Hobby or a Business

I had an interesting discussion with an Enrolled Agent. She has seen a great increase in IRS audits for schedule C’s. One thing they are looking for is whether your business is really a hobby or a business.

Hobby/biz example: My photograghy is a hobby (may change). I may occasionally sell a photo or 2, but I do it for fun, as such the few dollars I earn go into other income. I can’t write off all my camera equipment, software as business expenses.

But as I use my camera to make custom cards, promote my SendOutCards business, if I keep a log of how much business and how much personal, I can take off the biz portion on my schedule C.

Now a new business started at the end of the year may not have any sales that first year, but there should be sales of product/service in the following years.

Now if I later decide to turn my hobby into a business, that is allowed too.

The enrolled agent (passes IRS exam/similar status to CPA) said IRS questions whether it is really a business if no sales and no advertising/promotional expenses and no income. Now if you advertised and promoted, but no one bought (hopefully none of us would have that problem), it would still be a business, and you would find new ways of doing things. But if I opened up a store front, no advertising, not even as sign on the door, and talked to friends (non business discussions) and surfed the net all day, and no sales, the IRS would lean heavily towards it’s a hobby.

If ever in doubt what to do, talk to your tax advisor.

For IRS guidelines on hobby or business check out their discussion. I’ve always thought it to be a great reality check to go through the list, being honest with yourself, are you serious about your business, or is it just a hobby?


Picture Plus

I’m so excited about the new Picture Plus feature from SendOutCards With Send Out Cards new feature I can now upload unlimited photos to their servers. Then from any computer anywhere, I can grab a photo, turn it into a custom card instantly, and have it printed an mailed.

Our church did a float in a local Pioneer Day parade. It was hot, we passed around water bottles, fruit, etc. The kids were great. I took a few pictures. Imagine their surprise when they get a thank you card in the mail, featuring them!

Pioneer Parade

Or after an Eagle Court of Honor, a congrates card to the new Eagle and cards to the other scouts, inspiring them to do the same. Each card featuring themselves.

Future Eagle

My new grandbaby moving to Dallas, gets cuter everyday. Just turn his picture into a cards and share with far away family members.

Baby Jack and Aunt Lauren

Great for business also, imagine the front of your business on a card, better yet, honor someone else for an award they recieved. Put them recieving their reward on the front of a card. They’ll appreciate the thought and won’t be forgetting you anytime soon.

The possibilites are endless. Use your imagination.