Tax Lies from Mary Kay
Current Mary Kay consultants, take heed: it's tax time! It's that time of year when you are going to prove to the world that you're making money! If you're making a living at Mary Kay, then on April 16th, I invite you to post your schedule C right here. Blank out your identifying information (name, social, etc) but post it or a link to it right here.
Or perhaps, you'll do your taxes and say, "Oh my God, what am I doing with my life?"
Maybe this year, you'll be surprised. You'll do your taxes and will actually have made money for the year. Don't forget to take into account how much inventory is still on your shelves. Have you finished paying for it? Or are you making giant interest-only payments on it every month? If you made money, how much? Did you net $1000? $5000? even $10,000? If you're working full-time or even working only 20 hours per week, is $10,000 a full or even half-time salary?
When you hear the Mary Kay business plan for the first time, one of the things you'll hear is all about the "tax advantages." Write off your computer, your printer, your office supplies, your office space. Write off the cost of traveling to Seminar and Leadership conference and Career Conference and your Fall Advance/Retreat/Summit. Write off the cost of your weekly meeting. Write off the interest on your credit card that you're going to use for all of your Mary Kay inventory and expenses. Write it off, write it off, write it off! Many directors will even tell bald-faced lies, telling you that you can write off the cost of your clothes, your manicures, and your pantyhose. (If you have been told this, or if you are telling it, you need to stop because it's not true.)
How many people know what a write-off is? I had one top director tell me that if you used a credit card for inventory and didn't use it for anything but Mary Kay, you could write off all of the interest, and that would make it just like an interest-free loan from a relative! Now, I am a generally smart person, and I not only didn't question it, but I repeated it!
But the thing is, it's completely wrong! A write off or deduction is NOT the same as a tax credit! A tax credit is something that takes money off of what you owe in taxes. For instance, people who qualified for the first-time homebuyer tax credit last year were able to take $8000 off of what they owed in taxes for the year. If they would have had an $8000 tax bill, that would be reduced to $0. A deduction or write-off only reduces your amount of taxable income. So if you spent $1000 on Seminar fees, airfare, and food, all that does is reduce your amount of income by $1000. So if you miraculously made $5000 in Mary Kay, that $1000 would reduce that amount to $4000, and only the $4000 is then taxed. If you paid $500 in interest on your credit card, you don't get that $500 back; you only reduce that $4000 that you netted to $3500. You'll pay fewer taxes, sure. But you still SPENT that $1500 on Seminar and interest payments, and you're NOT getting that money back.
Put another way, Mary Kay will try to convince you that spending money is good because you can "write it off." They make you think that you're going to get all of that money back. The fact is, you'll spend the money, and you'll see that your bottom line has gone down. So you might not have to pay taxes on your MK business. That means YOU DIDN'T MAKE MONEY.
If you've done your taxes and seen that you've once again lost money, or made so little money that you would have been better off working part-time at McDonalds, it is time to seriously consider quitting. You can return any inventory that you purchased in the last 12 months for a 90% buy-back. You will never be able to do Mary Kay again, but hey, that's not such a bad thing.
Oh and by the way, I write this about Mary Kay, but it goes for any multi-level/dual-marketing/network marketing business. Are you doing one? And are you being honest with yourself when you do your taxes? Is the effort you put into your business being reflected in your pay? Be honest with yourself, and save your finances before it's too late.
Or perhaps, you'll do your taxes and say, "Oh my God, what am I doing with my life?"
Maybe this year, you'll be surprised. You'll do your taxes and will actually have made money for the year. Don't forget to take into account how much inventory is still on your shelves. Have you finished paying for it? Or are you making giant interest-only payments on it every month? If you made money, how much? Did you net $1000? $5000? even $10,000? If you're working full-time or even working only 20 hours per week, is $10,000 a full or even half-time salary?
When you hear the Mary Kay business plan for the first time, one of the things you'll hear is all about the "tax advantages." Write off your computer, your printer, your office supplies, your office space. Write off the cost of traveling to Seminar and Leadership conference and Career Conference and your Fall Advance/Retreat/Summit. Write off the cost of your weekly meeting. Write off the interest on your credit card that you're going to use for all of your Mary Kay inventory and expenses. Write it off, write it off, write it off! Many directors will even tell bald-faced lies, telling you that you can write off the cost of your clothes, your manicures, and your pantyhose. (If you have been told this, or if you are telling it, you need to stop because it's not true.)
How many people know what a write-off is? I had one top director tell me that if you used a credit card for inventory and didn't use it for anything but Mary Kay, you could write off all of the interest, and that would make it just like an interest-free loan from a relative! Now, I am a generally smart person, and I not only didn't question it, but I repeated it!
But the thing is, it's completely wrong! A write off or deduction is NOT the same as a tax credit! A tax credit is something that takes money off of what you owe in taxes. For instance, people who qualified for the first-time homebuyer tax credit last year were able to take $8000 off of what they owed in taxes for the year. If they would have had an $8000 tax bill, that would be reduced to $0. A deduction or write-off only reduces your amount of taxable income. So if you spent $1000 on Seminar fees, airfare, and food, all that does is reduce your amount of income by $1000. So if you miraculously made $5000 in Mary Kay, that $1000 would reduce that amount to $4000, and only the $4000 is then taxed. If you paid $500 in interest on your credit card, you don't get that $500 back; you only reduce that $4000 that you netted to $3500. You'll pay fewer taxes, sure. But you still SPENT that $1500 on Seminar and interest payments, and you're NOT getting that money back.
Put another way, Mary Kay will try to convince you that spending money is good because you can "write it off." They make you think that you're going to get all of that money back. The fact is, you'll spend the money, and you'll see that your bottom line has gone down. So you might not have to pay taxes on your MK business. That means YOU DIDN'T MAKE MONEY.
If you've done your taxes and seen that you've once again lost money, or made so little money that you would have been better off working part-time at McDonalds, it is time to seriously consider quitting. You can return any inventory that you purchased in the last 12 months for a 90% buy-back. You will never be able to do Mary Kay again, but hey, that's not such a bad thing.
Oh and by the way, I write this about Mary Kay, but it goes for any multi-level/dual-marketing/network marketing business. Are you doing one? And are you being honest with yourself when you do your taxes? Is the effort you put into your business being reflected in your pay? Be honest with yourself, and save your finances before it's too late.