This Post is intended to help you be organized this year and help you with tax preparation. I’m not saying my way is the best way… it works for me. Please feel free to use any forms I post or tweak them for your needs!
Disclaimer: I am not a tax professional. I have been doing my own business taxes for about 7 years and consulted an accountant the first year to make sure I was doing everything correctly. That being said… I will not be by your side if you get audited ;). If you are uncomfortable with preparing your own taxes, please consult a tax preparer! In any case, you will need to provide them with all this information.  – If you have questions on something I’ve posted, you can post the question in the comments.



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In this post, I show you my expense sheet I use at the end of every month (I totally made this one up!) (At the end of the year, I take all 12 months, and add the total for each section and put the total on a blank form for the entire year.)

You can see that each category I use goes right into the same color on the Schedule C form you use to file your taxes. There is one expense I don’t list on here as monthly because Paypal will calculate the entire year for me — my fees to use their invoicing and accept credit cards. This would go on line 10.

Most people wont use any of the other categories under expenses. However, you may have the following expenses:
– if you added to your home owner’s or renter’s insurance to cover your inventory, you would put that expense on line 15.
– if you used a credit card for BUSINESS ONLY and had any interest paid on the balance, you could deduct that on 16a
– if you rented a retail space during the year, you would put that on line 20b
– if you are deducting for a home office, you would use line 18 and possibly 25 … I offer no advice on this expense… you should consult a tax professional.

Section IV and line #9 under Section III
Make sure you keep a mileage diary… I keep a small notebook in my car so it’s handy… you could also use your planner, etc. If you are deducting mileage, you need to fill out part IV about how you used your car.

Section V – Other Expenses.
– This is where you can record any items that there is not a category for on the front page in Section II. I record my hostess rewards here – you take the total cost to you… $2.75 plus tax per piece.
– I also record my shipping and postage here. Some people account for this in supplies, but since I do a large amount of shipping, I don’t want to throw up any red flags with what would look like an inflated supply cost vs my sales…. things like this could trigger an audit if they think you’re claiming more than you should. (Yes, I love Office Max, but not that much! lol)
– The last thing I claim here is ‘Bad Debts’. Have you ever given someone their product because you KNOW they will pay you and didn’t? Lesson learned…move on and we won’t do it again. However, this is actually a cost of doing business (not a good one, but still an expense!) This again would be the total cost of the pieces, including sales tax.

PLEASE NOTE: LINE 10 UNDER Part II is NOT for your commissions from Paparazzi! This is an expense and would be if YOU PAID commissions to an employee only!

Click Here to get that Expense Recap Sheet

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Ok, Let’s talk about INVENTORY! You should have an invoice from all your shipments last year — except Fashion Fix shipments. I suggest going into your back office and pulling a summary from last year and make sure you have all your invoices and print out one for your Fashion Fix since they didn’t come with invoices.

On the expense report, I have a section for Inventory. I list the invoice number, total of the invoice and the date. (I also have a column to indicate if I needed to purchase from another consultant for a customer. Yes, the company frowns upon this, but sometimes we need to satisfy our customers!)

There are 2 important things to discuss here:
#1 – the total of your invoice DOES NOT always equal the total of your inventory. For example, if you received a Fashion Fix shipment, $5.95 of that invoice is shipping…which is a DEDUCTIBLE EXPENSE, not inventory!!! (remember, more expenses = bigger refund!) Also, if you were to purchase display items or supplies (bags, t-shirt, loyalty cards, etc) these are supplies… again, a deductible expense.
So, what do I need to do? Take the total cost of the invoice, subtract the shipping (make sure you record this in the shipping section – this isn’t just for sending to your customers!) and put the remainder of the invoice under Inventory. (you would do the same thing if you had biz supplies….just list them under supplies)

#2 – If you receive a credit from the company for returned merchandise, you would record this as a credit to your inventory (the last line that I have in parenthesis ($8.08) is a credit for items I sent back.) The only way you get this total is by pulling from your order summary in the back office.

SECTION III on the Schedule C:
– You will need to list your starting inventory on line 35 (closing inventory from 2013 tax return….or zero if you became a consultant in 2014).
– line 36 will be the total for all of your inventory purchases for the year MINUS any items you kept for yourself!
– line 41 is the inventory you had on hand January 1st. (total pieces x your cost… this includes tax)
– after you do the calculations, you will take line 42 and copy it to line 4 in Section I.

Link to the Schedule C



I use this form to track all of my hostess rewards. Yours does not have to be as in depth, but I started a couple programs this year and I want to see where my FREE product is going.
The main thing is you have SOMETHING to keep track of what you give away… It’s totally a deduction on your taxes! The minimum you need to record is:

1. Who you gave it to
2. When
3. How many
Again, you don’t have to use my sheet, just make sure have a system to keep track of hostess rewards. (This, my defective report and my personal use report are all kept in a folder on my desk…. I use this folder several times a week!) Click Here to get Sheet.


This is the form I use for all the jewelry I have kept for MYSELF for this year. (If you didn’t realize it, we get to ‘write off’ all the jewelry we wear every day…. who’s doing a happy dance right now?!)

Unless it’s a blockbuster name that I know I’m going to remember, I usually describe the piece instead of putting the name. That way when I can’t remember if I’ve written off a piece, I can look and see that I’ve written of the ‘black sparkly snap bracelet’ specifically. (Yes, it’s best to write the piece down immediately, but who hasn’t been still picking out their jewelry while your husband is waiting in the car! lol)

Again, this is a SUPER SIMPLE form, but it is professional enough looking that if I ever did get audited, I would look organized and put together! Click Here for the document.


This form is for any type of defective product that is a cost to me. (If I get a credit from the company, it’s NOT a cost to me.)
You would use this form for:
– replacing a customer’s broken jewelry with a new piece.
– refunding a customer’s money and the jewelry given back to you is used and unable to resell.

The total for this from will go onto the Section C in Part 1 on line 2. On this line, you would also claim any returns where you have actually given the customer her money back.
(Example: I invoiced a customer from a party and she paid it, but she never came to pickup the jewelry as arranged. After 2 months of trying to contact her, I decided to just refund her money and put the jewelry back in my inventory. Since she actually paid the invoice, it counted in my sales in my Paypal reports… I need to claim the same amount in a refund to offset the sale.) 

The important thing here is to make sure you have a description of the product and what is wrong with it…. again, to substantiate your case if you were to ever be audited *knock on wood*

Also, make sure this jewelry is then thrown away… you can’t fix it, or turn it into something new and wear or sell it if you are claiming it as defective. Click here for the Document

Question: Do I include the tax the customer pays me in my Sales that I report on line 1?
Answer: YES. When you record the total of your invoice from Paparazzi, you are including sales tax you already paid as a cost. When the customer pays you, you claim it as sales and the two offset each other. Likewise, if you don’t charge a customer sales tax, you already paid it to the state through Paparazzi, so when you subtract your ‘cost of goods sold’ from Section III from your total sales, your profit will reflect that.

Question: Where do I report my commission from Paparazzi?
Answer: If you received a 1099 from Paparazzi, you will record this on your Schedule C on line 1 along with your sales.

*Big Thanks to Kristen Brown-Barnhardt Who wrote all of this. Thank you so much for helping us stay organized! This is so Helpful!