This week, I had the privilege of speaking for the Expert Call—thank you for attending!     You guys had a lot of great questions, and so I want to publish them here with the answers for a recap. 

 Can you reiterate the Three Game Rules you mentioned with a brief explanation of each?

1.       Prove Intent Rule:  you must prove an intent to make a profit with your business.  You cannot be in business just for deductions.  The purpose of business is to make a profit.  IRS asks, “Does the taxpayer carry out activities in a business like manner?”  The most practical way you “prove intent”  is in the management of your business finances – books and records.  (I explained THE easiest, slickest, online software that sets aside money from every bank deposit and slots it for profit so that your rear is covered.    www.spendonpurpose.com )

2.       Company Money Rule:  ALL income resulting from your business efforts belongs to your business, not your family.  Put all of your business income into a bank account that you use exclusively for business purposes.  No co-mingling business/personal finances.

3.       Prove it or Pay Rule:  Write on every receipt  what you were purchasing and what business purpose that expense necessitates.   (If you’re at a coffee shop having coffee with a potential business recruit write: “Interview LeAnne Smith”  and circle the date.)

 I’m confused how to pay myself now that I know the Company Money Rule, can you explain? 

Remember, Income – Expenses = Profit !  So, you pay yourself the profits of your business.  I recommend writing a check to yourself out of your business bank account.   Take that check and deposit it into your personal checking account.    NEVER do an online transfer between accounts.   Always write a check , or do a withdraw cash. 

 Does the Company Money Rule really apply to me if I’m not officially “incorporated” (S-Corp or C-Corp)?  Can you explain why? 

Yes!  It applies to you regardless of your business structure.  There are lots of different business types that IRS recognizes.   Regardless of whether you’re a Sole Proprietor (98% of Direct Sellers), and LLC, S-Corp, or C-Corp you are in business.    In a nutshell, these business formations essentially help define how you pay tax as a business owner (in addition to liability protection).    So, no matter what, the money of your business is business income and will be REPORTED  as business income.  

The biggest problem with being a Sole Proprietor is that there’s no official piece of paper that your state sends announcing, “You’re now recognized as a business entity!”    For a second I ask you to think outside legalities and technicalities, and look at the ethics of it.  When in doubt, let ethics be your guide! 

Ask yourself next time you’re in your favorite coffee shop, “Would I consider it ethical if the owner of this place took the money out of the cash register and put it in her handbag on her way to the mall?”  How is it any different when you get your commission check or income from sales?

 What was that online software you talked about?   Where do I find it?   

It’s called Prosperity.  You can find it at www.spendonpurpose.com   It’s the easiest  business finance application in the world!  It’s a totally different way of looking at money.   Prosperity uses the concept  of “the envelope system” so that your bank deposits not only hit a check register and document your books/records, but they  fill up your envelopes,  so you always know at a glance what your profit is!  It’s a completely new approach to finances… even if you’re not a numbers person, you’ll actually enjoy putting your deposit(s) and expenses in because it feels like a game to watch your profit envelope grow!  If you want help getting signed up for a 30 day trial of Prosperity, the sales office number is 509-456-6524 (pacific time zone)  You can watch Prosperity in action with the videos they provide on the Tour and Support Pages.

 This class was great!  I wish I would have had this kind of business-basics training earlier in my career. I’d like to have a call like this for my own Team!    When are you doing it again, or how do we set that up?  

My  company calls this a “Sales Unit Webinar.”   We require 15 people in attendance.  Your people can from all over the world can attend virtually.   When you set up a Sales Unit Webinar, my office will coordinate all the times/dates/details.     You are effectively the “host/hostess” and will distribute the webinar registration link to your Sales Unit.   You can get some help on this by emailing info@spendonpurpose.com