One of the major circumstances is how businesslike your activities are carried out. Areas of interest to the IRS include well-maintained books, obtaining a local business license, maintaining a separate bank account for the business, and proof of marketing efforts including business cards. Another concern of the IRS is the amount of time and effort you devote to the enterprise, especially if you also hold a job besides your business. The IRS checks to determine if you depend on the income generated from your business and if you have made changes or improvements to the business based.
