Certified business coach, licensed attorney and best-selling co-author, Jennifer Anderson, reminds hobby-turned-business owners that the IRS has very specific expectations that prove one’s business is real and not a hobby.
San Antonio, TX – February 22, 2020 – Jennifer Anderson, attorney, Business Coach and co-author of The Art Of Success with Jack Canfield, posted a new article on her company website entitled “The IRS Expects You To Prove That You Have A Real Business.” Ms. Anderson tells readers how they can prove to the IRS that they are really in business.
“With the April 15th tax deadline getting closer,” writes Anderson, “many people who have turned their hobbies into businesses may be thinking there are all kinds of business deductions they will be able to take.” She continues adding, “Well, before you get too excited, let me forewarn you that the IRS has ways of determining whether you have a real business or merely a hobby. And, they’ll expect you to prove it.”
As Anderson points out, “Unfortunately, there are no concrete rules for determining if you operate a hobby or business.” She goes on to say, “The IRS does say that a business must actively be trying to make a profit. To prove your startup is a business, you need to be able to show that you are making an effort to turn a profit.”
According to Anderson, “Proving intentions is not always simple. But, the most obvious way to meet the IRS’s requirements for a business is to actually make a profit.” “Usually,” she says, “you won’t be considered a hobby if you make a profit for three out of the first five years you are in business. The amount you make can be small. If you can show the IRS you made a couple of dollars off your startup, you should be OK.”
“While making money is great for your new business,” says Anderson, emphasizing, “and the first couple of years can be difficult to show a profit, you may be relieved to know that money alone isn’t enough for the IRS to consider you a business. You need to proactively demonstrate that your business is valid.”
Read the entire article at http://jenandersonconsulting.com/2020/02/20/the-irs-expects-you-to-prove-that-you-have-a-real-business/
About Jennifer Anderson
Jennifer Anderson is a licensed attorney and certified coach, certified practitioner of neurolinguistic programming, certified hypnotist, and certified Timeline Therapy practitioner.
Both as a student and as a consultant, Jennifer has trained in enhancing performance and productivity in all areas of life for more than 20 years. She has dedicated her career to helping clients solve problems, overcome limitations, and achieve success in their personal and professional life.
After graduating from University of Texas at Austin and University of Houston Law Center, Jennifer has dedicated her legal practice to assisting entrepreneurs with their business, real estate, and estate planning needs.