Video Workshops from the I.R.S. - Am I a Business or a Hobby? - OR - Make Your Business More Business-like!
For artists and makers, running your business in a manner compliant with I.R.S. rules can make a BIG DIFFERENCE between being declared a "business" or a "hobby" and potentially major financial consequences. The IRS defines "hobby" as "an activity not engaged in for-profit" and deductions for expenses are limited. On the other hand, a "business" is allowed to deduct the operating expenses from their business revenue to determine net taxable income. Read more about this issue: "Business or Hobby? Answer Has Implications for Deductions."
In the course of preparing for my recent audit and writing these articles about "Surviving the I.R.S." I found a great set of videos on the I.R.S. website that I recommend if you want to learn more in convenient, digestible segments.
Grab your tea or coffee cup!! The video series is called Small Business/Self-Employed Virtual Small Business Tax Workshop.
The Introduction and Lessons 1 - 4 are fundamental information. I especially recommend that you listen to at least these four. You can pause, replay, or skip around. Start with the Introduction (it is really short.)
Everyone should listen to: Lesson 4. What you need to know when you run your business out of your home.
BELOW are summaries of the first four lessons:
Lesson 1. What you need to know about Federal Taxes and your new business
EIN (Employee Identification Number)
Bookkeeping and Accounting
Forms of a Business Organization
Paid Tax Preparer
Lesson 2. How to set up and run your business so paying taxes isn't a hassle.
Net Profit and Loss
Disability Access Credit
Self-Employment Tax and Estimated Tax
Lesson.3 How to file and pay your taxes using a computer.
Describe IRS e-file
Benefits of e-file
Electronic Payment Options
Lesson 4. What you need to know when you run your business out of your home.
Determine Deduction Eligibility
Types of Expenses
Sit back, listen up, and
take your legal deductions.
This post was updated on January 22, 2022.
Good to the Last Drop Flower Brooch by Harriete Estel Berman