Using Your Candle Business Tracker: How-To Do This-and-That!

Candle Business Tracker

Roy Juers
Apopka, FL
"Certified Candle Freak!"

Thanks for your enthusiasm, patience, suggestions, donations, & testimonials!

It means so much!

Candle Business Tracker

"I'm ready to start entering stuff... but,
What Goes Where?"

Many of you have asked where to put expenses and income, once you start using the Tracker regularly.

There can be different interpretations as to where you would claim certain deductions on your Schedule C, but for the most part, you can follow this general guideline, so that when you present your Tracker to your accountant, they can move around any expenses that may be better placed somewhere else on the Schedule.

Here are a few answers to some very common questions about how to treat individual transactions, when entering them into the Tracker.

-------------------------------------------------

How to Categorize Stuff

Q) How do I enter my COTM into the Tracker?

A) Great question! There are 3 different ways you could track your COTM, and here are some things to consider, before you choose a method of doing it:

Purchases Only- The entire COTM amount goes under Purchases.
Not really the the best way to go. In theory, you're getting materials that you can re-sell, and the cost of those items is thrown off by the fact that the website is part of the package. You're only adding $25.50 worth of products to your inventory ($9.50 for the jar, $12.00 for the votives, and $4 for the Bella Bar, plus tax and shipping), with each COTM. That means the "effective monthly cost" of the website is $14.45 + tax.
Memberships Only- The entire COTM amount goes to Other Expenses, in the Memberships column.
This is a more appropriate way to track COTM, because the entire amount is really a basic cost of being a distributor. It's easy for your accountant to track, and if they decide it's better to do it differently, it's easy enough for them to find and make any adjustments. IRS considers the COTM a "start-up" expense, or an expense to be a distributor, so therefore it's more appropriate under Memberships.
Purchases/Memberships Split- The cost of the Candles & Bella Bar is split off from the cost of the website, and they're claimed in different columns.

This is probably the most accurate way to record the COTM. The product portion of your COTM is $25.50 plus tax and shipping. You'll be adding the COTM products to your inventory in the JAN-DEC tabs, so placing the product portion under Purchases, keeps the Cost of Goods Sold section consistent. Since the website portion ($14.45 + tax, with no shipping) is not a product you can re-sell, place it under Other Expenses- Memberships.

Top of Page^

Q) How do I track an order that includes both candles & other stuff?

A) It's important to separate products that you sell, from those that you don't sell (meaning, things used to promote your business, or in the daily operation of your business). This separation can be done when the purchase is recorded in the INCOME & EXPENSES tab.

EXAMPLE 1: Let's say you order a dozen jar candles and a bunch of sales aids. The sales aids would typically fall under Advertising. You can split the cost of the invoice, by putting the sales aids portion in the Advertising column, and the cost of the jar candles plus their tax & shipping (as the cost of items you re-sell) under Purchases. It's not unreasonable to include the all of the shipping cost with the candles, since their weight accounts for the large percentage of the shipping cost.

EXAMPLE 2: On the other hand, if you buy two pie candles and $300 worth of sales aids, that's a different story. Most of the shipping cost would be attributed to your sales aids rather than the candles. This being the case, the shipping cost would get absorbed into the Advertising expense instead of Purchases.

Top of Page^

-----------------------------------------------------------

Q) How do I know what columns to use for other miscellaneous things that don't seem to be identified through the pre-set categories?

A) Boy, that's a tough one, without knowing what the "other miscellaneous things" are. The IRS allows for certain things be claimed in the Other Expenses column... things like Postage, Trade Publications, etc. But if you're in doubt whether an expense is deductible, or if it is, where exactly to claim it, put it here in the Other Expenses, and consult your accountant for assistance.

If you don't have an accountant, we advise you get one, but in the meantime, you may have success posing your question to various Yahoo Groups to get assistance from them. Or email me, & if I can give you a credible answer, I will.

Top of Page^

------------------------------------------------------------

Q) Information online about deductions, especially IRS info, is pretty generic, and doesn't mention the things I can buy in the Back Office.
Is there any info that's specific to the promotional company products?

A) When deciding where to put deductions on a tax return, we're pretty much on our own, and should always consult an accountant, especially one that knows network marketing...
But generally speaking, if I were to categorize my purchases on the Tracker, this is how I'd do it. My accountant would, of course, correct me if I was wrong:

Advertising:
Article Reprints, Business Opportunity Brochures, Business Opportunity CDs,
Calendars, Car Magnets, Catalogs, Coloring Books, Counter Top Signs, Display Boxes, Door Hangers, Entry Pads, Fundraising Postcards,
Fundraising Sheets, Gift Bags, Home Party Postcards, License Plate Frames,
Post Cards, Presentation Brochures, Shoulder Bag, Survey Sheets, Window Decals
Purchases: All candle and bath & body products, including all tax and shipping paid.
Supplies: Envelopes, Letterhead, Entry Pads, File Folders, Fundraising Sheets, Manila Folders, Sample Containers
Utilities (subject to limitation): Telephone, Cell Phone, Internet Access
Depreciation: Office Furniture & equipment, computers, laptops, iPads fax machines, printers, scanners, shredders, hard drives, shelving units.
Taxes & fees: Business License Fees, Membership fees like BBB or Chamber of Commerce, Costco & Sam's Club Membership Fees.