I know that I have to pay income tax on my profits from product sold, but what about my profit from recruiting? Also, will I be paying both income, and self-employment tax?
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Yes and yes.
Income Tax and Self-employment Tax.
Of course you do! Income is income regardless of the source and unless it’s explicitly exempted from tax by law then it’s included in your income. And since it’s self-employment income you must pay self-employment taxes on top of the income taxes.
yes, you have to pay taxes on your recruiting income, and self-employment taxes too.
You will be required to pay tax on the net from all income from this activity. You are subject to both income tax and Self Employment tax. The good news is that very few people ever make any money in an MLM so your tax won’t be so bad.
Hi again
Just answered your other question too. If you’re still referring to efusjon, I think you’re confused.
You do not make money actually recruiting people since you do not profit in any way from their membership fee. You make money on commissions from their sales only.
Additionally, you are hired as an independent contractor. You will be sent a 1099 with all the information on it on how much they paid out to you. You bring that with you when you do your taxes and of course the gov taxes their cut.
yes on the recruiting side.
As for self employment–depends on how your structured. If you are a sole proprietor then yes because schedule C is SE taxed. On C-corps no because you get W-2 income. As for S-corps, partnerships, and LLC’s (partnerships) you can chose to SE tax but not required because it is an investment.
Yes, both are self employment income and will show together on your schedule C