13 Ways Direct Sellers can avoid the Dreadful Audit

The deadline is nearly here. It’s tax season! Are you’re overjoyed or pulling your hair out? Regar13 Ways Direct Sellers can avoid the Dreadful Audit dless of your perspective, nothing could rain on your parade more than being audited.

You probably do your best to remain inconspicuous, which is a good thing. But some factors are beyond your control. It’s a fact. The more money you make, the more likely you’ll be audited. Those who are self-employed, like network marketers, have a higher statistical probability of misstating their income and deductions compared to salaried individuals. Of course you’re not going to limit your income or change your business plan in order to decrease the chances of being audited! So we’ve decided to put together a target list of 13 [unlucky] red flags that spark interest from the IRS.

  1. Business expenses are especially important to direct sellers. Did you know that IRS examiners often refer to home office, business travel, entertainment, and business use of an automobile deductions as the kiss of death? Why is this? Well, these particular deductions are often abused and the IRS knows to scrutinize them closely. Keep strict documentation and proper records and be ready to defend your claims!
  2. Charitable contributions and casualty and theft losses. Taxpayers who donate property to charities, and taxpayers who have had property stolen or destroyed tend to overvalue it for tax purposes. The best defense to an IRS challenge is to get independent appraisal of higher-priced donated items.
  3. Bad debts. To claim a debt loss you must show that the debt was legal obligation, such as a contract or loan note, and that Continue reading
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10 Tips to Sponsoring Long Distance Recruits Successfully

10 Tips to Sponsoring Long Distance Recruits SuccessfullyIn the digital age, one thing is for sure, your network of friends, relatives and online acquaintances will reach far beyond your own city limits – even beyond your country! Even if you don’t call yourself a “technology person,” the distributors you recruit locally will likely know of other people outside of your locale.

Because we are globally-connected, you are bound to become involved in long distance sponsoring.

Embrace the opportunity to recruit beyond your city walls. You never know if – in a city a thousand miles away – long-distance sponsorship will be your most productive downline.

Like everything else in this business (in life); however, there are right and wrong ways to go about long distance sponsoring. Continue reading

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Is the FTC ramping up regulation of the MLM Industry?

Fact Checking the FTC’s New Legal GuidanceFederal Trade Commission Chairwoman Edith Ramirez argued on October, 2016 at the DSA Policy Conference that it was time to ratchet up regulation of the direct selling industry, and not a time to “put the brakes” on more regulation of the $36 billion industry and its 20 million strong sales force.

The FTC and the Direct Selling industry are clearly of the same opinion of the basic goal that the direct selling industry should prosper through effective and ethical practices. However, FTC Chairwoman Edith Ramirez emphasized new legal standards that would abandon a 40-year old gold standard, the Amway Safeguards Rule, and that would also upend and call into question decades of industry accepted business practices.

Briefly, the Chairwoman argued for: Continue reading

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21 Ways to Provide Legal and Ethical MLM Training to Distributors

21 Ways to Provide Legal and Ethical MLM Training to DistributorsYou can look at MLM companies from several perspectives to get an idea if they are running a legal business or a pyramid scheme. In this post, we cover how legal MLM companies approach training their distributors. Legal direct selling companies will encourage distributors to run their business with ethical standards and realistic expectations.

A good MLM company, seeking longevity in the marketplace, will put a lot of effort into training their distributors on how to manage and build their business. Businesses will provide online training, event training, and incentives.

Not every MLM company has the same opportunity, or compensation plan. There are many types of compensation plans and many variations on the original compensation plans (stairstep, unilevel, breakaway, matrix, binary). Each compensation plan and MLM company is unique in how it approaches consultant training.

Regardless of what compensation plan you’re using, there are common distributor training techniques among all companies and compensation plans. From a legal perspective, MLM companies must be realistic about their distributors’ statistics for success. It is not easy to become a MLM multimillionaire. Only a small percentage of distributors achieve such high success. Therefore, when legitimate direct selling companies present their training, management and support programs to encourage and train distributors they use some (or all) of the techniques in the list below.

If distributor training in your company sounds a little like this list, then it is likely looking good from a legal perspective. A MLM company opportunity should prioritize some or most of the following: Continue reading

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9 Characteristics of a Successful Network Marketer + Videos!

9 Characteristics of a Successful Network MarketerNot every person is right for the direct selling business. Are you right for MLM? Here is a list of 9 characteristics of a successful network marketer:

1. You must be able to meet people! This is a people business. The only way you’ll find recruits and customers is by getting out there and marketing! If you’re not a people person, this business likely isn’t for you!

2. Do you believe in the products you’re selling? You must be excited about the product you are selling. If you don’t believe in the product it will impact your sales results. You must be the type of person who gets enthusiastic about sharing your product with others. Excitement plays an important role in a purchase decision in the network marketing business! Continue reading

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Watch out for Pyramid Schemes! Some Warning Signs

Warning Signs of Pyramid SchemesHow can you tell if a company is an pyramid scheme, unintentional cash gifting pyramid scheme, or otherwise downright illegal? Well, there is no single authority on the on the subject. There’s not really one single definition either. However, there are certain warning signs that can cause law enforcement agencies to investigate a company. Here are a few warning signs to look for when starting, joining, or even investing in a direct selling, MLM company:

– Promotions where the business opportunity is the product. If no legitimate product or service is being sold, but only the opportunity itself, chances are that the company is operating a pyramid scheme.

Products are sold at inflated prices. Pyramid promoters try to mask their true intentions by selling a product. Often, the product will be vastly over-priced, and unlikely to generate much retail activity. This is a sure tip-off that the real “product” being sold is the compensation opportunity. Continue reading

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Create a Prospect List!

How to find network marketing leadsPotential Distributors are quite literally all around you. Friends, relatives, neighbors, PTA, people you run into at the post office and grocery store. They are everywhere! Consider using this list to develop your own prospect list, and remember, these folks may know others who are also potential customers!

Workplace Prospects:

– People who need to earn extra income

– People who are intrigued by new opportunities

– People who are in a similar line of work, like sales

– People who are high-energy and gregarious

Neighborhood Prospects: Continue reading

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10 Questions Distributors Must Ask to Meet their Sales Objectives

Meeting your goals in network marketingAs a distributor, you must decide what your objectives are when beginning your network marketing, direct selling, MLM business. Here are ten questions to ask yourself in order to help you meet your sales goals and reach your full sales potential:

1) In your first year, what is your objective as a distributor? It is important to establish long-term goals and remind yourself of them frequently. If your objective is to sponsor 25 distributors in the first year, then you must recruit an average of two people each month. Once you develop long-term goals it is easier to see, and therefore reach, the short term goals.

2) How many people are you going to need in your organization? If your answer to the first question is monetary, then you will need to determine how many people you will need to recruit in order to meet your sales goals. Be sure to study the company’s compensation plan to understand what you need to do in order to succeed.

3) How much time do you feel it will require each week? Depending on your objectives, you may decide to spend ten hours a week or 30 hours a week recruiting, advertising, and selling. Keep in mind that most companies state that home parties average around 1.5 hours.  Continue reading

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Check to See if a MLM Company is Legal or a Pyramid Scheme

How to check to see if a mlm company is legalProspective distributors often ask how they can find out if a MLM, network marketing, or direct selling company is legal or if it’s a pyramid scheme. There are a number of ways to research the company yourself; to be sure of its legality before joining.

Here are some ways which you can investigate a MLM company:

1) Check to see if it is a member of any industry associations, like the DSA or DSWA.

2) Call your state’s attorney general’s office or consumer protection division. Most states regulate direct selling companies through these agencies.

3) Check with the Better Business Bureau. Continue reading

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Join for the Product or the Compensation Plan?

Join a MLM Company for the compensation plan or the product?What is more important to distributors, the compensation plan or the product?

It is common for distributors to be recruited based on an attractive compensation plan. Instant monetary benefits, promises of instant wealth, and enormous payouts are often advertised by companies. However, no company has ever been successful based on its compensation plan alone. An out-of-this-world compensation plan often gives the company an initial jump start, but time Continue reading

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