Navigating the legal and financial aspects of your doTERRA® business can be a challenge. Here are some tips to get started:
Basic Financial Advice:
- Get a good tax adviser. Everyone’s personal tax situation is unique. The best way to make sure your taxes are done correctly is to consult with an expert about what’s right for you.
- Be charitable. The more you give, the more that will come back to you. The doTERRA Healing Hands organization is a great way to responsibly give to those in need around the world.
- Get out of debt. doTERRA is all about freedom and empowerment—finances are an important aspect of that. Make specific goals to get out of debt, and stick to them.
- Invest wisely. Never invest in anything unless you’re willing to lose everything you invest. Remember, one of the best investments you can make is in your own business.
Simplify your record keeping, set up:
- A business credit card. Whether the card is in your personal name or your business name, this will ensure that all business expenses are in one place for you to access come tax season.
- A business bank account. Once your business has reached a certain level of income, it will be important to have all your business-related income and expenses come and go from a separate account. Check with your bank; some banks even offer free business checking.
When should I form a legal company and why is it important?
Forming a legal company or entity protects a business from its owner’s personal risks and debts, and owners from their business’s risks and debts. Because of these valuable protections, it’s never too soon to form an entity. Some options are:
- Single-member LLC: Offers limited risk management of liability concerns, and is ideal for downline and commission continuity purposes. With the assistance of an attorney or CPA the total cost to set-up an LLC will range from $1500 – $2000.
- S-Corp: If you have a taxable income of $45,000 per year, an S-Corp makes sense. At this point, the tax savings from the use of an S-Corp will outweigh the ongoing maintenance costs associated with an S-Corp.
What can I deduct as a business expense?
- Ask: Did I spend money to make money? The general rule is the deduction should be helpful to grow your business, and be industry-accepted and appropriate.
- Consider whether an item is for your personal or business use: an iPad, product inventory, etc.
- Keep a record of deductible mileage, and a calendar of business activities: where you went, what you did, who was there, etc.
- Make sure your expenses do not exceed your profit. If your business does not make enough money to validate your expenses, tax deductions will not make sense.