HOW TO TURN YOUR HOBBY INTO A BUSINESS

HOW TO TURN YOUR HOBBY INTO A BUSINESS

At a networking event the other day a friend of mine asked me "George, is it possible to turn my hobby into a business? And also what is the difference between a hobby and a business? I know some of you might have a hobby that you would like to turn into a business, but don't know how. This blog post would attempt to point you in the right direction.

What is the difference between a hobby and a business?

A Hobby - A hobby is an activity that may produce an income, but is operated for pleasure without the intent of making a profit.

A Business -Business is an activity conducted on a regular basis with the intent to make profit, but you are not required to make a profit in order to claim tax deductions.

REMEMBER: To be a business you must have a product or service which you offer regularly to the public. You demonstrate your intent to operate a business by:

• Talking regularly to potential or actual customers and keeping records
• Open a separate bank account - Pay- Pal Account
• Keep good records of income and expenses
• Profit and loss statement
• You automobile or other assets need not be in a business name to be become deductible

As a business you may deduct all of your ordinary and necessary operating expenses, no matter how great or small your income.  If you have more income during the year than expenses, the difference is your taxable profit. If you have more expenses than income the difference is your taxable loss.

Quick Business Start-Up Kit

1. Select  a business idea based on your interests, abilities and the amount of the time you have to spend on your venture

2. Choose a form - a Sole Proprietorship - Partnership -Corporation

3. Choose a business name and file it at the county clerk office for license

4. Offer your product for sale to potential customers

5. Learn everything you can regarding your business from books, tape courses, seminars, the internet, etc.,

6. The Small Business Administration (SBA) also has valuable resource publications

7. Colleges continuing Education departments also have various courses

Ask yourself these questions:

Do you have a business plan? What is your objective? What is your time frame? Have a five year incremental time frame and take into consideration the different market cycles that you will encounter. Is it possible to make money in the beginning, and can you sustain the momentum?