Is Your Photography a Hobby or a Business?
Whether your photography is deemed a hobby or a business by the IRS could save you money. If you are running a photography business, you can offset your income – not just the income from your photography business but from your day job, as well – by the costs of your photography business. To be declared a business, your goal must be to make a profit. But since photography is expensive, it can take a long time to show a profit. So are you out of luck? Maybe not!
Here are 10 ways that will help to show the IRS that you are running a photography business:
• Make a profit in three out of five consecutive years, and you need to show nothing else.
• Keep accurate and updated business books and records on your activities.
• Leave your time-consuming day job or reduce your time there to devote to your business.
• Market and promote your business.
• Follow standard or develop revolutionary practices for your business.
• Make attempts to reduce the disparity of your losses compared to your income from the business.
• Hire experts such as accountants, marketing firms and lawyers, or study ways to help your business make a profit.
• Experience losses similar to others in the same business.
• Operate your business like those who do make a profit with their photography business.
• Be able to show that your business will eventually make a profit.
Other than the first item, none of these will definitively prove that your photography activities are a business. Further, the IRS may look at many other factors to determine the purpose of your photography. But following the above practices will not only help to show that your photography is a business, it will actually help your business.
Take my advice; get professional help.