Is your business a Business or a Hobby?

Either way numia.biz can help keep your sales receipts and expenses organized.  The nice advantage a business has over a hobby is that it can deduct expenses like meals & entertainment, travel and other marketing costs.  The Internal Revenue Service looks at two things to determine if you are a business or a hobby.

1. If you make a profit in three out of five years.
2. If you can demonstrate that you are in business to make a profit.  That is, do you manage the business in a professional manner, how much time & effort do you put into the business, if you depend on its income and your level of expertise.

The key point the IRS will tell you again and again in proving you manage the business in a professional manner is good recordkeeping.  You should have a bank account for the business separate from your personal one.  You should record all business transactions and retain all your records (receipts).

Imputing your sales and expenses into numia.biz fulfills the “record all business transactions” IRS requirement.  That was easy!

Also, make sure your business has a tax ID number called a Employer Identification Number or EIN.  It’s just like your Social Security number except for businesses.  You can get one from the IRS in the USA here:

https://sa1.www4.irs.gov/modiein/individual/index.jsp

But beware; even though it is an online application, the computer only works Government hours as of January 15, 2009:

Monday – Friday: 6:00 a.m. to 12:30 a.m. Eastern time
Saturday: 6:00 a.m. to 9:00 p.m. Eastern time
Sunday: 7:00 p.m. to 12:00 a.m. Eastern time