Be ware fellow breeders! Keep all your receipts the IRS is after us!

When an individual (or in our case a family) decides to step up their game, and follow their passion by taking something they enjoy and have experience with and turning it into a business, there can be some startup costs anticipated. All businesses incur startup costs in their early phases and it should be fairly reasonable to anticipate some losses (within reason) in the beginning. No Madagascar trips here! No trip expenses, dining expenses or extravagant attire! Also, we all know that we are selling a product that takes a little time to be produced...therefore, in the early stages a little patience is needed.

It is interesting to look at the information available regarding classification of a hobby vs a business and to look at the expected time frame at which a business is expected to show a profit. It is also interesting that people in the horse breeding business are given a longer time frame. As a business, we are far from reaching our expected time frame.

Again, I am pleased at the direction we are headed and I have confidence in our tax professional.
 
Teal Beauty said:
Fortunately, we have our taxes done professionally by a certified accountant and reputable company; therefore, we feel that we have very little to worry about. Had out accountant felt that we did not have a legitimate business, he would have advised accordingly. Our accountant has many, many years experience in tax matters including expertise in the field of tax audits. We have very good business records. At this point in time we find this matter to be more of an annoyance and rather insulting. It is a shame that small business owners must be questioned regarding their practice when they have so many responsibilities related to owning and operating their business.

Our announcement here has not been to request individual opinion on whether or not we are a true business; but merely to advise others to keep their books clean and retain documentation of their expenses and income. Based on reaction, I am assuming that many partake in the selling or perhaps the trading/exchanging of chameleons as a hobby and not as a business so for them this may never be an issue. Perhaps for some, a hobby is satisfying; but for us, a family business has always been our dream!

Thank you for your support and for standing with us through this challange! Many of you have become an extension of our "chamily" and we appreciate your kind words and encouragement. It is for the LOVE of and devotion to these amazing creatures that we are driven to success!
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Would you be able to share an example of your book keeping that perhaps others can learn from and not learn through mistake...or audit!
 
CharlesYamaguchi said:
Would you be able to share an example of your book keeping that perhaps others can learn from and not learn through mistake...or audit!
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As Matt stated it is important to keep everything! If you have receipts that appear faded or may fade overtime, either photocopy or scan to an electronic format. Log every expense, no matter how insignificant it may seem at the time, and make sure that you are able to justify each expense logged. Keep good records of all sales and update your books regularly. It may often seem tedious and like you may not have the time, but it is worth it, if and when you are ever audited. It is a good business practice, but also a good practice for your own personal budgeting as well. You are an open book when undergoing an audit, and because of how stressful it is to receive a dreaded notice, avoid heart palpitations by rather being overly prepared! Have the mindset that your audit notice is in the mail!
 
My wife works for the IRS and if i remember correctly she said if you made money over a certain amount then it must be claimed i'm not sure whats the amount but as long as you don't go over that then it doesn't need to be claimed. Kind of like selling cars where you are limited the number of cars you are allowed to claim as a gift ,donate or privately sell during that year anything over that amount would be classified as a car dealership business. Now if you registered for a business license for you chameleon business to be issued a sells permit i would assume you would file your monthly quarterly or whatever business income you made to the franchise tax board like other businesses would .
 
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