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First off, I'm glad I found his site and read alot of the comments/stories that are posted.

To start the story off, a friend of my wife's had a MK party which my wife attended. She calls me on the phone asking to buy makeup, I respond "Ok, how much is this one gonna cost me ?". "Oh... about $200.", she replied. Wow, thats alot of cash for makeup, but nonetheless I gave her the go ahead.

The consultant she dealt with had no inventory. Had I known we would just have to trust her to deliver, I would have never agreed to this, but to my surprise the consultant pulled through and delivered within 5 days. After this order she was set for awhile, but when she ran out of product, the consultant was unreachable for whatever reasons (I can't remember exactly what). So my wife sees a customer while at work wearing a MK shirt and asks if she sells... blah blah blah, my wife gets "recruited" and the brainwashing (if you want to call it that) begins.

At first i was just a tad apprehensive because I know how my wife is about details. I drill her to no end, with most of her responses being "I don't know". (I would say 85% of them, being liberal) You know, just the basic business stuff like, Do you need a business liscense, do you need a business banking account, do you need federal and state employer tax ID numbers, what about estimated tax payments paid quarterly ? So, she got with her Director and told me "No, we get a 1099 from MK at the end of the year and handle everything at tax time", "I don't need any of that other stuff, all I need is a bank account for my business."

Telling me she is going to get a 1099 also tells me that she is considered a sub-contractor and she is not "starting a business". The American dream, as it is so-called is not "sub-contracting", it is sole propiortorship (that is running a business). It would really make since if they would just consider themselves a wholesale cosmetic supplier and only sell to people who have agreed to certain rules ad what not.

My gripes with this are that since MK is doing the 1099's, "they" (whomever that may be) are reporting my wife's income to the Federal Government based solely on how much product she orders. This makes things a major PITA when tax time rolls around since she plans to sell to her family and friends at 60% of retail.

One thing I just don't understand is why, when she places an order, she has to pay sales tax on the retail amount of the product instead of just the wholesale amount, which, in turn, poses a whole sleau of problems in itself. Scenario example : She purchases $1000.00 wholesale value of product, pays $1168.50 (that's $1000, plus 8% sales tax [on $2000] and the standard $8.50 shipping fee) Now, she sells all of the product at %60 to whoever and charges them 8% sales tax for a total return of $1296. Now the problem is she paid $160 in tax, and only got back $96 for sales tax on the items she sold. Now, is MK sending the retail tax amount to the state (which my wife is paying) ? If so that's just dumb, and what can she do to get that difference back ?

There are many things I hate about MK. Another is that, to my understanding, the products cannot be sold in a retail store setting. Again, that's just dumb. If my wife wanted to open her own store and sell nothing but MK products, she couldn't due to the agreement she signed in order to become a MK BC. And the parties, oh the parties... They do put a psychological strain on the attendees to buy because of the home setting and the fact that most likely the people there are going to be friends, family, friends of family, or friends of friends (at least to begin with). The attendees, not all, but granted some, will buy product just because of that simple fact. It sort of makes them feel obligated.

Now don't get me wrong, I think they have good products (my wife loves them) but the selling part really has some issues. Now, on to the "meetings"... On one hand, they can provide support and encouragement for the new BC's, but I'm sure some of the directors, if not all, will pressure in some fashion or another their "employees" to buy inventory, intentionally or not. That is why they are where they are. You can't become a Director without recruiting and encouraging your recruitees to sell and order, plain and simple.

In order to be successful in MK, one would have to be very detail oriented in order to not get screwed by their director, have a lot of free time to hold parties, know a LOT of people in general in order to branch out, or just be one hell of a sales person AND have lots of free time. With my 12 hour, 5 day a week job, 2 kids and my wife working 8 hours 5 days a week, this is NOT a good oppotunity. With our schedules and 2 children under 5, this is not the most excellent opportunity for extra cash as she was so encouraged it would be. I dont see how any young married couple could possibly do well with this if they have children. I can see where this could make money, but for MOST people I don't think they will be very successful in it. Just a few more gripes and I'll quit typing :).

The statistic stated to my wife - 3% of all Millionaire's are women, and 70% of those were made by MK --- Flat out BULLSHIT. On Dave Ramsey's radio show (I trust what he says 100% because he uses credible sources) I heard that 70%, yes 70% of self made millionaire's IN AMERICA are women and I would be willing to bet that less than 3% of those are from MK. Although by technical definitions MK may not be a MLM, they are so closely related they may as well be.

My advice to anyone would be to carefully and critically think about any decision you may be faced with BEFORE taking action. There are many things to be considered ! My wife was kind of pressured and put on the spot to begin this ASAP. Her director told her things like Oh, well if you wait till tomorrow you wont get blah blah gift. Also, on her first order her director told her - Oh, you cant place an order after such and such date. After that I have to place it for you and charge it to your (insert payment options here credit card, banking account, etc.)

I'm like WTF, you mean to tell me that you can't place a freaking order for 2 weeks if you didn't do it last night ? And now you have to have her to do it ? That just doesnt sound right to me.. Anyway, on my closing thought, I'm sure there are concerns, gripes and praises alike that I have left out. Looking forward to some responses ! Sorry so long, LOL.
William Garner - 12 May 2005

We are subject to business license regulations depending on the state you're in. And, your wife will be the one who has to find that out. As for federal and state tax ids, that will depend on the regulations in your state. I know this isn't much help, but that's how it works.

Also, she can charge sales tax on the retail instead of the discount, so she'll be fully compensated. Or she can charge sales tax on the discounted price and request a refund from the state. Mary Kay In Touch has a form in the Tax & Legal section that can be used for this. Also, you can opt out of paying sales tax to Mary Kay and pay it directly to the state (in this case, you would need a federal and state tax id). As for estimated taxes, those are hard to figure when you're new, but as you see how much you'll be making, you can come up with a more accurate estimate.

The director who told her she couldn't order for two weeks did not accurately state the order system. After a month closes, orders placed in the first week (or two) of the following month will be delayed until all orders from the previous month are processed and shipped. The time frame can be 10-14 days. I've placed orders in the first week of months and have not had to wait this long. On the last day of any month, only directors can place inventory orders and they can order for consultants with the consultan'ts funds. I think this is done to meet monthly goals for the director. Every day or two before the end of the month, I get an email from my director about placing an order to meet our unit goals. I figure since I'm in business for myself, I order when my business needs it instead of when my unit needs to meet a goal.

I hope this helps.
Kittie Atencio - 12 May 2005

Actually, if I remember correctly, only commissions and the value of any prizes go on the 1099. It is up to her to report anything she actually earned from sales for income tax purposes. But her director was correct that she need not estimate. She will not make enough money to make that necessary.

> One thing I just don't understand is why, when she places an
> order, she has to pay sales tax on the retail amount of the
> product ...

Yes, that's really a PITA. And don't count on it being okay for her to charge based on the full retail as Kittie suggested. It isn't legal in my state, and I don't know what states that would be legal in. There is a form to fill out and get the extra sales tax you paid refunded, and yup, it's a pain to track all that.

> Also, on her first order her director told her - Oh, you
> cant place an order after such and such date.

That was a lie, plain and simple. Either her director wanted her to order right away for fear she would wise up and not order at all, or the director needed her order in quickly so the Director could make her goal for unit production (perhaps her car was at stake.)
Rachel Suddeth  - 14 May 2005

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