Double Diamond, and network marketing full-timer for many years, as well as, traditional business owner and entrepreneur, Karen Ford, offers great advice to help you keep your tax documents organized.
POINTERS FOR ORGANIZING YOUR HOME-BASED BUSINESS TAX PAPERWORK
1.) Keep EVERYTHING! Keep all gas receipts & repairs, meals, travel, purchases of any kind for the promotion of your business. Let your tax preparer go through with you what you can and cannot use so you will know for future years. You can separate the receipts to save money & time for your tax preparer into general expenses, purchases, automotive and home office expenses.
2.) CRA requires that you keep a vehicle trip log for at least 3 months of the year. Easiest way is to keep a notepad in your vehicle, write down your odometer reading before you start and if you drive it for business more than pleasure, just write down the pleasure trips kms so they can be deducted later. For the business trips you should write who and where you went at least. There are mobile apps that will help you with this, too. Write down your odometer reading every year at the same time to get the total kms you drove.
3.) Signage: any advertising is a write off, whether business cards, flyers, signs and posters. Also you can put signs on your vehicle which will make it a 100% write off! Take pictures of your vehicle in case CRA asks for proof. They prefer permanent signs, so pictures won’t show that your vehicle has the popular magnetic signs. You can even put then on your RV, even if you don’t drive it that often. If you are using the vehicle for pleasure use, keep in mind that if you start to use it a lot for business, you will want to upgrade your insurance to business use. It doesn’t cost much more and will protect you.
4.) For meals, keep a list of who you met with and what it was about, i.e. new customer, existing distributor meeting, group meeting, etc. Tips are also a write off! If you are meeting an existing customer over & over, generally CRA won’t accept that as a write off. Include at your discretion.
5.) You can write off all your travel as long as you are promoting your business, whether trying to find new customers or distributors, attending a meeting, convention or trade show or anything that shows you are involving your business. Write down the names of the people you have spoken to. If you are on vacation, I recommend you also take pictures of your products, business cards and any other advertising in your room or somewhere you are to prove you are doing business. Even better is pictures of the people and you holding up the product! If you are with other distributors, take a picture in a meeting like setting. This is done by many types companies for their yearly trips with employees or other business owners in the same field!
6.) You also can write off a % of your space in your home for business use. Calculate the total square footage of your home and then the square footage of your office and presentation space. This % is what you can write off of your mortgage or rent, home insurance, property taxes, utilities and maintenance and repairs if they cover the whole home. Any maintenance or additions to the office space is 100% write off. Consult with your tax preparer what applies.
I have listed examples of general expenses pertaining to the network marketing industry below, please check with your tax preparer for more details or contact me for a more extensive list.
Office supplies & expenses
Cell phone and long distance on home phone
Any supplies to demonstrate products (cups, sugar, cream, etc)
Cost of shows, markets and meetings
Computer or cell phone maintenance/repairs