Note: I am not a tax professional and make no claims as to my knowledge of tax law. Please use this information as a guideline and talk to your local IRS office or tax expert as to the current rules and regulations. However, this will give you a head start on what types of records you need to keep to make it much easier for you at tax time.
Because you are an independent representative, you are essentially self-employed. Avon does not withhold taxes from your earnings, and you are responsible for your tax reporting.
But it’s not as scary as it might seem. Record keeping for your business doesn’t have to be difficult. And keeping good records helps ensure that you will benefit from every tax deduction possible.
Bottom line… keep copies of everything. You never know what will help with your taxes, but here’s a short list of items you definitely want to keep:
- Copies of your Avon invoices. These are very important because they detail all your products, demos, samples, supplies, etc.
- Receipts for any supplies you use in your business, such as ink, paper, etc.
- Receipts for lunches, dinners, coffee, etc., when meeting with customers, prospects, etc.
- Airline tickets, hotel expenses, meals, etc., if you attend any out-of-town functions.
- Receipts for any paid training, such as online coaching classes, college classes, etc.
- Definitely keep track of your mileage when making deliveries or anything relating to your business, such as meetings, trips to the post office, etc.
- Any office furniture or equipment needed for your home office.
- Utilities from your home. You may be able to deduct a portion of them if using part of your house as a home office – see your tax expert for help with this.
- Your Mortgage/rent – same as above. You may be able to deduct a portion – see your tax expert for help.
- Taxes and insurance on your home – same as above. You may be able to deduct a portion – see your tax expert for help.
- Anything else that pertains to expenses incurred while running your business. If you’re not sure, but think it may be deductible, keep it. Your tax person will be able to tell you, and it could make a difference in your tax liability.
Good record keeping is the best thing you can do to ensure that you receive the benefit of every tax deduction you have coming to you.
I have created a Document to help you keep track of your Business Records.
Also, keep it simple. I keep all my records in an Avon box. I have one labeled for each year. They’re easy to stack and keep track of your records for the year.
Be sure to keep those boxes, and your records, for seven years.
Questions Most Asked About Avon Representatives And Taxes
Should I file an income tax return?
Since you are self-employed, you must file a federal tax return and pay self-employment tax if you had net earnings (that’s after your business expenses have been deducted) of $400 or more from self-employment throughout the year.
Note: Each individual’s circumstances will vary, and you will want to consult with your local IRS office or a tax expert.
If I have to file an income tax return, does that mean I have to pay income tax on my Avon earnings?
Generally, yes… but not necessarily. Even though you may be required to file an income tax return, you will not be required to pay income tax unless your income (after all your business deductions) reaches certain minimum levels.
Everyone’s situation is different, so having to file an income tax return does not necessarily mean you have to pay taxes.
How can I figure out my earnings from my Avon Business?
Your earnings are the amount you sell to your customers, minus the amount you paid Avon for the merchandise, minus all your business deductions. You will also need to include the value of any prizes, awards, or even trips that you earned from Avon.
What information does Avon provide for tax-reporting purposes?
For many Representatives, Avon is not required to provide any tax information. If an Avon Representative purchases $5,000 or more of merchandise for resale in a single year, Avon is required to supply your name, address and Social Security Number to the IRS. This is done on a Form 1099.
In fact, Avon only informs the IRS only that you have purchased $5,000 or more in products from Avon. It’s just a check box on the Form 1099. They do not specify a dollar amount unless requested by the IRS.
The amount Avon includes in the $5,000 purchased for resale does not include demonstration products, sales tools or other items shown on your invoice as “No-Discount Items.” They also do not include any item that has been returned to Avon.
Additionally, when prizes, awards, or any other bonuses you receive from Avon total $600 or more annually, Avon must by law file an information return (Form 1099) with the IRS, and also send a copy to you for your records.
Avon also does not report your earnings. Only you can properly determine them. Avon has no idea exactly what price you sold those items to your customer.
As mentioned above, I am not a tax expert. Please be sure to consult with one to learn what is needed specifically for your business.
“It makes no sense at all to cut down on sales and earnings because of the fear of taxes. Your Avon earnings will always come out ahead.” ~H. Block of H&R Block
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By Lynn Huber
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