Is your Business a Hobby?

  This is an important question to ask yourself if you are in business. Why? The IRS is asking that question and if they determine that the answer is yes your business is a hobby then that lesson can be very expensive in penalties and fines. Action alone is not the determining factor. The type of action can be. What do I mean by that? Are you in business to make money? Some people may think that is a stupid question. If the IRS determines that you are not in business to make money then they may decide to investigate further to determine if your businesses is just an attempt to get write offs and deductions. That is called tax evasion and is illegal. It is very important to understand this. The government is looking for ways to get money out of it's tax payers. Raising taxes is the last option but, going after businesses disguised as hobbies is the first alternative. I am not presenting this information to you to scare you out of starting a business or continuing to be a business owner. what I am doing is arming you with information with hopes you will become an intelligent and productive business owner. There will be more to come.