November is a critical month for a lot of Photographers and WEbsite Designers. No, it has nothing to do with Black Friday deals or mini sessions.
November is a critical month for determining if you have a business or a hobby by the 9 Standards set by the IRS.
Did you know that they use 9 Factors in making this determination?
The 9 Factors they use are:
- Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.
- Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.
- Whether they depend on income from the activity for their livelihood.
- Whether any losses are due to circumstances beyond the taxpayer’s control or are normal for the startup phase of their type of business.
- Whether they change methods of operation to improve profitability.
- Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.
- Whether the taxpayer was successful in making a profit in similar activities in the past.
- Whether the activity makes a profit in some years and how much profit it makes.
- Whether the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.
You can find out more on the IRS website here.
How does your business stack up against this list?
Did you happen to notice the first, fifth, and sixth determining factors?
How your books are kept and who you have on your advisory team is key to making it clear you are in fact a business.
If you need help with both of these click the button above to schedule a call. This is where we shine and are able to instantly help our clients get organized, profitable, and create a successful business.
Schedule your call today!