As a business owner, at least here in the United States, Ben Franklin reminds us that there is at least one certainty in life: taxes. As a direct seller, you may have opted to build a small "side gig" to earn a little extra operating funds for trips, to give your family a little "more" or just to fund your shoe shopping habit.
Ultimately, though, if you're producing revenue, you've got a business, and Uncle Sam wants his due. Even if you're not profiting from your direct sales business, there may be some taxable situations that will effect you.
Mind you, I'm not a tax professional, but my friend, Scott Lovingood is, and he shared some great tips on his call for the Small Biz Super Summit this Spring. While the deadline for filing your taxes for 2010 may have passed, now is a great time to consider ways to get your finances in tip top shape this year.
1. Keep good records. Even if you put all your receipts in a shoe box, at the end of the year, you're going to need to refer to them to prepare your taxes. The better records you keep, the easier it is to complete your taxes and defend yourself should an audit occur. One particular area that Direct Sales Pros tend to overlook is mileage. Keep a mileage log so that you can track all the miles you drive to and from your shows. It adds up over the course of a year, but if you don't keep track, you can't claim the deduction! At 50 cents a mile, every two miles you drive is a dollar back in your pocket come tax time!
2. Be aware of special deductions. Certain entities (like an LLC, for example) can alter your taxable benefits. Home based businesses have special deductions. Knowing this can save you thousands on your taxes.
3. Tax rules change all the time. One of the first tasks to outsource may very well be your bookkeeping. Tax pros spend all day every day staying on top of the tax code changes. They can take that responsibility off your plate so you can focus on making money.
4. Run your business as if the IRS were going to audit you at any time. Chances for an audit are small, if you fall within the "norms" the IRS uses to evaluate businesses. However, a business can be randomly selected for an audit at any time. If you're running a real business, keeping business and personal expenses separate is just one way to help the IRS see your business as a going concern. Setting up a business account, having a business phone (that's only used for business) are not only potential deductions, they help the IRS to see that you're serious about growing a real business, not just having an expensive hobby. Hobby income must be reported, but hobby expenses are NOT deductible.
5. Close your books at least quarterly, if not monthly. By balancing your books each month, you have a better look at cash flow projections, income and expenses BEFORE the end of the year. If you have a major influx of income, you might even be required to pay quarterly taxes. If you are not balancing your books each month, you should at least balance them every quarter (most businesses do). You may avoid some of the tax penalties that can occur if you don't pay those taxes on time.
Running a business from home means a lot of potential tax savings - trips to fun locations for your national conference could become deductible on your taxes at year end - but only if you're running a business and keeping good records (other rules may also apply). It is up to you as the business owner to keep track of everything. Start now (if you haven't already) to see success the next time your taxes are due. When in doubt, consult a tax professional to help you get the most out of the tax benefits a home business provides.
© 2010 Lisa Robbin Young.
==========
USE THIS ARTICLE FOR FREE IN PRINT OR ONLINE!
Please do not alter it and include the following information (with active links as appropriate):
Lisa Robbin Young is a certified direct sales marketing coach, teaching direct sellers to grow their business like a real business instead of an expensive hobby. Sign up for her free weekly ezine athttp://www.homepartysolution.com/
Showing posts with label IPA. Show all posts
Showing posts with label IPA. Show all posts
Direct Sales Success: Quarterly Planning Made Easy
No, it's not glamorous, but an hour of your time now could net you some big gains before Summer hits.
It's time to start looking at your Q2 planning.
What? You mean you haven't ever DONE quarterly planning?
I hear you. Most direct sellers live two weeks from bankruptcy - meaning they're booking shows in so close, they haven't really thought much beyond the next 30 days of life in business.
It's time to make a change and get your numbers in order. We're going to lay out two quick ways to do "projections" for your quarterly planning.
First, gather your results from last year. If you're brand new, use your numbers from the first quarter. I realize we're still IN the first quarter, but bear with me here.
Look at what your numbers were for first quarter last year, compare them to first quarter this year. You'll see where you're up, down or about the same. Not sure what numbers to be looking at? Check out my previous post on knowing your averages.
Now look at quarter two from last year (that would be April-June, if you're not sure). Compare Q2 of 2009 to Q1 of 2009. Most direct sellers will see an increase in their numbers because the holiday 'slump' is over, new product catalogs are coming out, and people are more likely to book early spring parties in April and May than they are in February and March. But it's not important if the numbers are higher or lower -what's important is that you KNOW whether they were higher or lower.
This gives you an opportunity to look at your business and see where you can improve, as well as what to reasonably expect for the coming months. We only look at a quarter at a time because - well - life happens. ESPECIALLY as direct sellers that are learning to treat your business with more respect, we have to flex those business owner muscles and get used to looking at the numbers in our business in the first place.
Look at the goals you have for the next three months - show sales, recruits, team promotions, bookings, etc. If you have company incentives coming down the pike, how are you planning to achieve those incentives? What activities do you need to schedule into your business over the next 3 months to make sure you hit those goals?
Now, pull out your planning calendar - your personal one, as well as your business one. You want to look at what's already on the radar for the next three months, events, kid stuff, vacations, holidays, sales meetings, rallies, national conferences, leadership camps, incentive trips. Identify any potential items that could prevent you from holding the number of shows you'd like. Identify big expenses that might require you to do an extra show or two in the coming months to help generate additional income. Identify locations in which you'll find yourself that might make good 'recruiting recon' destinations.
By starting now - and it may take a good hour of your time to do it - you'll have a road map for the next three months of business. You'll easily know what nights you will work - as well as the nights you absolutely can't. You'll also have a good idea about how much income you can count on.
But the BEST part about planning is that if you pinpoint a potential gap (in income, recruiting, shows, etc), you'll have a few months to formulate ideas and ACT on them in order to fill the gap. Otherwise, you could end up staring down a blank calendar at the beginning of May, wondering what you're going to do to pay the bills for the month.
Quarterly planning doesn't sound all that sexy, but once you begin, it almost becomes a game. How many gaps can you fill before the end of the quarter? How much MORE money can you make this quarter? How many days off can you actually ENJOY for a change? Quarterly planning makes it possible to know all the answers to those questions - and then some.
© 2010 Lisa Robbin Young.
==========
USE THIS ARTICLE FOR FREE IN PRINT OR ONLINE!
Please do not alter it and include the following information (with active links as appropriate):
Lisa Robbin Young is a certified direct sales marketing coach, teaching direct sellers to grow their business like a real business instead of an expensive hobby. Sign up for her free weekly ezine at http://www.homepartysolution.com/
It's time to start looking at your Q2 planning.
What? You mean you haven't ever DONE quarterly planning?
I hear you. Most direct sellers live two weeks from bankruptcy - meaning they're booking shows in so close, they haven't really thought much beyond the next 30 days of life in business.
It's time to make a change and get your numbers in order. We're going to lay out two quick ways to do "projections" for your quarterly planning.
First, gather your results from last year. If you're brand new, use your numbers from the first quarter. I realize we're still IN the first quarter, but bear with me here.
Look at what your numbers were for first quarter last year, compare them to first quarter this year. You'll see where you're up, down or about the same. Not sure what numbers to be looking at? Check out my previous post on knowing your averages.
Now look at quarter two from last year (that would be April-June, if you're not sure). Compare Q2 of 2009 to Q1 of 2009. Most direct sellers will see an increase in their numbers because the holiday 'slump' is over, new product catalogs are coming out, and people are more likely to book early spring parties in April and May than they are in February and March. But it's not important if the numbers are higher or lower -what's important is that you KNOW whether they were higher or lower.
This gives you an opportunity to look at your business and see where you can improve, as well as what to reasonably expect for the coming months. We only look at a quarter at a time because - well - life happens. ESPECIALLY as direct sellers that are learning to treat your business with more respect, we have to flex those business owner muscles and get used to looking at the numbers in our business in the first place.
Look at the goals you have for the next three months - show sales, recruits, team promotions, bookings, etc. If you have company incentives coming down the pike, how are you planning to achieve those incentives? What activities do you need to schedule into your business over the next 3 months to make sure you hit those goals?
Now, pull out your planning calendar - your personal one, as well as your business one. You want to look at what's already on the radar for the next three months, events, kid stuff, vacations, holidays, sales meetings, rallies, national conferences, leadership camps, incentive trips. Identify any potential items that could prevent you from holding the number of shows you'd like. Identify big expenses that might require you to do an extra show or two in the coming months to help generate additional income. Identify locations in which you'll find yourself that might make good 'recruiting recon' destinations.
By starting now - and it may take a good hour of your time to do it - you'll have a road map for the next three months of business. You'll easily know what nights you will work - as well as the nights you absolutely can't. You'll also have a good idea about how much income you can count on.
But the BEST part about planning is that if you pinpoint a potential gap (in income, recruiting, shows, etc), you'll have a few months to formulate ideas and ACT on them in order to fill the gap. Otherwise, you could end up staring down a blank calendar at the beginning of May, wondering what you're going to do to pay the bills for the month.
Quarterly planning doesn't sound all that sexy, but once you begin, it almost becomes a game. How many gaps can you fill before the end of the quarter? How much MORE money can you make this quarter? How many days off can you actually ENJOY for a change? Quarterly planning makes it possible to know all the answers to those questions - and then some.
© 2010 Lisa Robbin Young.
==========
USE THIS ARTICLE FOR FREE IN PRINT OR ONLINE!
Please do not alter it and include the following information (with active links as appropriate):
Lisa Robbin Young is a certified direct sales marketing coach, teaching direct sellers to grow their business like a real business instead of an expensive hobby. Sign up for her free weekly ezine at http://www.homepartysolution.com/
Income Producing Activites for Direct Sellers
In a previous post, I discussed Pareto's Law, the 80/20 Rule. And often, as was this case with this post, the comments come back like this:
"I *know* this. It's just hard to put into practice."
So I wanted to take a closer look at Income Producing Activities for Direct Sellers, as I research your most burning questions for an upcoming free teleclass for my subscribers.
Many direct sellers don't even know what their income producing activities (IPA) really are. Simply defined, IPA are any activities that directly generate income for you.
Most consultants think of this as booking, selling and recruiting. Most consultants would be wrong.
Let's look more closely at each of these activities and see if they meet our simple definition.
Booking parties is time-consuming. Even at the show, we're dropping 3-10 booking seeds to get 3-4 shows added to our calendar. When we look at industry statistics, 20% of your shows will cancel or reschedule. But in reality, it's not the booking that generates the income. Any consultant who's failed to follow up with a hostess, or forgotten to mail the invitations, or didn't confirm the booking has invariably lost a show (or had a mostly unprofitable one). Therefore it's not the act of BOOKING the party that produces the income, but rather hostess coaching and follow up that produce the income.
Dozens of industry trainers will offer you host coaching programs. The best one I've ever seen - and use myself, is Deb Bixler's Create a Cash Flow Show - which virtually guarantees you'll have a $1,000 show every time you do a party. And yes, out of full disclosure, that's my affiliate link. It give me credit for referring you to her website. I only recommend products I use and love. Deb's is one of the best on the market in terms of content and delivery. Her no-nonsense, build it like a real business approach is in complete alignment with the way I run my business, and she's a trainer of integrity.
So booking is NOT an income producing activity, per se. Hostess Coaching is. And often, this is the area in which we suffer most.
Selling is quite obviously an IPA, since the result of selling is that you earn income. Whether you're doing custmer care follow-up, reorder calls, or the show itself, I think that IPA is fairly self-explanatory.
Recruiting can be an IPA, but you need to check your company rule book. In nearly all direct selling companies, no one is paid for recruiting someone, but rather, is paid when that recruit meets a performance goal - selling a certain amount, getting "qualified" or some other performance based measurement.
In fact, many companies have strict rules AGAINST compensating a person for adding recruits to their team to avoid being considered a "pyramid/ponzi scheme". Ponzi was notorious for paying people in the pyramid a portion of the recruiting fee and there was no real product to sell - which ultimately meant the pyramid would crumble when people stopped signing up. The DSA and the federal government have some pretty strict rules about this.
So recruiting in and of itself is not an income producing activity, rather the income is produced based on team performance. But how do you encourage consultants to perform? Coaching. Thus COACHING your team is the income producing activity.
So aside from the actual sales process, the bulk of your income is derived fom your coaching activities - either with your hostess or with your team.
But where are we told to spent the bulk of your time? Booking, Selling and Recruiting.
Don't get me wrong, these are important activities, but when it comes to the 80/20 rule, Booking and Recruiting (also known as prospecting) shouldn't take more than 20% of your business time (they likely take up 80% of your time now). The remaining 80% of your business time should be focused on actual Income Producing Activities: SELLING and COACHING your hostesss and teams.
Yet this is the very complaint I hear over and over again: I don't have the TIME. Thus the need to streamline, automate, delegate and eliminate activities that don't fall into the most productive parts of our business.
Freeing yourself to focus on IPA isn't an overnight task. It takes time, but is critical to the overall success of your business. Top Direct Sales Leaders don't try to do it all themselves. Neither should you. Begin today by looking at what you could delegate, or things you know you're not good at that you could have someone else handle for you.
Take time to develop the list. Eventually, put a plan in place to start delegating. You'll free up your time to focus on making more money, which will eventually turn into freeing up more time because you won't need to work so much!
==========
Want more help understanding IPA and how to apply it to your business? Use this form to Ask Lisa your questions for an upcoming free teleclass about Income Producing Activities for Direct Sellers. The only certified Direct Sales Marketing Coach in the WORLD, Lisa Robbin Young can help demystify the business side of running your direct sales business. Visit her free online community for direct sellers today.
"I *know* this. It's just hard to put into practice."
So I wanted to take a closer look at Income Producing Activities for Direct Sellers, as I research your most burning questions for an upcoming free teleclass for my subscribers.
Many direct sellers don't even know what their income producing activities (IPA) really are. Simply defined, IPA are any activities that directly generate income for you.
Most consultants think of this as booking, selling and recruiting. Most consultants would be wrong.
Let's look more closely at each of these activities and see if they meet our simple definition.
Booking parties is time-consuming. Even at the show, we're dropping 3-10 booking seeds to get 3-4 shows added to our calendar. When we look at industry statistics, 20% of your shows will cancel or reschedule. But in reality, it's not the booking that generates the income. Any consultant who's failed to follow up with a hostess, or forgotten to mail the invitations, or didn't confirm the booking has invariably lost a show (or had a mostly unprofitable one). Therefore it's not the act of BOOKING the party that produces the income, but rather hostess coaching and follow up that produce the income.
Dozens of industry trainers will offer you host coaching programs. The best one I've ever seen - and use myself, is Deb Bixler's Create a Cash Flow Show - which virtually guarantees you'll have a $1,000 show every time you do a party. And yes, out of full disclosure, that's my affiliate link. It give me credit for referring you to her website. I only recommend products I use and love. Deb's is one of the best on the market in terms of content and delivery. Her no-nonsense, build it like a real business approach is in complete alignment with the way I run my business, and she's a trainer of integrity.
So booking is NOT an income producing activity, per se. Hostess Coaching is. And often, this is the area in which we suffer most.
Selling is quite obviously an IPA, since the result of selling is that you earn income. Whether you're doing custmer care follow-up, reorder calls, or the show itself, I think that IPA is fairly self-explanatory.
Recruiting can be an IPA, but you need to check your company rule book. In nearly all direct selling companies, no one is paid for recruiting someone, but rather, is paid when that recruit meets a performance goal - selling a certain amount, getting "qualified" or some other performance based measurement.
In fact, many companies have strict rules AGAINST compensating a person for adding recruits to their team to avoid being considered a "pyramid/ponzi scheme". Ponzi was notorious for paying people in the pyramid a portion of the recruiting fee and there was no real product to sell - which ultimately meant the pyramid would crumble when people stopped signing up. The DSA and the federal government have some pretty strict rules about this.
So recruiting in and of itself is not an income producing activity, rather the income is produced based on team performance. But how do you encourage consultants to perform? Coaching. Thus COACHING your team is the income producing activity.
So aside from the actual sales process, the bulk of your income is derived fom your coaching activities - either with your hostess or with your team.
But where are we told to spent the bulk of your time? Booking, Selling and Recruiting.
Don't get me wrong, these are important activities, but when it comes to the 80/20 rule, Booking and Recruiting (also known as prospecting) shouldn't take more than 20% of your business time (they likely take up 80% of your time now). The remaining 80% of your business time should be focused on actual Income Producing Activities: SELLING and COACHING your hostesss and teams.
Yet this is the very complaint I hear over and over again: I don't have the TIME. Thus the need to streamline, automate, delegate and eliminate activities that don't fall into the most productive parts of our business.
Freeing yourself to focus on IPA isn't an overnight task. It takes time, but is critical to the overall success of your business. Top Direct Sales Leaders don't try to do it all themselves. Neither should you. Begin today by looking at what you could delegate, or things you know you're not good at that you could have someone else handle for you.
Take time to develop the list. Eventually, put a plan in place to start delegating. You'll free up your time to focus on making more money, which will eventually turn into freeing up more time because you won't need to work so much!
==========
Want more help understanding IPA and how to apply it to your business? Use this form to Ask Lisa your questions for an upcoming free teleclass about Income Producing Activities for Direct Sellers. The only certified Direct Sales Marketing Coach in the WORLD, Lisa Robbin Young can help demystify the business side of running your direct sales business. Visit her free online community for direct sellers today.
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