Find solution
A business that is like Avon?

Avon business and tax deductions?

  • So I've heard that with at home business like avon, mary kay etc you are able to claim some expenses on your year end income tax if you make over 400 dollars a year? So I've heard they things you can claim are business supplies/office supplies that you would need, gas/mileage, if you have a home office a portion of your phone/internet/heat/light/ and mortgage if you have one..is this true?? how do you know what % you are allowed to claim? and what type of proof or documentation do you keep? Like if you put $40 bucks of gas in your car to go pick up we will say a $10 stamp for your business do you save the 40 dollar gas receipt and the 10 dollar stamp receipt? as far as house utilities for claiming those expenses, do you just save each and every phone/internet/light bill??? How do you document for the mortgage? Now those seem like lot's of expenses for a small small business, what happens if your expenses are more than your income when it comes time to file taxes?? Do some people have these side businesses just for the tax benefits?

  • Answer:

    For mileage, you don't claim the gas receipt. To get ANY deduction at all, you need to keep a log through the year of ALL of the miles driven. On a daily basis you need to show what was business, personal and commuting, and you only take the portion of your documented expenses proportional to just your business miles. You have an option of a flat rate per mile for your business miles, but you still need the log. For a home office deduction, you need to be able to show an auditor that you use part of your home REGULARLY and EXCLUSIVELY for business - then you can take a % of your utilities, and your rent or depreciation on your home's value, that's the % of your house used only for business. You don't get a % of your mortgage. The depreciation is for the house itself. Business and office supplies for your business, yes they're deductible. If you consistently lose money on this business and can't convince the auditor your expenses are all legit and that you're trying to have a profitable business, they'll go back and disallow anything you have claimed.

NYCchick... at Yahoo! Answers Visit the source

Was this solution helpful to you?

Other answers

The short answer is: you're wasting your time: it's not worth it. Why would you incur a dollar of expense to save 25 cents in tax? You'd be better off not to incur the expenses -- you'd be 75 cents ahead of the game. You cannot deduct personal expenses that you would normally incur. The long answer is: -- it doesn't matter how much or little your self-employment income is. Even if it's only $1, you still can claim business expenses. -- if the expense is 100% business, like the stamp, you save the receipt and deduct the amount of the expense. -- if the expense is both personal and business, you have to calculate the portion that is business related. -- for auto expenses, you keep track of the total distance travelled in the year, the total distance for business, and the total auto expense. You do this by keeping a log of all your business trips. If you go 25,000 km in a year, and 5,000 was for business, you can deduct 20% of your auto expenses. -- for house expenses, you calculate how much of the home was used for your business. It must be a separate room used solely for the business. If your house is 1500 sq ft, and the room is 150 sq ft, you can deduct 10% of your household expenses (like utilities, property tax, mortgage interest, etc.) In every case, you have to be able to prove you incurred the expenses, so you have to keep all your receipts. As you can see, the system is designed so you can claim only business expenses, and not personal expenses. There is no case where a "side business" can be a tax benefit. The only time you can benefit is when the business actually makes money, causing you to pay more tax. Of course, the extra tax is worth it, because there's still money left over for you.

Fred S

What the other two said. Except Judy is not correct for Canada regarding business use of home. The legislation says you get to claim business use of home if your home is your principal place of business, OR if you use it on a regular and continuing basis to meet with clients. If you have no other place of business, then your home can be your principal place of business. These things are covered, more or less, in CRA's book "Business and Professional Income," available here: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/menu-eng.html

George

Related Q & A:

Just Added Q & A:

Find solution

For every problem there is a solution! Proved by Solucija.

  • Got an issue and looking for advice?

  • Ask Solucija to search every corner of the Web for help.

  • Get workable solutions and helpful tips in a moment.

Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.