subject: How Can Network Marketing / Mlm Business Owners Qualify To Deduct Home Office Expenses? [print this page] One of the questions that Network Marketing / Multi Level Marketing owners ask is What do you have to do to qualify for the home office deduction? There are strict requirements you must meet in order to qualify, and it pays to know the (IRS) code to maximize the deduction and minimize the risk of an IRS audit.
There are three hurdles anyone must meet, regardless of industry or business category:
1. You must be in business.
2. You must use your home office exclusively for business, and
3. You must use your home office for business on a regular basis.
Any business must meet all three requirements. But once you get past those three general requirements, you must clear one other of several possible hurdles one of which is pretty easy for network marketers to meet. That other requirement is this: you must regularly and exclusively use your home for administrative or management activities, having no other fixed location where you perform them.
Clearly, there are administrative activities to take care of as a network marketer. Any MLM business owner has books to keep, customer and representative records to maintain, supplies and materials to order, and other similar administrative tasks.
Bottom line, even if you're home office is not where you generate most of your business incomeand even if you're home office is not the primary place where you meet customers, you can still easily qualify to take the home office deduction. You do so as long as you perform administrative activities from a workspace at home that is used exclusively and regularly for that purpose.
The key is to use and maintain an area of your home or apartment that you use exclusively for business administrative or management activities. You dont need an entire room. Part of a room is fine, as long as it doesnt include desk space that you use for both personal and business work, doesnt include a filing cabinet with both personal in business files, doesnt include a bookshelf with both personal and business books, and so on.
Some home business owners are hesitant to take the deduction, for fear it will increase the likelihood of an audit. The fact of the matter is that overall the risk of an audit is very low anyway, regardless of whether you use the deduction. If you're entitled to take the deduction, and understand and comply with IRS rulesand keep good records to prove itthen by all means use the tax code to your advantage.
Bottom line, the home office deduction can be one of the biggest the deductions available to network marketing professionals.
