The IRS Wants to Know, Are You Running a Business or a Hobby?

11 Feb The IRS Wants to Know, Are You Running a Business or a Hobby?

As a Weaverville / Asheville area CPA I work with a lot of self-employed solo-entrepreneurs.  Their talents are varied and range from business coaches, artists, potters, construction workers, doctors, nurses, massage therapist, acupuncturist, bankers, investors, and so many more.  The one area many of them have in common is the issue of providing documentation to support their business income and expenses so that a accurate tax return can be filed.  According to the IRS website, 1 in 7 self-employed individuals will be audited.

With the growth in Direct home-sales based businesses like Tupperware, Avon, Mary Kay, Longberger Baskets, 31, It Works!, DoTerra, Pampered Chef, Tastefully Simple, Paparazzi, Jamberri, and so many more, the issue of whether a business is truly a business or just a hobby comes up more and more.  This tax topic is called “Hobby Loss Rules”.  I have written an article that covers the specifics of this rule and how to prepare yourself should you be audited.

Here is a link to my recently published article that speaks directly to the Hobby Loss Rules.  I hope you find it helpful.