As a representative
of a direct selling company, you are a self-employed entrepreneur. All activity
related to this business is reported on Schedule C under Wages & Income |
Business Items (or Business | Business Income & Expenses in Home & Business).
The
easiest way to to find Schedule C in
TurboTax is to use the Search box at the
top right side of the TurboTax header. Enter "schedule c", hit Enter,
then click "jump to schedule c".
This will take you directly to the start of this section.
You may be asked for
a Business Code: most direct sales representatives use business code 454390
(Other direct selling establishments) and use the Cash Method.
If the merchandise
you purchased is for resale, it is considered Inventory. If you just started
your business this year, your beginning inventory is $0 and the ending
inventory is the cost of the products that you still have (did not sell).
"Tell Us the Cost of Your Goods" should be the amount you paid to
purchase the items from the company. If you used any products for yourself, you
will enter than information as well (these expenditures are NOT deductible expenses).
If the items you
purchased were used for advertising (not resale), you would include the amount
you didn't use yourself under Other Common Business Expenses | Advertising. If
you had product that was consumed for demonstration purposes, that amount would
be entered under Supplies.
You may claim a Home
Office Deduction if you use a dedicated space in your home to store inventory
and conduct business. The rules are very specific, so be sure to answer all
questions as accurately as possible.
You may also claim Vehicle Expenses for mileage directly related to your business.
Sales taxes paid and
collected are reported to your State Tax Office, and are deductible
business expenses on your income tax return.
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