BUSINESS, TAXES, RED FLAGS
Tax season is here.
And some of you, business owners, worry about raising red flags with IRS.
What can increase your chances of getting audited?
Having business losses — for three straight years — can put you on IRS’ radar.
And you run the risk of having your business reclassified as a hobby.
IRS says “someone operates the business to make a profit.”
According to them businesses should be making profit three out of five years.
(Or two out of seven if your business is training, showing, breeding horses.)
When you keep having losses, it will attract IRS’ attention.
(Those red flags we mentioned earlier.)
Does this mean the IRS will automatically reclassify your business as a hobby?
* Keep good records.
* Prove to the IRS that you run the operations in a business-like manner.
* Have a business plan — showing you fully expect to make a profit (soon).
Wishing you success in all you do.
Thanks for visiting.