cell phones, and
computers can become deductible.”
Because of this, if you get audited by the IRS they will
apply certain tests to determine if your business is really
a trade or business, or maybe it’s just a hobby.
To be treated as a business, you must prove that your
intended purpose for operating your business is to make a
profit. The following are very important steps that you must
take to help prove your intent:
1.
Keep all documentation for your expenses.
2.
Do your bookkeeping on a monthly basis.
3.
Prepare a written business plan that projects the length of
time it will take you to get profitable. A sample
4.
Compare your business plan to your actual progress from time
to time to determine if you are on track to
meet the goals you set up for yourself when you did your
business plan originally.
5.
Document any changes you make to the operation of your
business to get it profitable.
6.
Keep good mileage records.
7.
Open a separate bank account for your business.
When you perform the steps above, you show strong
indications that you are truly operating a trade or
business, but there is more.
I strongly urge all of you to read “IBO
Bookkeeping 101” and the “IRS
Direct Seller Audit Technique Guide.” (The
Direct Seller Audit
Technique Guide is a document used as a guideline by IRS
auditors when auditing direct sellers.) Both of the
documents are posted here on the
IBOAI Board’s website free for you.
You should also encourage all of your downline and upline to
access these documents on the Board’s website.
Joe
Learn more about
Joe DePetris, Jr., and IBO tax return preparation
and tax issues at
IBO Bookkeeping 101.
Find more
Tax Tips for IBOs from Joe DePetris, Jr., CPA.
This article is provided as an
educational resource for your guidance, and is
strictly informational. It does not constitute
legal, accounting, or other professional
counsel. Nothing included herein implies a
recommendation by the author, the
IBOA International, or
Amway Global, of any course or method of
regulatory compliance. Readers and users who
intend to take, or refrain from taking, any
action based on information contained herein
should first consult with their qualified tax
advisor, preferably a C.P.A., or appropriate
regulatory authorities.