Thursday, February 4, 2010
Hobby or Business ????
From one of our readers: I wanted to start my business as more of a hobby. I would eventually like to spend more time, but currently I am a full-time student(19 credit hrs this semester!), mother of a 4 and 5 yr old, working part-time, and also married. My husband is getting ready for a year-long assignment (active duty Air Force) in July so I will be an “almost” single parent for a year. Can you tell me if I would still be able to consider my business as a “business” and claim expenses, etc? I wasn’t sure since I would probably only spend a few hrs a week and have about 2-3 parties a month. I didn’t know what all the rules were and wanted to do my homework before I got started. I haven’t signed up yet and I am planning to in a few months.
I am not a CPA and haven't stayed totally current on the guidelines, I would suggest everyone visit the irs website to read more about what can and can not be claimed. In most cases if you are operating with the intent to earn a profit, most reasonable expense may be claimed. One must show a profit for a certain number of years within a certain time period (matter of years) or IRS has the right to say that it looks as if you are not operating to earn a profit and disallow the expense - if it is more of a hobby. If one makes under a certain amount, it may not be necessary to file - but as I said, I am not qualified to give you absolutes because I never would want anyone to have trouble because of my advice. It may even be worth a call to your favorite accountant.
Nothing burns me more than hearing a director "over" sell the expenses, sorry all, manicures, nylons, getting your hair done, taking your hubby out to eat, etc... don't count as reasonable expenses!
A little note is even our director's suits may not be claimed as a deduction because it could be used other than "MK" - it is not a "uniform" per se.
Expenses are important in reducing our reportable income so it is important to know what you can deduct. Man yourself with knowledge, it will be worth it. There is no better time than now - at the beginning of the year - to make sure you are keepting track of every allowable expense.
I apologize for not being more definitive but I do not want to cause anyone any potential headaches. Play it safe and check with the pros.
For Further Reading...This Week On Pink Truth - Click Here
Pros and Cons of Mary Kay - Read or Contribute or Both!
First Post - Why I Started This Blog
The Article I Wrote For ScamTypes.com (here) (there)
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