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11/26/2018

Hobby vs. Business – What is the difference?

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​Hobby vs. Business – What is the difference?

A hobby is something that casually brings in money, but you don’t really have the intention of making a profit with it.
A business has the goal of eventually making a profit. It’s ok if it’s not making a profit in the first couple years, but after the third year, you’ll need to show a profit on your tax return to prove to the IRS it’s not a hobby.
The big downside to a hobby is that if your expenses are more than your income that year, you can’t deduct more expenses than the total income you brought in.
Sarah set up a single-owner LLC in her state after learning that this structure provides a little more legal protection than staying a sole proprietor (which is the default for any business). Then, she went to the bank to set up a separate business checking account. She took all her business paperwork and it took about 45 minutes to sign all the papers and get it set up at her bank. Now she has a place for all her payments to go in and all her business-related expenses to come out of so when it’s time to do her bookkeeping, she’s not trying to remember all her expenses!
Mike McVay, Tax Accountant - 850-725-5696 - Mike@MikeMcVay.com

11/15/2018

Tax Info for 2018 - UPDATED

    Mike McVay, Tax Accountant Blog
    Certified ​QuickBooks ProAdvisor & Licensed Tax Accountant Pensacola, FL

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    Mike McVay, Accountant Experienced IRS Tax Resolution Specialist
    With over 20-years experience working with individuals, families & small business owners. McVay has long term knowledge in taxation to help with their income tax, I.R.S tax issues and businesses management.
    850-725-5696​
    Mike@MikeMcVay.com

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