Organizing Receipts: What Categories Should I Use?

[kisrae]

Im seperateing my reciepts and was wondering what catagories I shoul have them in. So far I have Buis. Expenses, ad/donations, postages, groceries and I'm unsure of what else.
Any help is welcome and appreicated.

 

[lkprescott]

Im seperateing my reciepts and was wondering what catagories I shoul have them in. So far I have Buis. Expenses, ad/donations, postages, groceries and I'm unsure of what else.
Any help is welcome and appreicated.

Common expense categories:

Bank Fees/Charges
Subscriptions/Dues
Postage/Shipping
Mileage/travel (including tolls if applicable)
Food bought for demos
Advertising
Charitable Donations
Insurance
Office Supplies (including biz cards, letterhead, pamphlets, etc)
Printing (if you have a printing company print anything for you)
Computer Expenses (software you may have purchased for the business or repairs to a biz only computer or a biz only computer purchase)


I also am tracking the shipping I pay for as a compliment/incentive to some hosts and guests.

I also track things I purchase from PC for future demo purposes.

And if you do any kind of recruiting that entails taking a possible recruit to lunch or coffee say, to discuss business that's also an expense you want to track though the IRS only let's you deduct 50% of it, every little bit helps.

HTH!

 

[kisrae]

And if you do any kind of recruiting that entails taking a possible recruit to lunch or coffee say, to discuss business that's also an expense you want to track though the IRS only let's you deduct 50% of it, every little bit helps.

Speeking of deductions, How much of the expenses will be deducted? Is it only 50% or 100%? Im not really sure how it goes. I'm sure I'm in a DEEP loss.

 

[lkprescott]

Speeking of deductions, How much of the expenses will be deducted? Is it only 50% or 100%? Im not really sure how it goes. I'm sure I'm in a DEEP loss.

Depends on the deduction. Most are 100% deductible... some (like big ticket items) need to be depreciated over a number of years... and some like meals & entertainment are usually only 50% deductible...

The rest you'd need to seek advice of a CPA to see what's allowed.

I'll have a slight loss, since I'm still working on my initial ROI... but it's close which makes me hopeful that I can eventually make enough to cover my expenses AND make a profit to put in my pocket.

Here's a link to a GREAT resource of information, straight from the horse's mouth: Small Business and Self-Employed One-Stop Resource

There's links on that site that will help figure out expenses and more as a self-employed individual (which you are as an independent consultant for PC).

HTH

 

[PamperedTammy]

HOW TO ORGANIZE YOUR BUSINESS EXPENSES
Written by Lydia Martin, Senior Director

For those of you who haven’t used your Pampered Partner program to keep track of personal business expenses, what are you waiting for? It is so easy to do, once you have it set up. To help you get started, here is the list of categories that I use. I highly recommend that you use a professional tax advisor who is knowledgeable about home-based business deductions. If you have always done your own taxes and don’t like the idea of paying someone else, I can tell you from personal experience that it is worth it! My tax advisor helped me think of most things on this list. Also – you will have even more deductions if you can claim a “home office”. With a home office deduction you can claim a percentage of all your utilities and home improvements. Ask you tax advisor for more information. That has saved us a bundle! I will put in my own disclaimer that these categories are listed as tax-deductions according to my knowledge. You are responsible for submitting your taxes correctly, so please check with your tax advisor if you have any questions.

All you need to do to get started is enter categories in the Income and Expense report. Here are my codes and the descriptions of each as listed in the computer. My explanations are in ().

Income Categories
Code Description
Bonuses Products/Awards/Bonuses (This is anything that you earn from Pampered Chef outside of your
paycheck. For example, free products, trips, awards, etc. If you don’t know the value, just wait
until you get your statement from Pampered Chef at the end of the year. All of these bonuses are
considered income. However, most of these things can then be deducted under “Products” if you
keep them or “Gifts” if you give them away.)
Check Commission Check (This is any money that you earn.)

Expense Categories
Advertise PC Promotions (Every once in a while, I will pay to advertise in a home-school newsletter. Other consultants have placed ads in small town papers. Be sure to read the guidelines in the Consultant Business Guide on advertising before placing any ads.)
Training Cluster/Regional/National Meetings (This would be the cost of attending special functions such as the January Kick-Off Meeting ($5) or registration for National Conference.)
Food Food expenses for demo practice (Any time you practice Pampered Chef recipes, the ingredients are tax-deductible. As with everything – save your receipts and circle the items specifically used for business purposes!)
Gifts Hostess/Customer Prizes (This is any gifts that you purchase to promote your business.)
Insurance Liability (This is the $2 that is deducted each month for insurance. Rather than entering each month, I just enter $24 each year.)
Meals Business meals (Anytime you go out to eat with a potential host/consultant/guest to conduct business, the meal is tax-deductible. Also – if you go out of town to do a show, you can claim an automatic daily meal deduction. Last year it was $32 per day! We get credit for 50% of it.)
Mileage Miles (Double check the current amount per mile – it is around 32 cents. Track your mileage to each show, the post office, and the grocery store – anytime you are conducting business.)
Paperwork Paperwork/Supply Orders (For paperwork orders through Pampered Chef)
Phone Long Distance Charges (For long-distance phone calls to hosts, to home office, etc.)
Postage Stamps/Postage (Buy a roll of stamps and use it only for business. That way you can deduct the whole receipt.)
Product PC Products (Any products that you purchase to use for your show demonstrations.)
ShowExp Show Expenses (This is anything that I have to provide for a show – such as an extra ingredient, extra food, paper products or whatever I may have provided for the host.)
Supplies Office Supplies (This would be anything I purchase for use in my business such as paper, pens, computer desk, folders, briefcase, etc.)
Travel Travel Expenses (Airfare, hotel, taxi, tips, etc. for shows or PC conference.)
Cell Phone Cell Phone (Use to deduct the portion that you spend on business calls.)

Note: This list is not all-inclusive. There may be other categories that apply to you. Or you may decide to organize
your categories a little differently. Either way, if you consistently enter your income and expenses throughout the year,
then at tax time all you need to do is push “PRINT”!!! Best wishes!

*If you do not use Pampered Partner to track your expenses, then keep a notebook that lists each category and allows you to store receipts.

 

[Cassie1037]

Starting tomorrow, I'm going to stay on top of keeping track of income/expenses in PP3. I think this will save me so much more time in the end! Thanks for sharing this, Tammy

 

[kisrae]

Wow!! Thanks Tammy and Lisa. I really needed this info. I have covered most of what you have listed. I started out great putting things into PP3, then got busy and life took over and the voices in my head said "just do it at the end of the year, you'll remember" Yah right!

 

[lockhartkitchen]

A loophole to the 50% of meals is to use gift cards. If you meet with clients at a cofee shop, purchase a gift card to use for these occasions. Gift cards are 100% deductable.

 

[wadesgirl]

Someone mentioned before that while we count "free" items from PC as an income, we can also deduct them because we use them for shows. How does that work?? Does PC list all your earnings out or do you keep track yourself? I don't know if I know what all I earned this year (including over $900 in cookware).

I started keeping track in PP but got confused and was hitting the wrong button and missing some of my receipts. Right now I have them in a coupon organzier by catagory (meals, food for shows, postage, office supplies, etc), is there a better way to organize these or should I sit down and put them all in PP as soon as possible?

 

[lkprescott]

A loophole to the 50% of meals is to use gift cards. If you meet with clients at a cofee shop, purchase a gift card to use for these occasions. Gift cards are 100% deductable.

I'd be wary of that... I would that that you'd still need to keep receipts to show what the gift cards were used for unless you're claiming them as a gift expense? Remember, it's not about getting away with 100% deduction it's how would you explain it to an IRS agent with no sense of humor and who's 'heard it all before'?

I always err on the side of caution and report with full disclosure. It's just easier that way, in the long run.

 

[lkprescott]

I personally use Peachtree to organize my accounting records. I'm most comfortable with it and have been using it for gads... 10 years? LOL... I like reconciling my statement with my accounting each month and keeping track of assets and liabilities with it as well as income and expenses. Some prefer Quickbooks... I've used that nearly as long and *shrug* personal preference I guess. I've ended up nicknaming it Quirkbooks. LOL.. I've poked around with the accounting feature on P3 but it's just not as robust as I'm used to.

 

[StacieB]

Someone mentioned before that while we count "free" items from PC as an income, we can also deduct them because we use them for shows. How does that work?? Does PC list all your earnings out or do you keep track yourself? I don't know if I know what all I earned this year (including over $900 in cookware).

I would like to know how to do this too. I am doing my taxes on Turbo tax and I am stumped on where to put this information!! Thanks for any help!!

Also should I do 100% depreciation on my new computer. I say I use it 80% for business, is that right?

 

[fruit76loop]

I would like to know how to do this too. I am doing my taxes on Turbo tax and I am stumped on where to put this information!! Thanks for any help!!

Also should I do 100% depreciation on my new computer. I say I use it 80% for business, is that right?

All of your FREE stuff will be listed on your 1099!!

And according to the tax law, you can only deduct 80% of your computer.

Let me look for my last post on taxes and I will include it again!!

 

[StacieB]

I see it on my 1099 and it is in box 3. I put that in the right spot, but am asking if I can use it as a deduction too, since it is for use at shows?

 

[fruit76loop]

Yes deduct anything you use for your business, which is products, bags etc.

 

[Jenelle]

I noticed someone mentioned bank charges as an expense, does this mean if we had an overdraft charge from the bank that it could be put in as an expense? I missed a check from a customer and had an overdraft charge.

 

[fruit76loop]

Most definately...any bank fees are a deduction! So bounced checks, overdrafts (caused by these checks) any fees associated to you business!!

And here is the info I posted in the other thread!!

As the owner of a home-based business you are entitled to a lot of money-saving tax deductions. It is said that most direct sellers overpay their taxes by thousands of dollars each year! There are usually two reasons for overpaying your taxes:
• Fear (of the IRS)
• Lack of knowledge (not knowing what is deductible)
It is stated that as the owner of a home-based business, you are entitled to these benefits - it's one of the major advantages of this business! The most important thing is to keep good documentation for your expenses. Take it from my own experience, if you keep track of your expenses on a daily or weekly basis, you will be very thankful to yourself when tax season rolls around. You can make up your own simple spreadsheet or purchase an expense log at any office-supply store.

Here are some of the allowable deductions. Take full advantage of them and don't cheat yourself - they are legally ours to take!
SUPPLIES
§ Super Starter Kit - (your initial start up cost)
§ Super Starter Booster Kit
§ New Product Samples
§ Any products you purchase for yourself
§ Door Prizes
§ Hostess gifts
§ Envelopes, folders, pens, etc.
§ Bowls, bins or towels used for demos
§ Copies
§ Business cards
§ Stampers
§ Catalogs, order forms, etc.

TELEPHONE
§ Telephone expenses (separate line for computer, or portion of your local/long-distance charges used for your business)
§ Long-distance calls to customers, home office
§ Cell phones (based on % used for business)
§ Internet Fees

POSTAGE
§ Hostess packets, thank-yous, flyers, etc.
§ Bills related to PC
§ Newsletter mailings to customers, consultants, etc.
§ Customer Care
TRAVEL EXPENSE
§ Hotel costs
§ Monthly meetings (mileage, food expenses, etc)
§ Out-of-town shows (airfare, etc.)
§ Meals (50% is tax deductible unless you prepay for gift cards in advance, then 100%!)
§ Taxi's or airport transfers (just ask for a receipt!)
§ Tips for bellmen, etc.
DUES AND SUBSCRIPTIONS
§ Cooking magazines, recipe clubs, etc. (online or magazines)
§ Business related dues (chamber of commerce memberships, etc.)
§ Meeting and Conference registration fees
ENTERTAINMENT EXPENSE
(Entertainment and meal expenses are deducted at 50%)
§ Recruiting interviews (buy a potential lunch, coffee, etc.)
§ Planning meetings with spouse other consultants, etc. Be sure to document your agenda (If you meet for lunch with another consultant to share ideas, etc.)
§ Entertainment expenses. An example is that if your husband golfs, you can give him some catalogs to pass out at his golf game, and he can legally deduct his golf fees!

HOME OFFICE EXPENSE
§ Office equipment such as computer equipment, fax machines, calculators, scanners, etc. Percentage based on how much time it is used for business vs. personal
§ Internet expenses - based on percentage of how much it is used for business
§ Computer Software used for your business
It is extremely beneficial to have your own "home office". A home office does NOT need to be a separate room - it can be a corner of a kitchen, bedroom, etc. To qualify as a home office the area must be used "regularly and exclusively" for your business. When you have a home office you can deduct the following:
§ A percentage of your real estate taxes, mortgage, and utility bills. (based on square footage used for business use) To determine the percentage, calculate the square footage of your home and your home office. Divide the footage of your home office by that of your home. This is the percentage you can deduct. For example, if your home is 2000 square feet and your home office is 100 square feet, you can deduct 5% of your expenses. (that's more than you can do now!)
§ Mileage to and from your shows.
§ Mileage to another job you may have, with restrictions. In order to take this deduction, you must do some type of Pampered Chef work at home before you leave for your other job. The tax law reads that you can deduct mileage "from your first job to your second job". If you are working on Pampered Chef as your first job in the morning, then you leave for your other job the mileage is deductible. This could be as simple as sending out a few emails or entering orders on your computer.
§ All computer-related expenses, considering that your computer is only used for your business. This includes Internet connection fees.
MILEAGE AND TOLLS
§ To cluster meetings, conferences, grocery store, post office, bank, etc. For shows, check with your accountant: this may be deducted if you stop on the way for food or if you have a home office). See note under Home Office Expenses
§ Current rate is .505 per mile!!!

ADVERTISING AND VENDOR FAIRS
§ Logo clothing, hats, pins, etc.
§ Newspaper ads, church bulletins or newsletter ads
§ Free gifts to vendor fairs, etc.
§ Vendor Fair booth fees
§ PC LOGO apparel. (deduct this as advertising, not work clothes!) all of these are considered advertising.)
GROCERIES
§ Any food you use to practice Pampered Chef recipes (According to Vicky, you can deduct grocery expenses more than once for a particular recipe if you are working on "perfecting" it- like feeding it to your family all the time!)
§ Any food you take to shows, meetings, etc.
INTEREST AND FEES
§ Tax Preparation Fees (business portion on Schedule C at 100%, personal portion on Schedule A - Itemized deductions)
§ Bank fees
§ Credit card interest that relates to any business expenses
PAYROLL EXPENSES
§ This is an incredible way to reduce your taxes! If you have children between the ages of 6 and 18 you can pay them for helping you with your business. There is some work involved, but the benefits are great. You will need to get a Federal ID number (your tax advisor can help you with that). Then you should pay your children a normal salary for age-appropriate work (i.,e., a 6-year old could be paid $5 for stamping catalogs for ½ hour but not $50 for an hour of host coaching calls!)
§ You can pay each child up to $4,750 per year. It is TAX FREE to the child, and FULLY DEDUCTIBLE for you, You should write a paycheck to your child and document the time spent and tasks completed
RETIREMENT CONTRIBUTIONS
§ As the owner of your own business you can set up special retirement plans for yourself. There are SEP's (Self-Employed 401K's), Simple IRA's, etc. Contact your financial or tax advisor for details. This is a great way to save money for your retirement TAX FREE!

HTH

 

[StacieB]

Do we have a principal business code?

 

[fruit76loop]

hmmm....Things that make you go hmmmm.....

I haven't done my own taxes in a few years so I can't remember what it is but I do remember we had one! I know that doesn't help...

 

[StacieB]

No Marlene, that doesn't help and that is one of the errors I get!!

 

[almondfarm]

Hi, Stacie -
I have used Turbo Tax for 3 years, I think there is a place to look up the principal business code and it is something like a home based direct sales industry category. Do you know what sheet it fills in on? I can try to look up my last year's one for you?
Lynette

 

[fruit76loop]

You might have to call...don't they have a # on there??? Like I said...its been years!

And just so you know, you said I seem knowledgable about this...it's because I went to a wonderful CPA who deals with small businesses and she has saved me a ton of money in write-offs I didn't even know about!

Like this year I am excited to write off the sales tax on my new car!!! WHOO HOOO!!:balloon: :balloon:

And we get the $500 energy credit because we installed central air!!! YIPPPEEEE!!!

I know who would get so silly over taxes???

 

[archie]

Hi, Stacie -
I have used Turbo Tax for 3 years, I think there is a place to look up the principal business code and it is something like a home based direct sales industry category. Do you know what sheet it fills in on? I can try to look up my last year's one for you?
Lynette

I don't know if you still need this but I thought I'd post it anyway. I'm just doing my taxes now (why did I wait so long??!) and have found the following code: 454390. Type in "direct sales" for the code search. HTH