Avon is among the world's leading companies in sales of anti-ageing skincare products, make-up and fragrances. A business selling Avon products is considered a sole proprietorship for tax purposes. If you sell Avon products, you are required to pay taxes on your earnings. Avon provides to its representatives invoices and statements that show information such as products sold, prices, earnings, profits, sales aids and demos purchased. Avon invoices, along with receipts, mileage logs and spreadsheets detailing business expenses, provide the information you need to complete the required tax forms for your business.
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Things you need
- Sales records
- Expense records
- Tax forms
Gather your Avon records, including income and expense reports, balance sheets and profit-and-loss statements. Use them to begin filling out your Form 1040 with the IRS. Some information that you will put on your 1040 will come from other tax forms that you may have to fill out, including Form 1040 Schedule C, Form 8829 and Schedule SE.
File a Form 1040 Schedule C titled 'Profit or Loss from Business' with the IRS for federal taxes for a sole proprietorship. Federal tax forms are available on the IRS website, at your local IRS office or at your local library. You can fill out tax forms by hand to mail; fill out forms by computer to download, print and mail; or file online with a free or for-profit computerised tax system.
Enter the amount of money you earned selling Avon products on line 1 of your Form 1040 Schedule C. If you issued any credits or had returns, enter that amount on line 2. Enter Avon-related expenses such as vehicle mileage, office supplies, business phone and self-employment insurance costs on the 'Other Expenses' line.
Fill out Form 8829 if you are deducting office space in your home. Transfer the amount you are allowed to deduct for office space to Form 1040 Schedule C, Line 30. Calculate on Line 31 to see if you must claim a profit or a loss. Check the box on Line 32a if you can claim a loss. If you have a loss, you do not have to file Schedule SE.
Fill out Schedule SE if you make a profit on your Avon sales. List your net income from Schedule C on your Schedule SE to calculate FICA, Medicare and Medicaid taxes due. Fill out Schedule SE and write the tax amounts from Schedule SE on the appropriate lines of Form 1040. Write down the net loss or net income information from Schedule C on the indicated line of your 1040 form and complete the rest of your tax return as usual.
Tips and warnings
- Use computer software to file your taxes if possible. Online tax programs walk you through questions about your Avon business and figure taxes and credits based on your responses.
- Give your Avon business information to an accountant or tax expert if you are don't understand the instructions on the forms or have trouble calculating your profits and/or losses. Allowing an expert to handle your taxes when problems arise may cost you money up front, but it can save you money in the long run.
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