How to File Taxes as an MK Director?

I hope everyone had a fantastic holiday season, but now is the time to prepare for the 2018 tax season. So how to file taxes as an MK Director or Independent Sales Consultant? If this is your first tax season with MK, we understand how confusing it can be. Here is a guide to understanding your tax classification and obligations for the 2018 tax season.

How to File Taxes as an MK Director?

Tax Filing Obligations

MK Independent Consultants and Directors are usually considered independent contractors and must report business income and expenses on a Schedule C. Profits or losses from business activities are then recorded on Form 1040, the income tax return for single and joint filers.

Hobby vs. Business

It is critical to determine if your MK business is considered self-employment income or hobby income before the 2018 tax season. If you are selling MK with the intention of making a profit and have made a profit for the last three years out of the past five, it is self-employment income.

If your MK business is not your full-time or main source of income, then it can be considered a hobby income. If this is the case, you will need to report earnings on Form 1040 and expenses on Schedule A.

Small Business Owner

As a self-employed small business owner, you must report all business income and expenses on Schedule C. Calculate your revenue by totaling the purchases made by your clients and report this amount on line 1. All returns issued to your clients should be calculated and reported on line 2.

Cost of Products Sold

The cost of goods sold must be reported on Part 3 of Schedule C since you are reselling MK products for your business. To calculate this amount start with the value of your product inventory. Add all purchases and then subtract the inventory value remaining. The difference remaining is the cost of goods sold.

Other Business-Related Expenses

If you are classified as an independent contractor, you can deduct additional expenses associated with your MK business. For example advertising, office supplies, and travel expenses are tax-deductible. As of 2015, the IRS will allow you to deduct 57.5 cents per mile drive. These expenses should be reported on Part 2 of Schedule C.

UnitWise is Here to Help

UnitWise makes it easier to keep up with your records in preparation for the upcoming tax season. If you have any questions about our tax report features, do not hesitate to contact our outstanding support team. Simplify your 2018 tax season today!

*Content found in the UnitWise blog is for informational purposes only. UnitWise is an independent business with no affiliation to Mary Kay®.*

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