Hello Experts,
I find myself in a situation where my business expenses exceed my income significantly. Could I potentially be a target for an audit?
My husband works full-time, and I began freelancing two years ago. Despite securing a couple of projects and earning approximately $27k but my actual business net income was only $900.
Recognizing the need for a formal business structure, I established an LLC last year. Despite completing over three small projects, my expected income of $27k turned into $19k due to unpaid invoices. Complicating matters, I leased a new vehicle and incurred various expenses for business trips, resulting in a net loss of -$25k. The substantial expenses led to a $45k business deduction for the previous year. With two consecutive years of net losses, does this make me a likely candidate for an audit?
Thank you for your insights.
