line is too long and you don’t want to hold everyone up just tape the entire receipt to a sheet of paper and total out each category WITH TAX and put it in your MULTIPLES FOLDER.
Tip #4: MASTER CATEGORY TOTALS SHEET
Step 1: In January take each manila folder and dump out your receipts. Pop in a good movie and begin adding each category. Write the totals of each category down on a separate piece of paper. . It need not be fancy and you don’t even have to enter it into your computer and print it. Hand written is fine. And if you have additional notes in your categories include them on your MASTER CATEGORY TOTALS SHEET. That way you will have your notes in front of you when you meet with your tax person.
The Master Category Totals Sheet is what you will give to your tax person. That’s easy enough.
Tip #5: Gas/Mileage
With GAS or MILEAGE you will want to keep a LOG. A log is simply writing down on a piece of paper where you are driving and why as well as the actual miles. Whenever you driving for your Cookie Lee business log it. Such as driving to the Showroom, or Convention or delivering products to customers, going to your Home-shows, getting food for your Home Shows, or decorations, etc. I like to keep my MILEAGE LOG in the car that way I am reminded to use it.
Even though you are keeping a MILEAGE LOG you still need to keep your gas receipts in case you are audited.
KEEP EVERY RECIEPT OF EVERYTHING
Step 1: Keep all your gas receipts and put them in your gas/mileage folder no matter where you went and no matter for what. If you get audited you may need these receipts.
Step 2: Keep a MILEAGE LOG. A mileage log is simply a spiral notebook where you keep track of your mileage. It is best to keep your mileage logbook in the car so you remember to write down your miles.
In your Mileage Log you will want to write down 4 things;
DATE, WHERE you went and WHY you went there, and the actual MILES to the location. Here is a quick example.
Date Where (include address) Why Miles TO
12-1-09 Ann’s Bakery Bristol St Cake for party 1.3 mi
12-1-09 Sheila’s house “ same Delivery&Party 7.3 mi
12-3-09 Von’s on Barker St Home show food 3.1 mi
Notice on the Von’s entry for the address I just put the street because I don’t know the actual address but we do have about 15 Von’s stores in our town so I need to jot down which one I went to. Ann’s Bakery the address was on the building so I jotted it down when I picked up the cake. Do what you can as far as writing down information at the time you are doing it. It will make it that much easier for you when tax time comes.
Also when you enter your MILES from your miles log to your Master Category Totals Sheet you want to ADD the actual miles to a location twice to include ‘from’. You get a write-off for driving ‘to’ a location as well as driving back or ‘from’ a location. Since the miles ‘to’ and ‘from’ will be the same just double the entry on your Master Category Totals Sheet.
You don’t need to put a lot of information just basic information is fine.
*Note: If your car mile gauge is too difficult or its just a pain to calculate because your car doesn’t have a mileage reset button then skip the miles to the location on your log. You can calculate these easy enough another way. By using a computer, go on the Internet and type in Mapquest. Besides giving you driving directions, Mapquest will give you the actual miles to and from any location.
Tip #6: Debit and Credit Cards and Bank Statements
Having a separate bank account with a separate debit card keeps your business expenses separate but if you cannot do that you will need to keep all credit card bills and bank statements and review them when you are preparing your Master Category Totals Sheet . Highlight entries that apply to your business and be sure to add them into your Master Category Totals Sheet. *Note: Be careful not to ‘double’ entry. A double entry means you included the actual receipt and then you doubled it by adding it again from your bank statement or credit card. The best way to avoid this mistake is by ALWAYS ALWAYS ALWAYS GETTING A RECIEPT and using the receipt. But sometimes when you are purchasing something on-line you must use your bank statement or credit card statement. Just be careful not to add the item twice.
Tip #7: CATEGORIES
Your tax person will tell you what you can and cannot write off. This is merely a general category list to give you suggestions. Be sure to include all incoming monies as well as out going monies. In other words, include money you received like commissions as well as out going that you paid like shipping charges, or bank charges. I put my incoming money on a separate sheet of paper labeled Master Category Totals Sheet INCOMING MONEY and it includes any commission checks, profit from sales or anything that gave me money.
Accounting
Advertising – do you have a website & email account that you pay for?
Answering machine
Bad debts from sales or service
Bank charges – besides your normal bank account monthly services do you pay for checks? Do you pay another company to have customers credit cards ran?
Car and Truck expenses (not included somewhere else) – repairs, tires, etc
Commissions and Bonuses
Contract Labor
Convention
Delivery and freight charges – did you pay shipping for business items?
Donations
Dues and subscriptions
Employee benefits programs
Gifts to customers and hostesses
Insurance (other than health) – did you attend a craft show or some event where you had to purchase additional insurance?
Internet
Janitorial – did you have to pay for a cleaning service for a special event?
Laundry and cleaning services
Legal and Professional services
Medical/Doctors/Hospital
Miscellaneous – if you aren’t sure of an item write it down and ask your tax person when you meet
Mortgage interest (paid to banks, etc)
Office expenses – office furniture & equipment
Other interest (not entered elsewhere)
Outside services – did you have to hire someone to help you create a website, a form, business card, flyer, banner? If you hired anyone to help you with some aspect of your business write it down.
Parking and toll pension and profit sharing plans – contributions, admin. and education costs
Postage
Prescriptions/Medicines
Printing
Rent – vehicles, machinery, and any equipment
Rent – other
Repairs
Security
Supplies
Taxes – real estate
Taxes – payroll
Taxes – sales tax included in gross receipts
Taxes – other
Telephone charges
Tools
Training – classes, books or manuals, etc
Travel
Total meals and entertainment
Uniforms
Utilities
Volunteer expenses
Wages
*Check with your TAX person for updated and OFFICIAL tax write-offs. Your tax person knows exactly what you can and cannot write-off as well as the percentages. In some areas you can only deduct a certain amount or percentage of your overall total but your tax person will do that for you.
Tip #8: Great Tax Man in California
Get a referral to a great tax person from a Cookie Lee consultant in your area. In Southern California I highly recommend Steve Freeman. He knows Cookie Lee and is an honest, real guy. My up-line, Janet Grossman recommended Mr. Freeman to me. If you live miles away, all I can say is he is worth the drive!
Steve Freeman and Associates
2251 E. Thousand Oaks Blvd.
Thousand Oaks, CA 91362
805-495-4211
http://www.stevenfreemancpa.com
Mr. Freeman’s team may be able to recommend someone as well. Give him a call – you’ll be glad you did!
And finally – if you have a better, easier tip regarding taxes please send me an email! I am always looking for an easier way to do these darn taxes and your tip will be greatly appreciated by all of us who have a home-based business in Direct Sales and specifically with COOKIE LEE FINE FASHION JEWELRY!
Tereasa McKee
www.tereasamckee.com
tereasamckee@cookielee.biz
Tax Tips for your Direct Sells Business
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Webstarts is FREE.
Webstarts provides free help by phone to a LIVE person or email.
Webstarts has loads of free training videos when you are ready to take your website to the next level.
The more you advertise your business the more customers will find you.
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