Business Expenses Categories
(updated 2/28/15)
Please refer to marykayintouch.com in Resources, Tax, Tax Essentials for more details or visit irs.gov. This information is gathered as an overview for easy understanding. You may want to visit accountingunlimited.com and click on seminars. They do thousands of Mary Kay tax returns. My categories vary a bit from theirs just for simplicity but no difference in the actual write offs. I try to follow somewhat similar to what the titles are on the Schedule C. I am not an accountant so again please see your tax professional for accuracy but feel this information can be helpful. Remember receipts are a must for everything.
Use an accordion file holder for receipts that are organized by category (not date) and either enter into computer in excel or write down on expense tracking form.
Advertising–Website, PCP, any logo clothing (beauty coat or Red Jacket)
Directors Only: First Look and white or yellow pages
Car & Truck Expenses (this includes parking and tolls)– Mostly you will include parking and tolls here if you choose to use the standard mileage deduction which basically gives you a deduction per business mile driven. Under this method you cannot write off oil changes, car washes, etc. but parking and tolls are eligible.
Commissions and Fees –Your Propay or business account bank fees orany dovetail commissions you have paid can be deducted here. Also Sales Directors who have reimbursed adopted director for expenses or paid cash bonuses to unit members (i.e. MK Bucks).
Contract Labor – Amounts paid for contract labor. Consult your tax advisor for the difference between this and wages. (typically has to do with labor conducted outside of your home)
Depreciation – depreciationmay be applicable to your business in three areas – automobiles used for business, office furniture and equipment (including computer equipment) and the portion of your home that is used for business.
Insurance (other than health) –typically this would include product insurance or a general liability plan.
Interest – interest you have paid on your Mary Kay business purchases only if applicable.
Legal and Professional Services – any payments to accountants or lawyers for your business. This is also where you deduct hair and nails (with receipts verifying payment out of business account)
Meals and Entertainment – Personal meals are not deductible if it’s within 50 miles of your home and you are only purchasing yours. If, however, at a business meeting you purchase a meal for yourself plus a client/consultant then you may deduct 50% off the cost of meals. All meals are deductible during business travel (but still at the 50% level).
Office Expenses - office supplies such as stationery, paper clips, copies as well as postage.
Other Expenses – here are some examples of items that you can list under the “other expenses” category on your schedule C. You would combine the total for the year for each subheading such as, Child Care, Dues and publications, bad debt.
Postage – stamps, shipping for orders, fed ex. (this is actually to be included in office expense, however it is helpful to see this total for your budgeting purposes)
Product – wholesale orders from company (track wholesale, sales tax, section 2 which is supplies and postage); also be sure to keep receipts from Customer Delivery Service for all those same deductions.
Product Sales Tax – take the total directly from your print outs that come with your product orders from Mary Kay as well as your Customer Delivery Service receipts and write off the entire amount of sales tax. (this is why you DO include it as income for tax purposes but NOT for your weekly accomplishment sheets) On your schedule C, Cost of Goods Sold category, include the sales tax with the cost of your product less your personal use.
Promotions –(could be listed separate under Other Expenses – typically for directors) prizes, Mary Kay director supplies
Rent on other Business Property – any rent that is paid other than your home to conduct business or meetings.
Repairs and Maintenance – cost of repairing business equipment or furniture.
Supplies – sales aids including section 2 purchases or other items used during selling appointments such as cotton balls, etc. Typically think that these are items you often take with you to an appointment.
Taxes – Typically for our business this is applicable for taxes you pay employees. See irs.gov
Travel – Hotel expenses, cabs, airplane tickets, baggage fees, parking fees, meals during trip, tips, laundry or dry cleaning during travel. I would suggest keeping a travel log for trips. Be aware that there are boundaries for business travel deductions mixed with personal travel.
Utilities –Business - phone- fax lines, business line, cell phone for business portion (pay for business portion out of business account)
Utilities In-Home – a place to track your usual utilities bills such as water, electric and gas when you take the Business In the Home percentage deduction.
Wages – Amounts paid for office assistance.
Workshops & Conferences – this would include registration fees for workshops and company events such as Career Conference, Seminar, etc. (Be aware that some company events break apart a portion for food which you will see on receipt given at event) . You would list this in the Other Expense Category on your Schedule C.
Indirect Expenses – if you take the in home business deduction because you have a designated room for your business you may qualify to write off indirect expenses such as repairs and maintenance to your home. See form 8829 Expenses for Business Use of Your Home.