- iBeacon and 5 Reasons Why MLB is the Right Brand to Succeed Business 2 Community
When does a hobby become a small business?
So, I am a guy that publishes things for profit. I have gotten my writing published professionally through publishers, of course, but I was thinking of starting to do work as an art-publisher. Sort of small runs of my works and other people's works financed by me. I have set up a mailing address (not a store front or anything), a website, and things like that. I am not expecting to actually make any money, though. Sort of a hobby, and sort of for appreciation of the work rather than thinking any long term things or having employees or anything like that. This is a very realistic concept of how this is going to play out. My question is, when does a hobby become a small business? When would I have to register it and get a tax id? Is there any point to doing that? Can I just name my business and go from there, just sell my stuff like I am having a yard sale, sort of? Of course, i would be claiming net gains and losses on my taxes like I should, but I was just wondering about when I should actually go through the trouble of registering it and everything, if ever. Everything I have read seems to suggest that I need to have employees, a certain amount of income, etc, but nothing like "Well, if you plan on your business failing, it is no big deal to even go to the trouble of registering it." Thanks a lot!1 year ago - 2 answers
"actions speak louder than words"
i suggest that you do not mix the two.
OR, just forget about having a biz. I have written on this exact topic--when it is this or that?
email me further if you wish
To run a business as a sole proprietorship with no employees all you need is your Social Security number. There is no need for a federal ID number. You might find out what your city and state require as far as registrations just so you don't find your self in hot water with one or the other. If you are going to recognize gains and losses for tax purposes you should definitely get registered with your city and state.
If I remember properly the IRS calls a Business that makes a profit in only 2 out of 5 years a hobby and therefor you loose the tax benefits of a business owner.
You might see if opening the business as a non-profit is viable. Not making a profit on your business does not necessarily make it a non-profit. There are certain requirements, that the IRS can give you, to qualify your business as a non-profit.
All this being said the first line of your question says you publish things for a profit. So I say go for it. You may not get rich off it you but can still own a business that has only small profits.
Maintain good accounting records and you might consider buying a few hours consulting time with a CPA who has experience with small businesses.
Good luck with your efforts.
Source(s)by BD in NM - 1 year ago