Making MLM A Less Taxing Experience
          
          
               How can you make the most of the tax advantages
          that come from being active in MLM?  Most important,
          keep careful records.  Show all of your income --
          hiding income is the surest way to incur the wrath of
          the IRS.  But record all of your expenses, too, to
          offset as much of that income as possible.
               Your deductible expenses include your office
          supplies, phone expenses, travel (including auto
          costs), entertainment, and so on, as long as they're
          business-related.  The better your records, the more
          deductions you'll be able to sustain.
               In some circumstances, you'll be able to take a
          home-office deduction.  If you use 10% of your house
          for business, you can deduct 10% of your expenses for
          heating, electricity, home repairs, security systems,
          insurance, and so on.  However, there are a few
          standards you must meet to qualify for this deduction.
               First, you must have a section of your house (a
          room or part of a room) that's used regularly and
          exclusively for business.  You can't deduct your
          kitchen just because you work on your kitchen table.
               To qualify for deductions, your home office must
          be your principal place of business (for your MLM
          activity) or a place you use regularly to meet with
          prospects, distributors, or customers.  Also, the
          allowable deduction is limited to the gross income
          generated from the use of your residence.  There's a
          complicated method of deducting various expenses, but
          the bottom line is that your home-office deductions are
          essentially limited to your gross income from your at-
          home businesses.
               Can you deduct losses on MLM, counting all your
          expenses?  You may be able to, but only if you
          demonstrate an honest attempt to attain profitability. 
          If you're haphazard in your record keeping and your
          approach to your business, the IRS may claim you're
          only doing this as a tax dodge and disallow deductions
          for losses.
               The key to taking the deductions mentioned above
          is your status as an independent contractor.  To be an
          independent contractor, you need to be truly
          independent.  Set your own schedule; work as you want
          to work, not as the parent company directs you to work. 
          If you work for more than one MLM company, you're more
          likely to qualify as an independent contractor.
               Do you owe sales tax on the products you
          distribute?  Check with a local attorney; your parent
          MLM company may be able to provide you with a legal
          opinion that applies to your state.  If you need to get
          a "tax number" to avoid sales tax, do so.