Small Business and multi-level marketing common business deductions:
1. Advertising – This could include business cards, buying leads, flyers, participation in an advertising co-op with your up line, sample products, newspaper ads, postcards, pay per click ads(google adwords), or any type of online or off-line advertising that you might do to generate leads
2. Car and Truck expenses – Basically, you can deduct a standard mileage deduction for your vehicle or you can deduct an actual expense deduction (the IRS website explains the differences https://www.irs.gov/taxtopics/tc510.html). You should track your business and personal miles each day. The IRS requires that you document your mileage. This can be done on a small calendar or a spreadsheet.
In addition to tracking your mileage keep all of your receipts for oil changes, repairs, car payments, insurance, registration fees, if you and other vehicle expenses. At the end of the year you can decide between the standard mileage deduction or actual expenses, whichever is larger. In addition, you can deduct tolls and parking when they are business related
3. Commissions and Fees - This category might include fees you paid to set up a booth at a tradeshow, fees for your company’s website, renewal fees for your company and other fees. This would also include PayPal fees that you paid for any money that you sent or received electronically.
4. Contract Labor - This category is for any independent contractor that you hire to help with your business. For example you may have hired someone to write blog post or to create a book cover or do any freelance project. If you pay any one person more than $600 in a year you must provide them and the IRS with a 1099 MISC form.
5. Home Office Deduction – The home office is a tax deduction, but you have to use the space exclusively for your business and nothing else. You can deduct actual expenses or a pre-assigned dollar amount per square foot of office space used.
6. Interest - Most businesses will not use this expense category. Examples of interest expense would be if you have a credit card that is used exclusively for your business or if you took out a business loan for your business exclusively. You can use the deduction of the interest if you have a credit card that is used for both personal and business you can deduct a percentage of the interest based on how much of the interest was used for business purchases.
7. Inventory or Cost of Goods Sold -This is one that applies only if you keep an inventory - not all multilevel marketing businesses have an inventory. If you keep an inventory you will have to determine your cost of good sold. This is basically where you take your sales minus your inventory purchases and combine it with your remaining inventory on hand at the end of the year.
8. Legal and Professional Service - Anytime you hire a lawyer, accountant, bookkeeper or any other professional service for business purposes the fees would be placed under this category and written off on your tax return.
9. Meals and Entertainment - This category is often scrutinized by the IRS. You can't deduct your own meals, but if you take a client out to lunch and pay for their meal and yours you can deduct 50% of the cost of the meal on your taxes. You can also deduct any food you buy exclusively for home parties to promote your business. Some food is 100% deductible, but most meals are only 50% deductible. Be sure to save your receipts and make a note of the person/people you were meeting with.
10. Office Expenses - This would include any office supplies that are used for your business such as ink, paper, toner, pens, staples, paperclips, folders, etc. Please note if the supplies are not 100% for business use you can only deduct the percentage of the cost that is used for business purposes.
11. Supplies - in general the cost of materials and supplies used in the course of a trade or business may be deducted as a business expense in the tax year they are used.
12. Taxes and Licenses - This category is for any business licenses you purchased from your county clerk.
13. Travel Meals and Entertainment - This category is for any type of travel expenses to meetings, regional rally's, company conventions, training events, etc. that are overnight and away from your home they must be business related. This is one area a lot of people are confused about. If you take a trip and it was a combination of personal and business use, which most trips are, then you can only deduct the business percentage of the trip.
14. Communication - This would include your cell phone, or any other home utility used exclusively for your business like your Internet. If it isn't used exclusively for your business it must be pro rated. (For example if you use your internet 50% for the business then you can write of 50% of the cost.)
15. Miscellaneous Expense - This would be any other type of legitimate business expense that does not fall into one of the categories mentioned above.
16. Depreciation and Section 179 expenses - This is when you purchase an expensive item such as a printer or laptop and plan on using it in more than one year.
17. Insurance -This would be any business specific insurance that you bought for your business.