Not working? Do what you have always wanted to do

Okay, so you are out of work.  You check the paper, you talk to friends, you go on the internet and do everything you are supposed to do.....fill out applications, submit resumes, go on interviews.

What have you always wanted to do?  You are not working now so let's examine other possibilities than working for someone else....at least until you find a job.

You know what your passion is.  Now what do you do with it?  You move forward with your idea.  You can still check the paper, talk to friends, go on the internet, fill applications, submit resumes and go on job interviews but NOW you have a backup.  Or is it a backup?  Maybe while you are planning your backup you decide that is the direction you want to take.

Rob Spracklin 

Who are your competitors?  Once you have determined who they are can you compete with them?  If you have a WalMart on every corner it may be difficult to open a store that sells a little of everything.  

Are you going into a service type of business?  If so, do you like people?  If you do not like to interact with people the service industry is probably not for you.

Okay, so you now have an idea of what you want to do.  Now let's take a look at what the IRS's definition of what a business is:  

The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby, an activity not engaged in for profit.

In order to educate taxpayers regarding their filing obligations, this fact sheet, the eleventh in a series, explains the rules for determining if an activity qualifies as a business and what limitations apply if the activity is not a business. Incorrect deduction of hobby expenses account for a portion of the overstated adjustments, deductions, exemptions and credits that add up to $30 billion per year in unpaid taxes, according to IRS estimates.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

• Does the time and effort put into the activity indicate an intention to make a profit?
• Does the taxpayer depend on income from the activity?
• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
• Has the taxpayer changed methods of operation to improve profitability?
• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
• Has the taxpayer made a profit in similar activities in the past?
• Does the activity make a profit in some years?
• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

Do you have a business plan?  Mission or Vision Statement? Marketing Plan?

Think about it.  What have you got to lose....you aren't working now anyway.  You may just find yourself getting excited again.

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