Am I Missing Out on Tax Deductions for My PC Business?

[ChefJeniLobdell]

I have been back and forth with staying with my PC business. After speaking with my accountant, I am really bummed out. I earned $4,556.00 this year, had $3,102.00 in write offs and had a net profit of $1,454.00. He said I paid approximately $500.00 in taxes on that $1,454.00!

What am I doing wrong?

I enjoy PC, but am afraid that I spend to much time on this business and am not making enough.

HELP!!!

 

[wadesgirl]

I know I had alot of write off's last year but you have to realize that is the part of any business. You need to have supplies, products, etc. I also know that since I claimed a home office, there were some expenses that I had to pay anyway if I had this business or not. But I do know I did alot of things with the money I made last year. I spent some on conference which was a great experience and a tax write off. I helped to pay for cc payments, paid cash for Christmas presents, etc. So I know I made some money some where!

 

[ChefBeckyD]

Consistently doing 3-2-1 is the best thing I can tell you for being more productive. My sales have more than doubled since I started doing this, and my bookings have increased 3-fold!

Are you in a location where you can go to one of the Regional Training Days? Part of the focus for that event is being successful with 3-2-1. That may give you what you need to be successful!

 

[ChefJeniLobdell]

I totally understand no matter what business I'm in I'll have business expenses. I just wonder with the amount of hours spent on shows, etc. if it is really worth the money I'll make in the end. If a cooking show has great sales, then the commision is great, but then how much will I loose in taxes, paperwork, etc.? Not getting down on PC at all. I think it is a wonderful company.

Unfortunately no Regional Training Days near us. I went to conference last year and loved it. After write offs and taxes last year I made $900.00. I know if I work at it I'll get busier, but how do I actually keep more of that money I earn??

I don't know if I figured this out correctly or not. Last year my total sales for shows (not including individual and online orders) was $17,431.71, I held 37 shows (cooking and catalog) which means my show average was $471.13. After taxes and expenses I made approximately $1,000.00. Does this mean I made $27.03 per show????

 

[ChefBeckyD]

I'm trying to think of what I do to cut down on expenses for shows.

I don't make a lot of print copies - I mostly use B & W.
I stock up on supplies like host folders and manila folders at Back to School Sales, when they are the cheapest.
I write off everything I can



Also - don't spend much time on the business trying to make creative flyers, etc.....use what PC provides. The price is great on all of the flyers, etc...on Supply Order.
Don't keep a big inventory of supplies either. This may come from several years as a buyer in the retail industry, but I don't believe in stocking up on supplies when the price isn't going to change. I don't have a large backstock of invitations, catalogs, order forms, etc.....I take inventory of what I have, project what I am going to need for the coming month, and order just what I need. I can tell by peoples "Going out of Business" Sales, and "I need to make room for new stuff" sales, that alot of people buy way too many supplies to have on hand. Keep a 6 weeks supply on hand, and that's it.

 

[Cindycooks]

I so agree with Becky on people buying way too much that they do not need. I'm amazed at the people posting things for sale on here when they "Go out of Business"....all the different stickers, buttons, postcards....they just add up!!! I've found that for advertising all I need is my catalog in my catalog tote and 3-2-1. Yes a few stickers are nice but you can go way overboard! PC provides us with all we need and tells us to keep it simple!

 

[ameliasurf]

with me, i am using reuseable packets. Whatever i use for shows, i put into a plastic see thru page cover and try to reuse it as much as possible for that whole month! also i try to email as much as possible. i email hosts the host specials and the guest special for them to print out and share with their guests when they are doing calls. also i always try to keep my purchasing to a minium. i try to not stock pile paper work. also there are so many Former Pampered Chef consultants that have paper work left over... if you can get in touch with one of these people a strike a deal with them for their paper work, you can get it at a discounted price or even cost of shipping from what i have seen here on the marketplace. also get together with a cluster mate and split the shipping costs and order things together!

but i think it is all about keeping it simple. because simple pays off in the end to where you are putting more money in your pocket!

 

[ChefJeniLobdell]

Thanks everyone. I love the business, but just need it to make me more $$ in the end. Does the amount of taxes I pay sound right to you??

 

[beepampered]

My husband goes to work and doesn't deduct a dime for his mileage - I do. I count that as added money in my pocket since I have a deduction and he doesn't.

Also, I feed my family by trying new recipes. I'd have to buy groceries no matter what. It's nice that sometimes I get to deduct those costs.

I agree that, per hour spent, I'm not making as much as I would like. But where else can I have this flexibility?

 

[legacypc46]

Here's a couple quick thoughts (hope they help):

First off, what everyone else has said!

Leverage your write-offs.
- If you have a personal errand, do it in conjunction with a business errand. (I try to drive as little as possible that is not business related.) I'm not advocating abusing your authorized deductions, but don't make a full-blown separate trip if you don't have to.
-Intentionally test the recipes in the new SBs and cookbooks (and dig into the old ones too); you'll feed your family while being able to deduct the groceries. (I know you can deduct the groceries for each recipe at least once...someone else correct me if you know for certain it's more.)
- If you meet with a host and have coffee or a meal, you can deduct 50% of what you pay for yourself. (This does create an actual expense, but it's a nice way to treat yourself without paying full price.)

Focus on increasing your cooking show average.
- Give your host coaching a review...it really is the foundation for a good show (I believe so anyway).
- Periodically review the product training on CC; you'll be surprised at what you've forgotten or didn't know.
- Take at least one teleclass a week...if you think your business is worth the one hour investment. (I honestly don't mean that harshly, just putting it into perspective)
- Take a look at what you take to your shows. For example, if you have the stainless steel bowls, why take the batter bowl? It doesn't matter if you prefer the batter bowl, the S/S is lighter, easier to pack, and a much higher sale. (Besides, once you get used to using a S/S bowl at your shows, you won't want to go back to the batter bowl...IMHO. I used to think I hated the S/S bowl...now I'll hurt you if you try to take it away from me)
- Identify what you already do well, and do more of it. (You'll get more benefit by doing more of what you're good at, than trying to fix so-called deficiencies.)

Seek out consultants who are achieving what you want and copy, er learn from, them...just don't do anything that isn't your style. (I have to confess that when I first started this business and joined Chef Success, I made a point of always reading certain people's posts. I had so many a-ha moments that way.)

These are just some quick thoughts...hope they help. (Apologies if they come across as lecturing...old habit.)

 

[smile10308]

Hey I think I know just what you need. There is a teleconference Tuesday April 22nd at noon eastern time.

I think it will be a good one, heres what they sent me...

"Income Minus Expenses =Profit "

You're in business to make money, and a whole lot of it.

Do you ever feel like you make money, but you don't know where it goes?
Do you stress about getting all your deductions ready for tax time?
Have you ever wished that you felt empowered around money, instead of inflated?
Do you ever find yourself wishing someone in your organization would explain to how money works in your business?
Are you a Leader in your organization and know that your team needs training on money management in business?
Income Minus Expenses =Profit is going to be a powerful event for you. LeAnne Ozaine-Smith is the resident financial guru here at Direct Selling Leaders.

LeAnne's financial workshops are widely sought in the Direct Selling community because of her charismatic and theatrical teaching style. She has a passion to empower people with thoughts, practices, and easy systems in the area of money.

Income Minus Expenses =Prof covers the 20% you must know about money in your business - leaving the other 80% to your accountant. You'll dive deep into a simple system for managing your income, expenses, and how to sparkle at tax time.

http://www.directsellingleaders.com/expert_call.html

And remember - even if you can't make the call "live" you will get a link to an online recording!

 

[ChefBeckyD]

Here's a couple quick thoughts (hope they help):

First off, what everyone else has said!

Leverage your write-offs.
- If you have a personal errand, do it in conjunction with a business errand. (I try to drive as little as possible that is not business related.) I'm not advocating abusing your authorized deductions, but don't make a full-blown separate trip if you don't have to.
-Intentionally test the recipes in the new SBs and cookbooks (and dig into the old ones too); you'll feed your family while being able to deduct the groceries. (I know you can deduct the groceries for each recipe at least once...someone else correct me if you know for certain it's more.)
- If you meet with a host and have coffee or a meal, you can deduct 50% of what you pay for yourself. (This does create an actual expense, but it's a nice way to treat yourself without paying full price.)

Focus on increasing your cooking show average.
- Give your host coaching a review...it really is the foundation for a good show (I believe so anyway).
- Periodically review the product training on CC; you'll be surprised at what you've forgotten or didn't know.
- Take at least one teleclass a week...if you think your business is worth the one hour investment. (I honestly don't mean that harshly, just putting it into perspective)
- Take a look at what you take to your shows. For example, if you have the stainless steel bowls, why take the batter bowl? It doesn't matter if you prefer the batter bowl, the S/S is lighter, easier to pack, and a much higher sale. (Besides, once you get used to using a S/S bowl at your shows, you won't want to go back to the batter bowl...IMHO. I used to think I hated the S/S bowl...now I'll hurt you if you try to take it away from me)
- Identify what you already do well, and do more of it. (You'll get more benefit by doing more of what you're good at, than trying to fix so-called deficiencies.)

Seek out consultants who are achieving what you want and copy, er learn from, them...just don't do anything that isn't your style. (I have to confess that when I first started this business and joined Chef Success, I made a point of always reading certain people's posts. I had so many a-ha moments that way.)

These are just some quick thoughts...hope they help. (Apologies if they come across as lecturing...old habit.)

Thanks! What a great post!

The part I highlighted is something that my director has taught on this past year - and has really helped me! I used to spend so much time trying to get better at the administrative end of my business. I hate administration! What I'm good at is connecting with people, and the show! So, now, my office will never be perfectly organized, and I will probably always have stacks of filing to do - but I am concentrating on making a great show experience for my hosts and guests....and it seems to be working! Someday, when I'm an ED, I'll hire someone with administratives skills to do my office work!

 

[legacypc46]

Someday, when I'm an ED, I'll hire someone with administratives skills to do my office work!

I love this!

My desk is a true disaster zone...made worse by the fact I have to have things out and available (versus in drawers). Like you, I'm much better at the relationship thing...I've given up on ever being an organization diva.

 

[jbachen]

Hey I think I know just what you need. There is a teleconference Tuesday April 22nd at noon eastern time.

I think it will be a good one, heres what they sent me...

"Income Minus Expenses =Profit "

You're in business to make money, and a whole lot of it.

Do you ever feel like you make money, but you don't know where it goes?
Do you stress about getting all your deductions ready for tax time?
Have you ever wished that you felt empowered around money, instead of inflated?
Do you ever find yourself wishing someone in your organization would explain to how money works in your business?
Are you a Leader in your organization and know that your team needs training on money management in business?
Income Minus Expenses =Profit is going to be a powerful event for you. LeAnne Ozaine-Smith is the resident financial guru here at Direct Selling Leaders.

LeAnne's financial workshops are widely sought in the Direct Selling community because of her charismatic and theatrical teaching style. She has a passion to empower people with thoughts, practices, and easy systems in the area of money.

Income Minus Expenses =Prof covers the 20% you must know about money in your business - leaving the other 80% to your accountant. You'll dive deep into a simple system for managing your income, expenses, and how to sparkle at tax time.

http://www.directsellingleaders.com/expert_call.html

And remember - even if you can't make the call "live" you will get a link to an online recording!

I signed up for this, too... I am really looking forward to it!

 

[chefann]

Another little thing I've done to improve my productivity is having generic host packs. I use a non-specific OOF so I don't have to throw out expired ones, and I don't have to worry about having the right forms in the folders. I try to put specials (printed B/W on colored paper) into 2 packs before each show, but if I don't have a chance, I mail them to the host. I also make up a bunch of host packs at once - like 10-15. When you set up an assembly line on the table, you can put them together faster; and then just grab a couple when you need them.

 

[pjpamchef]

I'm not an accountant, but I think $500 in taxes seems like a lot! I've been doing this for over 10 years and usually end up in the hole, (which means I have written everything off!) There have been years I have not turned in all my expenses just to show a profit.(I still keep all the receipts just in case!) Keep track of everything and take advantage of all the things mentioned above, especially trying out new recipes for your family!

 

[ChefBeckyD]

Another little thing I've done to improve my productivity is having generic host packs. I use a non-specific OOF so I don't have to throw out expired ones, and I don't have to worry about having the right forms in the folders. I try to put specials (printed B/W on colored paper) into 2 packs before each show, but if I don't have a chance, I mail them to the host. I also make up a bunch of host packs at once - like 10-15. When you set up an assembly line on the table, you can put them together faster; and then just grab a couple when you need them.

This is exactly what I do too!

 

[pamperedlinda]

This is exactly what I do too!

Me too, makes life so much easier!

 

[pamperedlinda]

I have been back and forth with staying with my PC business. After speaking with my accountant, I am really bummed out. I earned $4,556.00 this year, had $3,102.00 in write offs and had a net profit of $1,454.00. He said I paid approximately $500.00 in taxes on that $1,454.00!

What am I doing wrong?

I enjoy PC, but am afraid that I spend to much time on this business and am not making enough.

HELP!!!

You might want to try a different accountant - that sounds a little off.

This year, just to see how much PC helps us on our taxes DH entered everything except my numbers. We were getting back $600. Then he entered all of my PC stuff - we are now getting back almost $6000! He is VERY supportive of my PC biz now!

 

[ChefBeckyD]

You might want to try a different accountant - that sounds a little off.

This year, just to see how much PC helps us on our taxes DH entered everything except my numbers. We were getting back $600. Then he entered all of my PC stuff - we are now getting back almost $6000! He is VERY supportive of my PC biz now!

I did this too with our taxes on Turbotax! It was fun to see the $$ go up as I entered all of my PC stuff!

 

[heather223]

Me too, makes life so much easier!

Me too and it makes it easier and more cost efficient when I copy B/W on colored paper. :chef:

 

[ChefJeniLobdell]

You guys are awesome. Thanks so much for all the great ideas. I will definitely have to catch that teleconference from online.

I like the idea of the generic outside order form. Less waste when you don't use all the specific monthly outside order forms.

Definitely need to take a look at what I'm bringing to my shows. This makes so much sense.

I need to remember to try more of the PC recipes so I can write some of my grocery bill off. I am a cookbook :chef: fanatic and have so many that I never get through them all. Normally make the same things, I need to branch out.

Next month I'm going to only start offering one or two specific recipes for a few months. That way I can spend more time talking to the guests, than paying attention so I don't mess the recipe up.

Haven't really been taking advantage of the teleclasses, need to do that.

Thanks again:blushing:

 

[chefann]

Oh- absolutely do the same recipe all month! If you get a killer recipe in your repertoire, people won't even care if you do it at two shows in a row with the same group. Heck, I've had people ask for "that pasta dish we made at so-and-so's party" for their show (the Creamy One Pot Pasta). It's not necessarily a money-saving tip, but it's a simplification tip!

 

[ChefJeniLobdell]

I can't find "Income Minus Expenses =Profit " in the teleclass lists. Anyone know where/why I can't access it?

Thanks in advance for your help.

 

[chefann]

It's not a PC teleclass, it's from someplace else.

 

[baychef]

What an awesome thread!!!

I live in New York state (aka...tax everything except the air you breath...and they are probably taxing that too somehow!!!).
With my full time job and PC, I have to pay in this year (thank God we are getting a rebate check).

The amount you paid in could NOT have been just on your PC income. You do need to go to someone different. Personally, I am a Turbotax person. I invest in the Home/Business (Federal and State) version and for $70 I can get my taxes done. The e-filing cost extra, but when you procrastinate like I do...it's the price ya gotta pay!!

The write offs I have are what I would PAY for out of my pocket if I was not doing PC:

Food for recipes

Mileage to stores, etc.

The laptop I bought

the internet connection

all of the PC products I earned (that right there would bankrupt me!!! )
we can write off part of the trip we earn (do you know how many people turn green with envy when I tell them my only expenses were my souveniers and drinks?!?!)

earned a TPC ring? I wrote mine off. Since I will not be attending many formal "rooster"tail parties, I choose to wear my ring to my parties to show my bling off!!

There are more write offs depending on your family situations but you certainly need to review the tax information provided on CC and get to someone that knows your business. You could ammend your tax return if the right person catches anything you may have missed.

I have to take some of the wonderful cost saving ideas learned from here. Thanks everyone!

 

[ChefBeckyD]

What an awesome thread!!!

I live in New York state (aka...tax everything except the air you breath...and they are probably taxing that too somehow!!!).
With my full time job and PC, I have to pay in this year (thank God we are getting a rebate check).

The amount you paid in could NOT have been just on your PC income. You do need to go to someone different. Personally, I am a Turbotax person. I invest in the Home/Business (Federal and State) version and for $70 I can get my taxes done. The e-filing cost extra, but when you procrastinate like I do...it's the price ya gotta pay!!

The write offs I have are what I would PAY for out of my pocket if I was not doing PC:

Food for recipes

Mileage to stores, etc.

The laptop I bought

the internet connection

all of the PC products I earned (that right there would bankrupt me!!! )
we can write off part of the trip we earn (do you know how many people turn green with envy when I tell them my only expenses were my souveniers and drinks?!?!)

earned a TPC ring? I wrote mine off. Since I will not be attending many formal "rooster"tail parties, I choose to wear my ring to my parties to show my bling off!!

There are more write offs depending on your family situations but you certainly need to review the tax information provided on CC and get to someone that knows your business. You could ammend your tax return if the right person catches anything you may have missed.

I have to take some of the wonderful cost saving ideas learned from here. Thanks everyone!

I am a TurboTax person too - but my director has an accountant who specializes in helping people with direct selling businesses like ours. I would find a different accountant.

 

[ChefJeniLobdell]

Unfortunately, my husband owns an automotive repair shop and our taxes for personal are filed with the same accountant who handles are business account. Changing to another accountant is not an option.

 

[legacypc46]

Then suggest your accountant expand his expertise. (Ooooh, I know that sounded b****y, but this is your family's money he's handling.)

I initially went to an H&R rep who the desk clerk said routinely dealt with direct sales reps. I ended up getting all kinds of red flags from the rep. She didn't seem to understand this is a business for me and seemed to almost resent the deductions we are legitimately entitled to. I honestly felt uncomfortable and left (also due to the way HR charges their fees).

(In the end, I found a fabulous accountant. She knew what was valid and what wasn't. If something was questionable, she listened to my rationale and provided feedback. If something was truly questionable, she looked it up versus making an assumption.)

 

[smile10308]

I listened in on the Income - Expenses = Profits and there was some good info. In case you wanted to listen in I have attached the recording.

http://clicks.aweber.com/y/ct/?l=FM5O8&m=1aYtTatMesq039&b=dCr7NO2FdrjpJeZzLaQ5Dw

 

[sfdavis918]

Unfortunately, my husband owns an automotive repair shop and our taxes for personal are filed with the same accountant who handles are business account. Changing to another accountant is not an option.

JMO, but I think that your accountant was not very helpful by telling you what he did and not explaining it further. I am a firm believer that we hire others to HELP us with things that we are not expert in. I am also a firm believer in not placing blind faith in those people. I am in no way saying that you should find a new accountant, but does he make you feel like you should just trust him, or does he take the time to explain things so that you understand? Does he truly believe that he is working for you, or does he seem to convey the feeling that he is doing you a favor by letting you come to him for his assistance?

Ultimately you and your husband need to be responsible for you finances and in turn, should understand everything that is going on with them, including how much you pay in taxes and why. I'm not saying you should be able to complete them yourselves, but just understand them when you look at the final returns.

Sorry, I don't mean to be coming off as harsh. I just think that service people should remember that YOU hired THEM and they are working for you. Find someone with the heart of a teacher (or ask your current person to teach you) so that you can feel confident about the work they do for you.

 

[ChefJeniLobdell]

Thanks for posting that Jodi. I listened for a while but the volume was kind of low. Definitely gives you some good information to remember and think about.

 

[missyciccolella]

I'm a little late in responding to this, but I hope your income is not reflecting products earned. We can write off products earned in sell-a-thons b/c we use to further our business and we use them at shows! I've done PC for 4 years and rarely make a profit according to taxes. I stay within regs, and my accountant questions me when I don't deduct everything I'm entitled to (home square footage, mileage, products, etc). My Exec even writes off earned trips b/c she talks so much business on them.

I agree what you paid seems high, but do you file jointly w/spouse? do you have kids? do you work f/t? does this include state taxes? there are many factors to taxes and I'm so bad with that stuff!

 

[jbdowd0798]

I did our own taxes this year (like every year but this is the first with PC) and it turned out ok. I didn't make money this year with everything that got written off but no biggie. My taxes turned out fine and no problems. Good luck all. I just look forward to the stimulus money next week! hee hee

 

[ChefJeniLobdell]

Missy, I file jointly with spouse and have two kids. Work full time at my husbands shop. Doesn't include state sales tax. I left a message for my accountant to ask some questions on the rate at which we pay taxes and what other items cheffers have mentioned I could write off.

Thanks for your help everybody!

 

[raebates]

This was the first year I did what Missy is talking about. It never occurred to me that the products I earned, which are reflected in the "other income" on my 1099, are then business expenses. For example:

$800 (Other income on 1099)
- 300 (Conference Cash, part of which will be deducted in travel expenses)
$500 (Products earned in SAT and other incentives which were used in my business and, therefore, a deductible expense)