A Quick Tax Overview – Direct Sales

Recently someone on my company’s Facebook group asked if she had to claim her direct sales business even if she did not make over $600 and as a result, did not get a tax form.  There was some thought that if you made less than that the government considers your business a hobby and then you do not need to claim it.

But… in reality, there are many reasons why you may not have received over $600 in overrides in your direct sales business.

  • Joined later in the year
  • Didn’t have a direct sales team


    taxes (Photo credit: 401K)

  • Had to take time off due to illness

That said, you still need to claim this income on your taxes and the main reason is that you will also get tax deductions.  You can claim things such as a portion of your utility bills, car maintenance and gas as well as expenses around you home.  You need to be careful though that you are only claiming those which are legitimate.  If you are not sure, you can check out the website of your tax agency or give them a call.

IRS – Small Business

Revenue Canada – Business

If you have kept track of all your revenue and expenses throughout the year, the tax process should be relatively easy and painless.  If you have not, you will need to sit down a few evenings and get it sorted out. You can pay your tax accountant to do this for you but it will only help to increase your bill.

Sort the papers into those which brought in money and those which you had to pay out money.

Find the utility statements and organize them in some method that makes sense.

Know when you started your business if you only started it in the current tax year that you are working on.

Disclaimer:  I am not a tax accountant.  Please consultant with your tax accountant for the advice that is relevant to where you live and your situation.

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