Last week we talked about some items you must have to prove you are in business with the intent to show a profit. Here are a few more items:

1) A bookkeeping system. It does not have to be a formal, double entry system but your receipts and records must be organized. You can use pencil and a paper spread sheet, a computer program, envelopes and a file box or whatever works for you. But you MUST be able to retrieve information regarding how and why you did business.

2) You must have a space that is regularly and exclusively used for your business. It can be an entire room, a 1 foot square file box, the basement or whatever; but, it must be used exclusively for your business operations.

3) Education - must be able to show that you are capable of doing this business. It is difficult to selling sewing supplies if you do not know how to sew. The cost of continuing education can be a deductible expense so make certain you know your product and how to sell it.

 
This information is provided in an effort to help you gather and organize the information necessary to file your individual or small business income tax return. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.