This is good GENERAL information. Everyone should consult with their own tax advisor, as a business owner, in their country of residence for professional tax advice as situations are different and the rules between the IRS in the US and the CRA in Canada are different.

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Sondra@SondraGoldCPA.com

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Expenses that are typical for an Arbonne business:

• Home office
• Vehicle
• Travel for conferences
• Arbonne purchases
• Gifts
• Meals and entertainment
• Hair/wardrobe/makeup for presentations to groups in person or online
• Payments for business/leadership courses
• Legal fees
• Accounting fees
• Bookkeeping fees
• Software or subscription costs if related to work
• Sample packs, demonstration kits, promo items
• General office expenses
• (When you are spending money to earn or try to earn income, within the tax act) ie- No single meals. No golf green fees.

We don't back out HST on the Arbonne commission. It is exempt of HST, similar to royalties.

A sales aid is property that is a customized business form or a sample, demonstration kit, promotional or instructional item, catalogue, or other personal property that a direct seller or an ISC acquires, manufactures or produces for sale to assist in the promotion, sale or distribution of the direct seller's exclusive products.

A sales aid also includes the service of shipping or handling, or processing an order for other sales aids or exclusive products. For more details, see the heading "Service of shipping or handling or processing an order".

A sales aid does not include an exclusive product or property that an ISC will use as capital property.

It is a question of fact whether a particular property is a sales aid. Direct sellers and ISCs must be able to demonstrate that the property is acquired, manufactured or produced for sale to assist in the promotion, sale or distribution of the exclusive products of the direct seller.

Sales aids may include:

• sample-sized goods in demonstration kits;
• property that would otherwise be an exclusive product, but which is identified as not intended for resale such as property labelled as a "tester", "sample" or "not for resale";
• advertising material such as flyers;
• business cards;
• pamphlets relating to an exclusive product;
• books, tapes, videos and CDs on how to be a better salesperson;
• books, tapes, videos and CDs providing information on exclusive products;
• monogrammed items such as clothing and towels with the logo of the direct seller;
• subscription to the direct seller's business Web site; and
• admissions to seminars and meetings the purpose of which is to assist in the promotion, sale or distribution of the exclusive products of the direct seller.

The following items are not sales aids:

• an exclusive product of a direct seller unless it is identified as not intended for resale such as property labelled as a "tester", "sample" or "not for resale";
• property that an ISC purchases for use as capital property. Capital property is property for which a person cannot deduct its full purchase price for income tax purposes for the year in which the person purchased it;
• books, CDs, tapes and videos that deal with general business topics;
• clothing or merchandise that does not have the logo of the direct seller on the item;
• services;
• admissions to conferences, seminars or other activities of a general nature.

Bookkeeping programs (although there is lots of great software’s and apps popping up every day):

• Wave (self employed)
• Zoho books (self employed)
• Expensify (self employed or corporate with another program)
• QuickBooks Online (corporation)
• Mile IQ and Everland (mileage km tracking apps)

The IRS takes the position that all deposits that they see coming into your bank accounts are evidence of taxable income (even if they came from your savings) but that nothing that leaves your bank accounts are deductible unless you have adequate records that clearly show the type of expense, the date incurred, the amount spent and the business purpose. To be deductible for tax purposes, all expenses must pass an additional test: they must be both ordinary and necessary for your type of business.

The burden of proof is on the taxpayer . . . which is a clever way of telling us that we need to keep records that back up anything that we hope to deduct on the tax returns. Consider using a formal record keeping system like Quicken or Quickbooks as well as a mileage log.

· Cost of Goods Sold – the cost of goods that you are selling is deductible and the sales are reportable as income.

· Advertising

· Car and Truck – either the mileage method (currently 56ct per mile for business miles) or the business use portion of actual expenses (determined by business miles / total miles).

· Contract Labor/Bonuses Paid – if you pay others for their time or the results of their efforts then you can deduct this cost.

· Depreciation – this is where you deduct a portion of a capitalized cost over time

· Insurance – business premises, business liability, general liability rider on your home owners policy needed for business use, etc.

· Interest – only on business debt or business loans

· Legal and Professional Services – including bookkeeping services

· Office Supplies – printer paper, computer supplies, business cards, etc.

· Rent of business use property or facilities

· Repair or Maintenance of business use property

· Supplies – for meetings, presentations, prospecting etc.

· Travel – for business only. This includes air fare, hotels, etc.

· Meals – non-entertainment meals paid for during business travel or presentations

· Entertainment – NOT deductible any longer.

· Utilities – for business use property

o Business Use of Cell Phone

o Business Use of Internet

o Business Use of Home – follow the forms provided by IRS

o Education and Training

o Meeting Expenses for Presentations

· Business Portion of Product Costs – a portion of your product purchases may be deductible as a business expense to the extent that incurrence of those product costs is in the nature of product research and enhancing your knowledge of the efficacy of the products you are selling. You will need to be able to separate out purely personal use products from those that are purchased so that you can better prescribe and market specific products. One method is to separately purchase products that you know that your testing out and keep track of those costs. Another method is to estimate your personal use portion of all your purchases and back out that personal use total from your total to determine your deduction.

· Cell Phones – since it is absolutely essential that you have great communication at all hours with your client base, there is good substantiation to take the complete cost of your cell phones rather than just a portion.

· Internet Service – since you have to enter orders across the internet, this cost should be deducted in full.

· Computer Costs – a computer is a required business tool for your business and you should be able to deduct its cost in full. If you use the same computer for completely personal reasons then you must allocate a portion to personal use.

THIS FIELD TRAINING MATERIAL HAS BEEN PRODUCED BY AN ARBONNE INDEPENDENT CONSULTANT,AND IS NOT OFFICIAL MATERIAL PREPARED OR PROVIDED BY ARBONNE. ARBONNE MAKES NO PROMISES OR GUARANTEES THAT ANY ARBONNE INDEPENDENT CONSULTANT WILL BE FINANCIALLY SUCCESSFUL AS EACH INDEPENDENT CONSULTANT’S RESULTS ARE DEPENDENT ON HIS OR HER OWN SKILL AND EFFORT. earnings.arbonne.com