Taxes 2012 & Your Business Plan

Logo of the Internal Revenue Service

Logo of the Internal Revenue Service (Photo credit: Wikipedia)

 

Greetings Friends!

December was going to be a warm fuzzy month for blogging–or so I thought, till I got wind of a scary new IRS tactic waiting to be unleashed on unsuspecting  home-based business owners.  The source of my IRS update–Ron Mueller, is fairly well known as the go to tax information guy in network marketing circles.  What I’ve heard from him is something you’re going to want to attend to asap.

Apparently the IRS has outfitted its auditors with a new rule book for home based business owners and their taxes, with the primary aim being to eliminate your business deductions if you’re not a) making money or b) demonstrating that you intend to soon.  Those of us who are fairly new in business don’t have to make a profit right away, but we do need to be able to demonstrate we’re savvy business owners doing everything we can to turn a profit.

This is only an issue if you’re audited–something you hopefully will never experience, but if you should, you want to be prepared.  Those who are living off the proceeds of their businesses are less in danger than those who aren’t, but you want to get act together, either way, just in case the IRS comes a calling.

The A#1 way to be ready is to have a business plan–and pay attention to the next several points because these are the new rules IRS agents are apparently gunning for…

Do you have a business plan that actually speaks to how you will make your business a financial success ?  What this means is your business plan had better be dealing with the realities of your business challenges.  If what you’re doing isn’t working, how have you modified your plans/actions so that you can become financially successful with your business.  I found it significant that the IRS has never taken an interest in business plans before–and that if you receive a letter saying that you’re being audited they WILL NOT mention that you need to bring  your plan to your face to face meeting with an IRS auditor.   Apparently the fact that you would arrive at a tax meeting for your business without your business plan will be seen as a sign that you are a business lightweight–and that could just cost you your business deductions.

You will also need to be able to tell the IRS who you serve, aka your niche, as well as the number of people in your area (demographics) who are looking for what you have to offer.  Those of you who have online businesses will need to indicate the number of people looking for your product or service–which is easy enough using SEO informtion.

All of this seems aimed at rattling the cages of the legions of folks seeking additional financial security via entrepeneurship; but panic needn’t be the order of the day.  Here are some tools that can help you if you’re worried about how to keep your business open without being taken to the cleaners come tax time:

  • Talk with your tax accountant to see what you need to do personally to be ready in case of an audit.
  • Visit Ron Mueller’s site if you need more information about how the new laws work and how they might impact you.
  • Create your business plan or revisit it as the case may be, with an eye toward insuring it meets the new IRS specifications; we’re in new territory here folks and forewarned is forearmed.  If you’re like me and the mere suggestion of needing to put together a business plan makes you beak out in hives, you might want to invest in  Jennifer Lee’s book, The Right-Brain Business Plan

There will always be new hurdles in life and this one, in the broader scheme of life, is just johnny come lately.  You have gotten wind of some changes and now you can take action to protect yourself and your business.  In fact, it would be wonderful if you passed the word along to anyone you think might benefit from hearing the news.  This way we can all begin 2013 ready to roll and without a dark tax cloud hanging over our entrepreneurial heads (my thanks to Ron Mueller and Steve Wiltshire for sharing this news).

Rich Blessings!

Dee

Copyright 2012.  All rights reserved.

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2 thoughts on “Taxes 2012 & Your Business Plan

  1. Thanks for the heads up, Dee. It is a good thing I was working on my plan for 2013 last night. Do you think it counts if it is in my journal?

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