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Unless you actually make money doing this, the IRS will consider it a hobby rather than a profession, and will not allow you any preferential tax treatment rela
by freeAgent 5y ago
Unless you actually make money doing this, the IRS will consider it a hobby rather than a profession, and will not allow you any preferential tax treatment related to business expense deductions, etc. Just a heads up.
- toss1 5y agoYes, that is a risk that my accountant warned me about. But he also pointed out that it is not required to make money from Day One, and there are other criteria. IIRC, they don't have a problem until 3+ years out, and other criteria are considered, such as following business formalities (meetings, minutes, filings), segregation of funds, accounting (&yes, filing via an accountant helps), having a storefront, business cards, website, etc. Consult a qualified accountant. I'm also presuming the GP poster is intending to make money, so that would eliminate the issue.