I started a home business with young living. I did not get a W2 because I did not earn over $600? should i report this?

[wileli22]

To keep my business up and running I spent 781.43. For materials for classes I spent 387.62   I have a home office and used my computer and internet to help my business. I spent between about 10 hours a week on my business. Im wondering if reporting this will help me.

[PatriciaV · Accepted solution]

Yes, including this activity on your return may be beneficial.

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. If you are using TurboTax Online, you will be prompted to upgrade to the Home & Business version.

If you make a profit, the income is subject to Self-Employment Tax.

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.

Any prizes you won may be considered income related to your direct selling business; report this amount under the Other Income section of Business Items.

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.

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. If you had travel expenses related to meetings or conventions, those expenses may be included as well.

Sales taxes paid and collected are reported to your State Tax Office, as well as part of your business expenses on your income tax return.