A hobby is your exterior interest that you’re shadowing on your spare time. It gives you an outlet to do something that can be relaxing. But, you must be missing something from your hobby, totally unaware that you could profit on it. Even if it’s just a pastime for your pleasure, your knowledge and skill can make a difference. Hobbies are one of a kind that you can make profit of. Let’s say you have a hobby in preparing delicious meals for someone, you can start experimenting your own ingredient and make your own menu. By letting others know that you cook and prepare menus on occasional basis that might be a start for others to ask orders from you. Now, how about a hobby in writing? Do you know that you can introduce your writing skill to students or professionals in your local area? Writing a research paper, a thesis, or even a company’s manual can be a great hobby.
You might be thinking now to start your own business with your hobby, the question is, how will you know you can possibly start a business out of your hobby? Let us slowly assess your hobby and see if you can turn it into business.
Questions to ask before a hobby become a business:
- Do you have a reputation? Do people trust you? Do people in your local area or your network take notice of your product or service?
- Do you often get more orders?
- Are you making profit already from your hobby?
- Do you think you will succeed through your hobby?
If your answers on all questions are positive, then better think of a bigger picture outside the box. You can make a good business from your hobby. The next step you need to do is to make a business plan. This will tailor everything and can be done according to your plan. Should you go beyond individual sales then, consider hiring a staff and renting an office or a shop. It would be better if you’re doing a fresh start, to start from the scratch. You can gradually think the things needed for future ventures.
There are others who started business as a hobby in their free time, without realizing that they already made much. This may complicate in tax issues when the internal revenue realizes that you’ve made much for many years without any business claims. It is very important to file a tax when you are certain of more earnings. It may still seem a hobby for you but, when you earn more than the minimum from your hobby; better claim your hobby as business.
There are consequences when you failed to classify your hobby as business. If the internal revenue classifies your hobby as business, they normally won’t allow you to seize any losses. If you can’t prove of any losses, they will get you pay the unpaid taxes plus penalties. You might not want this become complicated; therefore, better think right now and ask yourself if your hobby classifies as business.