Hobby or a Business?

A hobby is an outside interest that you pursue for fun in your spare time.

Hobbies are fantastic to have because they give you an outlet to do something of interest, outside of your regular occupation and may even be relaxing.  Successful hobbies however, can in fact turn into a business.

To find out if you are a business ask yourself some questions

“ASK YOURSELF QUESTIONS!!!”

Ask yourself the following 4 questions to get a general idea about whether you may be operating a business:

• Do you have a reputation? People in your industry or region may be taking notice of the product or service you are selling
• Are you getting more orders than I can fill? If you are receiving more orders/service requests than you can fulfill in your down time.
• You are making a profit or do you expect to make one in the future?
• Are you organised?
• Are you thinking beyond individual sales and are considering renting a shop?

“HOW DO I KNOW IF I’M A BUSINESS?”

The following are some factors that can show if your activity is a business (for tax purposes):

• Your activity is organised & commercial in nature
• You are engaging in business.
• You have the purpose and prospect of profit.
• Your activity is repetitious and regular.
• What is the size, scale and permanency of your activity?
• Is you bank account steadily growing and earning more each month?

Once you have established the answers from the above….

CLICK ON this ATO link HERE

“WHAT NOW?”

Ensure from now on that you :

• File all your receipts
• Use software or “app” to record your earnings
• Keep an eye on your turnover
• See your accountant if $75000 or more to register for GST

Check out my other articles relating to this topic

How to schedule yourself to do your own bookkeeping regularly?

Bookkeeping Tips – Filing

How to control your paper nightmare?

Do I really need to lodge a tax return?

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Amanda

Amanda Hoffmann is a registered BAS Agent No.18613005, Associate of Finance, Xero & Myob Certified Consultant, a Queensland’s Quickbooks Trainer and works with the ATO on their advisory boards.

She says she is more than just a bookkeeper with experience in real estate investing, social media, podcasting, public speaking and blogging.

Amanda would love to train you to use accounting software, if you need help fixing a messy account or general assistance with automating your administrative duties to save time and money.