Picture this: you’re a direct seller or multi-level marketer, but you’ve received some conflicting information about what expenses you can write off as direct seller tax deductions… and now? You’re confused and looking for answers…
Then you’re in the right place! I work with small business owners and soloproneurs (including many direct sellers), and today I want to share some information to help you out!
Because I know that when you take the time to learn all about your business tax deductions, you’ll likely benefit to the tune of thousands a year–and who doesn’t want that?
But, first things first…
You’re going to see there are several items on the list below marked with an asterisk. As you notice this, keep in mind that these expenses are more complex tax deductions that will require a little extra work on your part.
Essentially, if you choose to take the deductions with an asterisk, make sure that you understand all the legal requirements of these deductions, and keep very precise records to safeguard these deductions during an audit. (If you have questions about a specific deduction for your business or need help figuring out your specific tax situation, I offer thirty-minute and one-hour consultations to help you get the clarity you need.)
So, let’s get going with a helpful list of the business expenses that can be written off in the direct marketing industry.
List of Direct Seller Tax Deductions:
- Professional dues and licenses (such as membership fees to your Chamber of Commerce or a city business license)
- Professional subscriptions
- Inventory you sell to customers within the calendar year *
- Samples of inventory *
- If you have a website, your blog theme and purchased plug-ins
- Your hosting (such as BlueHost)
- Your domain
- Any web design services or maintenance
- Professional photography for promotional materials (like a headshot or fitness shots)
- Professional videography for promotional materials or training you offer clients
- Professional conferences and workshops admission (local and far)
- Lodging, transportation & travel costs to professional events *
- Graphic design
- Purchased fonts and stock photography for website or marketing materials
- Food (for hosted gatherings, selling parties, open houses, etc.) *
- Cell phone
- Continued education
- Editing of photos and videography for marketing or educational materials you put out to the public *
- Virtual assistants
- 1099 subcontractor staff
- Payroll processing (need a recommendation? try Gusto Payroll – more here)
- Interest fees
- Bank fees
- Professional e-courses that will elevate your skills for running and growing your business
- Giveaways *
- Materials for photos & film shoots (job materials) *
- Commissions paid out
- Bookkeeping software (such as QuickBooks Onlineor FreshBooks)
- +25 more direct seller tax deductions (download your beautiful, free checklist to get access to these additional 25 deductions below)
To get the complete tax deduction list with 25 more direct seller tax deductions, make sure you download your free checklist here:
A common question…
Now, you may be thinking “Hey, what about the products I use to show my clients this really works? Where are they on this list?” That’s a very common question and speaks to a larger public misconception.
Unfortunately, your use of products doesn’t count as a tax deduction. Hopefully if you’re selling something like a workout drink or makeup line, you believe in the product and love it enough to be using it yourself. But, your personal use of it does not justify it as a business expense.
That’s because Section 262 of the Internal Revenue Code explicitly lays out that business owners and sole proprietorships are not allowed to take any business deductions for personal, living & family expenses.
If you sell inventory of workout drinks (or makeup, etc.), that’s a business expense. Or if you buy a sample kit that allows you to give potential clients free, small samples (or perform a free makeover), that’s a business expense. But actual product you use yourself? That isn’t a deduction.
Now Over To You…
Do you have any questions or thoughts about these direct seller tax deductions? Share your thoughts and questions in the comments below!