Please Send Me Your Business Plan!
If I asked you to send me your business plan, could you do it in less than 5 minutes? Sounds brashy right? Who am I to ask for that?
Well, the IRS can ask you for that if you ever get audited. You may say, well, I’ll just write one up quickly. It’s not that easy – almost wish it were!
A business plan is just one of many items that the IRS looks at to prove that you are in business vs a hobby. Lately, the IRS is targeting small businesses and home based businesses that put out that they are in business and may be, just a hobby. Some targets include, but are not limited to, people in Mary Kay, Avon, Amway, Young Living, and similar businesses. Why would they do this?
The IRS is losing revenue and they look to places where they can get some back. Alot of home based businesses show paper losses that lower their tax liabilities. A good number of these businesses could easily be classified as a hobby, and therefore, be subject to losing their deductions.
A business plan is the first defense in stopping the IRS from declaring your business as a hobby. The key to a proper business plan is that it is a living document. It gets updated at least every 6 months and it changes with circumstances. So, writing one if you get audited does not work. The IRS wants to see updates!
A good business plan includes the answers to: Who, What, Why, When, Where, and How about your business.
Now, this does not need to be a 50 page document. Usually a good 7-8 pages can suffice. In addition to the “operations” of the business being addressed, financial projections is a must. This is where most people fall down. They really do not want to face the numbers. A good business coach can help do this for you and help you be honest about the potential of the business.
If you are reading this and do not have a business plan, get one today. I’ll even make it easy by giving you a free template. Just CLICK HERE for your free template.
If you want a FREE report on how your business can be compliant with the IRS, CLICK HERE