Someone Posted Something That Made Me Think...(We Were Talking About

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Discussion Overview

The thread centers around participants' experiences and thoughts regarding tax considerations for their earnings as Pampered Chef consultants. Discussions include how much to set aside for taxes, the impact of expenses on tax obligations, and personal strategies for managing tax-related finances.

Discussion Character

  • Anecdotal
  • Opinion-based

Main Points Raised

  • One participant, identifying as a consultant, raises a question about how much to set aside for taxes, noting the potential for write-offs.
  • Another participant shares their experience from a family business, suggesting setting aside 15% for taxes, which has worked well for them.
  • One participant mentions putting away 30% for taxes due to various obligations, including Social Security.
  • Another participant states they set aside 25% after expenses for tax purposes.
  • One participant questions the implications of claiming a loss with Pampered Chef and considers consulting tax professionals.
  • Another participant mentions that they typically break even and do not set aside anything for taxes.
  • One participant notes that first-year investments might lead to breaking even or showing a loss, suggesting a future plan to set aside 30-33% for taxes.

Areas of Agreement / Disagreement

Views differ on the percentage to set aside for taxes, with some participants suggesting amounts ranging from 15% to 30%. There is no clear consensus on the best approach to managing tax obligations.

Contextual Notes

Participants share personal experiences and strategies related to tax management as independent consultants, reflecting a variety of approaches based on individual circumstances.

Who May Find This Useful

Consultants looking for insights into managing tax obligations and those interested in personal experiences related to tax strategies within the Pampered Chef community.

babywings76
babywings76
Gold Member
Messages
7,266
Someone posted something that made me think...(We were talking about whether or not to make a purchase on my own that will boost my sales and I'll earn the commission on, or just pay the discounted price as a consultant) She mentioned needing to remember that we have to pay taxes on our commissions.

So....How much do you set aside to pay taxes on what you've earned with PC? I thought that with all the write offs, postage, gas, some groceries, supplies, etc, that I wouldn't really end up paying taxes. Is there a certain percentage that we should be expecting to pay? Is there a way to figure it out before tax time?
 
Re: taxesI'm new to PC so I can't say about PC specifically, but my husband has a small business, now incorporated but a sole proprietorship for many years, so I have some experience with small business taxes.

We have a separate bank account just for taxes and put 15% in that account. At the end of the year, that covers the taxes (corporate, sales tax, etc. but not personal - they're taken out of salary now) and some years we have a little left over. It's not a bad habit to get into now. If you don't end up using it to pay taxes, you have a nice little savings at the end of the year.
 
Re: taxesI work for myself, teaching horseback riding. I was told by someone cant remember who to put 30% away b/c you have to pay Tax, Social Security and some other thing... So thats what I've been doing this year. In the past my expenses always were more then I made so my tax was next to nothing but this year Thank G-d we are doing better. Also when you own your own buisness you need to turn a profit in a certain amount of years or they consider it a hobby!!! I will probably find myself an accountant/CPA for this or next year b/c its getting to complicated for me!
 
Re: taxesI set aside 25% after expenses.
 
Re: taxeswhat if you claim a loss with PC? I was thinking I might not have to pay in. Guess it is time to call the tax people.
 
Re: taxes
pamperedpnina said:
I work for myself, teaching horseback riding. I was told by someone cant remember who to put 30% away b/c you have to pay Tax, Social Security and some other thing... So thats what I've been doing this year. In the past my expenses always were more then I made so my tax was next to nothing but this year Thank G-d we are doing better. Also when you own your own buisness you need to turn a profit in a certain amount of years or they consider it a hobby!!! I will probably find myself an accountant/CPA for this or next year b/c its getting to complicated for me!
Click to expand...

The theory that: if you claim losses three out of five years, the IRS will assume your business is a hobby.... is a myth. The truth is that if you have income in 3 out of 5 years, you are a business.
 
Re: taxesI file jointly w/ my dh and I usually end up breaking even after it's all said and done, I don't set anything aside for taxes.
 
Re: taxesSince it's your first year and you have invested money to try and start your business, there's a good chance that you will even out and break even or maybe even show a loss.

You will need to do a Schedule C with your tax return. To get a copy of the Schedule C and instructions on what type of info you will need to provide the IRS (or the person who prepares your taxes) click here.

I agree that in the future you should plan to put back 30-33% in a seperate account. If you need it, then you don't have to panic come tax time. If you don't need all of it, you have yourself a nice little savings account that you can use for kit enhancement month -or- doing something like taking a family vacation. ;)
 

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