What to Do When a Hobby Becomes a
A lot of people wonder what to do when a
hobby becomes a business in terms of taxes. There are many
people that start something as a hobby and find it profitable
so they turn the hobby into a business.
If you can turn your hobby into a business,
then it is a good thing in terms of taxes because you can then
deduct a lot of expenses on your tax returns.
The IRS will not allow you
to deduct hobby expenses by there are so many
business deductions that you can claim.
The key is to be able to
prove to the IRS that you hobby is now a
business. You may not have to prove it but, if
you are ever audited by the IRS, at least you
are prepared to prove.
There are so many people
that tried to claim that hobby expenses as
business expenses and the IRS really frowns
In general, you have a business and not just
a hobby if:
You start the business with the intention of making
You participate significantly in the business
You show that you are committed to the business
You are operating the business in a businesslike