How To Pick A Tax Accountant

A question that I get all year, and of course more often during tax time, is who do you recommend for a direct sales business-specific tax accountant?

How to pick a tax accountant for a home business is not hard, it just takes some research.

Home Office Deduction Is Legitimate!

direct selling and taxesThe direct selling and home based business industry is a legitimate business model and your tax accountant should be understanding and approving of that.

Any income tax preparer who tells you not to take the home office deduction because it may put up a red flag is not the accountant for you.

The red flag is to find a different accountant!

Don’t be fooled!

As a direct seller working from home the home office deduction was created for you and the IRS does not make rules to nab people who are following the law.

Provided that have an office and that you have an intent to profit, the actions to back up that intent and documentation to prove it, then you are the person the home office deduction was written for.

Obviously, you must meet other criteria but the accountant can help you with those details!

Picking A Home Business Accountant

Keep these things in mind when choosing an accountant for your home business tax preparation.

An accountant can live anywhere. It is not necessary that they live near you.

When looking for an accountant locally, look for one who advertises small business or home business tax preparation. Ideally, like my accountant, the person will be a work at home accountant him/herself.

You should be able to find a few who may look like they would work for you, then take the next step to qualify them.

How To Pick A Tax Accountant = Qualify Them!

In order to qualify an accountant, just ask questions and interview them for compatibility. You are interviewing them to see if they are supportive of the direct selling industry.

If they do not have respect for the direct selling industry, then they are not the accountant for you.

It is similar to a job interview.

You are going to hire them so you should learn more about them. Ask questions that give you the information you want.

Ask questions like:

  • Do you maintain a home office and take the home office deduction?
  • I am an independent contractor with MYFantasticCompany; are you familiar with the direct sales industry?
  • What other direct sales company consultants do you prepare taxes for?
  • Do you have any home based business clients who use the home office deduction?
  • My cell phone is my business phone and I deduct that as a business expense…. Is that ok?

Just make up a bunch of questions that will elicit more information about her or his philosophy. That should give you a good idea about who will be good. Then, sometimes you need to educate them a bit.

Some examples of education may be:

  • The free trip is income but it is also expense (in/out) because you are networking with like-minded professionals and advancing your business. (Who would go on a personal vacation with their work buddies?)
  • A company has auto-ship requirements. That means that that is an expense required to stay in business. Auto-ship requirements are a business expense because without them you would not get a paycheck! If you did not have your auto-ship you would not be in business.

So, you are looking for a tax person who understands the networking aspect of the business and professionalism of the industry.

Then you would have to take his/her advice on actual law and strategy, such as how much of your home you can deduct or mileage maximums, etc.

Find A Direct Sales Tax Accountant

Home Office Deduction Recruiting AppUnfortunately my accountant who is very direct sales-friendly is not taking on any more clients as she has gotten too many from my referrals.

If you are looking for a direct selling accountant and cannot find one in your neighborhood then you may consider these options.

  • Steve Spangenburg wrote the direct sales-specific business plan template that is included in the Direct Sales Recruiting University.
  • It is also included in the direct sales and marketing Power UP program. Steve lives in PA also and I often mention him in my training events.  Steve’s contact info is: loweryourtaxes@soon.com
  • The DSWA has a tax accountant that they recommend for members: www.DSWA.org
  • The Expense Tracker is the company that made my recruiting app: www.TaxRecruitingApp.com. After joining the TaxRecruitingApp.com there are other resources available.

There are probably many accountants near you who would be perfect.

You are the customer, so tell them what you want.

If they understand home based businesses and the home office deductions then they will be good candidates.

Once you find a tax accountant that is home business-friendly then you should follow their instructions as to how to apply the home office deduction to your business.

Comments

    Shared by: Bill Coen:

    I disagree with the comment about autoships being deductible even if it is used for personal use.

    The IRS guide for auditing direct sellers is very clear about personal use of product.

    Here is the link to the IRS website http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Retail-Industry-ATG-Chapter-3-Examination-Techniques-for-Specific-Industries-Direct-Sellers Look under the section titled “Inventory and Cost of Good Sold”

    There is a lot of confusion on some of these matters so I have done much research and developed a 3 1/2 hour video series for our distributors.

      Shared by: Deb Bixler:

      Yes, I know, Bill. It is a very controversial subject.

      Both my accountant and Steve Spangenburg say that if the auto-ship is required to get your commission then it is a ‘necessary’ business expense.

      Technically, that product should/could be used for promotional purposes, vendor displays, etc.

      If you can not get your commission without an auto-ship, it does seem that it is a legitimate business expense.

    Shared by: bobbie:

    There are two tests that MUST be met in order to take the home office deduction.

    Just having an intent to make a profit in home-based business is NOT one of them.
    #1 Exclusive use test: the space must be used only for business. If it is used for personal reasons by the business owner or anyone else living in the house, the space does NOT qualify. The exclusive use test is not required for an area used regularly for storage of inventory or product samples, or for a home used as a day care facility.

    #2 Regular use test: the taxpayer must use a specific area of the home for business on a regular basis. Incidental or occasional business use is NOT regular use. See IRS Pub. 587 for details.

      Shared by: Deb Bixler:

      Yes, you are right, Bobbie – We are not saying that an INTENT to profit is the ONLY criteria necessary to take the home office deduction.

      As I said:
      “Provided that you have an intent to profit and the action and documentation to prove it then you are the person the home office deduction was written for.”

      After that you need to talk to your accountant (preferably one who is direct sales friendly) to see if your home office is qualified.

      The INTENT to profit separates a business from a hobby.

Leave a Reply

Your email address will not be published. Required fields are marked *

Pin It on Pinterest

Please Share!

Share This Page With Your Team!