Tips for Preparing

Your Avon Business for Tax Season

As the year comes to an end and tax season is around the corner, this is the perfect time to get ready. Whether you are going to file your taxes with an accountant, tax service agency (such as H & R Block or Liberty Tax) or you are going to do them at home with tax program like Turbo Tax, you will need to get your ducks in a row and get yourself ready to do the daunting task of filing taxes for your Avon business.

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My Tax Prepping Tips

I’ve learned a lot over the last few years on filing taxes for my Avon business. Some I’ve learned the hard way, some I’ve learned by asking a lot of questions. Below are my tips on how you can get ready to file your taxes for your Avon business, no matter how big or small your Avon business is.

Separate Personal & Business

Another thing I’ve learned the hard way is to have a separate banking account just for your business. I didn’t realize how much easier everything would be until I did it. Having separate accounts I am able to make sure I am staying on budget with my business & not using unnecessary personal funds. I know a lot of representatives have gotten themselves into a hole by using up all of their profit and then some on products for themselves. If that’s why they became a representative, then that’s fine. But for those who are looking to make a profit for whatever reason, like myself, then you want to make sure you spend within your budget.

Another benefit of having separate accounts is that I am able to track my income & expenses more easily. I can track my money more easily and what I love about my bank is when I login to my online account, I am provided a pie chart that shows where I spend my money in different categories.

Gather Your Records

One thing I’ve learned the hard way is it is much easier to file your taxes at the end of the year by having an organized system that is being updated on a regular basis. “With inadequate record keeping, [CPA John] Blake says, you could be leaving deductions on the table or, worse, you could be putting yourself at risk for an audit.” (Nationwide, 2014) No one wants to be audited or have the IRS on their butts.

When I show up to my tax preparer’s office they are always impressed with my filing system. Last year, she expressed to me that all of her other clients who had small businesses did not have even half of the paperwork needed. If I don’t have the paperwork to back up what I put on my tax form, I don’t claim it. So I make sure I have proof of all my income and all of my expenses.

This is what I bring when I file my taxes:

• My Income/Expenses report (I created my own template… see below)
• Receipts of any business expenses such as office supplies, ink, office equipment, shipping U.S. Post Office and UPS, gift basket materials, gas and anything I have spent money on for my business including utilities bills & cell phone bills.
• Print out of my travel log (mileage)
• Each campaign’s invoice report (found on AvonNow) with copies of each representative delivery customer’s order for that campaign stapled together. (You can print invoices on AvonNow or use a receipt book)
• Income reports provided by Avon (direct delivery earnings, leadership earnings, 1099-Misc, bonuses, etc)

Click Here for my budget template on Google Sheets

Don’t Be Afraid to Consult with/Use Professionals

Prior to having my Avon business, I would do my family’s taxes each year through Turbo Tax. I will admit, I am the first one to admit that if I can do something myself, I will do it & ask for help as little as possible. The first year, that was my original plan. I learned really quick how confusing it can be and I actually began freaking out. So, after a few hours of trying to figure it out myself, I admitted defeat and decided to go to a professional to get help.

In hindsight, I wish I would have gone to a professional once I started my Avon business. That first year I ended up missing out on a lot of deductions due to not having the receipts/proof. You’d be amazed in how much you can claim on your taxes including brochures, samples, business tools, shipping & handling fees, taxes you’ve paid, office supplies, training/seminar fees, dining, lodging, etc. Basically if you spend any money that relates to your business, managing, advertising, training, etc- save the receipt.

Now, when I go to file my taxes, I bring my records and feel confident that my tax preparer has everything she needs. I will admit, I still ask questions so I can learn for the upcoming year on how I can be more prepared, make tracking & maintaining my records easier or see what I can and can not deduct with my taxes for upcoming year. Plus, keep in mind tax laws change all the time. The professionals will be the most up to date on what the protocol is and how to file most accurately within each tax season.

NOTE: I am not an accountant or tax advisor. I advise to speak to a professional before applying any deductions mentioned above towards your business. What may apply to mine, may not apply to yours.

Click Here for Summary of What You Need to File Taxes from H & R Block.

Give Yourself Plenty of Time

I recommend filing your taxes as soon as possible. God forbid, if something comes up, you will have enough time to correct, amend or do what you need to correct your filing. I especially recommend this if you are filing yourself and not using a professional.

I admit I can be a bit of a procrastinator, but when it comes to things like this, I wouldn’t. Why take the risk of being put in a stressful situation. We all know it takes weeks for them to review & process tax returns so give yourself the wiggle room you may need if something comes up. If you need more time for whatever reason, make sure to file an extension on time. You don’t want to penalize for being late. Personally, I’ve seen how stressful it can be dealing with the IRS and I am good never having to deal with that.

Live and Learn

Don’t get too hard on yourself if you’ve made mistakes or you’re not as prepared as you’d like. See what you can do in 2020 to make sure a year from now you are all set to go. You are going to make mistakes with running/managing your business. I know, if you are a perfectionist like me, this can be hard. But as long as you learn from it, then it wasn’t a pointless mistake.

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References

Below are articles that I’ve come across during my research for filing my own taxes and for this blog:

• The Balance Small Business’s Your Complete Small Business Income Tax Guide by Jean Murray (Updated January 7, 2019)
• H & R Block’s Small Business Tax Prep Checklist
• Intuit Turbo Tax’s How to File Federal Income Taxes for Small Businesses (Updated for 2019 Tax Season)
• Nationwide’s 9 Best Practices for Small Business Taxes (2014)
• Pocketsense’s Tax Deduction for Avon Reps by Melody Hughes (Last Updated July 27, 2017)
• Sapling’s How to Do Taxes for Avon by Fraser Sherman

NOTE: I am not affiliated or have been paid by any of the companies listed above. I wrote about my personal experience, including what products I’ve used.

What are your tax filing tips for Avon businesses?

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