Presentation - Fall 2015

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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


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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


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)


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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


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


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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


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


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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.


Nan Lloyd, CPA [email protected]

(334) 834-1040 www.abs1040.com

www.facebook.com/AssociatedBusinessServices

Documents

Presentation - Fall 2015