YOU Should KNOW – If You Are in MLM or Network Marketing

If you’re running your own business out of your home which includes MLM companies, Network Marketing companies, Direct Sales companies or any type of employment where you are deemed “self” employed, then it is your duty to be current on IRS rules and codes that apply to the self employed.

This pertains to you regardless of the product or service you are selling with the following companies – just to name a few:


Fuel Freedom (FFI)

Mary Kay

Prepaid Legal


Juice Plus



Coffee Acai Plus


Mona View

Vemma Healthy

The following is a brief summary of what you should know regarding the IRS and how it views the Network Marketing industry. This is so important because the tax rules and codes were written for the specific purpose of those individuals venturing into the new business realm of direct sales. The last thing the direct selling industry needs is a reputation with the IRS and other government agencies that individuals are posing as business owners for all the wrong reasons.

You and I both know that in today’s economy, not only is it paramount that we create a substantial income, but more importantly, how do we hold on to as much of our earnings as possible.

Well the IRS knows how much is involved in starting up a business. Don’t be fooled for one second thinking that just because your office is in your home that starting a new business is any different that those starting up a business that includes a monthly rental bill. The logistics and requirements are much the same no matter where your office is.

•Network Marketing has been recognized as an important industry by the IRS.

•In 1982, the IRS specifically recognized the independent contractor status of direct sellers.

•The IRS issues a number of materials addressing the issues of self-employment workers and home-based businesses.

•The IRS specifically addresses the issues of network marketers in IRS Publications 911. See Tax Guide for MLM/Direct Selling Distributors

•One in ten thousand households in America has a direct seller.

•There are approximately ten million network marketers in the United States

•Sales of the Network Marketing industry in the United States are in the $20 billion range.

•About 65 percent of direct sellers area female and 35 percent are male.

•For most, Network Marketing is a part-time activity. Approximately 80 percent of networkers work part-time, less than 30 hours a week earning less than $500 per month.

•Network Marketing opens doors for everyone. About 5 percent of Network Marketers are senior citizens, and about 8 percent have physical disabilities; 13 percent are African-American; 5 percent are Hispanic, and 1 percent are Asian.

•The top five reasons that people join network marketing companies:

1.I like and believe in the product (90 percent).

2.I like being my own boss (73 percent).

3.I like working at home (64 percent).

4.The harder I work, the more I make (54 percent).

5.I enjoy selling (49 percent).

Sources for the above statistics: the Direct Selling Association