There is really only one reason to have a home-based business. You want to make money that’s outside your regular job or other business.
It’s a business you control. And that means you can have financial freedom even faster, assuming you work your plan.
Okay, that’s said. Now let’s tell you why I get excited. You’ll pay a whole lot less in taxes.
Unfortunately, the less tax part is why too many people get started. They are forgetting the “business” part of home-based business. That means the IRS has a whole new target.
There are three steps to safely and ethically taking advantage of the home-based business tax advantages:
- Have a legitimate business in the eyes of the IRS
- Find and record your business deductions
- Properly file your tax return
Today I want to talk about (1) – the need to have a legitimate business in the eyes of the IRS. It doesn’t matter what you think you’re doing. It matters what the IRS thinks you’re doing. And it all comes down to one question, really: Are you running this like a business or are you just looking for some tax breaks?
The IRS has devised a 9 Factor test that you can pick up at Freebies.
These factors boil down to 4 main categories:
#1: Are you running this business in a business-like manner?
#2: Do you have prior success in a similar business?
#3: Are you putting in the time and effort to make it a success?
#4: Do you have profit now, or have you had profit in the recent past?
In the next week or so, I’m going to announce a special webinar “Do You Have an IRS-Risky Home-Based Business?” to discuss these 4 categories in more detail. I’m going to share what you need to do, step-by-step to make sure you’ve got a safe IRS-Friendly Home-Based Business. Look for the email invitation! If you aren’t currently registered for our emails, please sign up for the Freebies on the right hand side and you’ll automatically be added.