At what point do you need to treat a revenue-generating hobby as a business
Quick background. I'm a woodworker, I kinda like to cook, and I'm also a martial artist who enjoys some of the weapon arts. Between those three interests, I have a need to sharpen various types of blades. Best I can tell, there is no one local, or even regional, who offers that service.
So I've invested quite a bit of time and money in the equipment and proficiency to sharpen a variety of items.
After sharpening most everything I own, plus a lot of cutlery for friends and family, I figured what the heck and put an ad on Craigslist offering a sharpening service.
For now, I'm calling this a hobby. I'm nowhere close to showing a profit yet, so really shouldn't be any tax implications.
At what point (other than the obvious...when you show a profit) do you need to stop calling something a hobby and actually get a business license, form an LLC, open separate business financial accounts, purchase insurance, etc? What other stuff is involved in operating a sole proprietor type business that I'm not thinking of?
Never done this before, so figure why not tap the Lounge for wisdom. Or smartarse remarks. I can work with either.
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Posted: 08/14/2018 at 4:47PM