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I am wanting to start a business selling of my hobby items. I have been makeing things for family and friends, which has increased my output. Most of this up to now has been in the form of gifts. Now I am thinking why not? Do I have to have a license, pay taxes or can this go under the heading of household income? I have a seperate shop set up. Will not have any employees as yet. I haven't kept close track of my costs, but can pretty well figure it out.
Any information or suggestions will be greatly appreciated
For the benefit of those without telepathic powers, might be helpful to post where on the globe you reside, and what specifically you are producing . . to address potential city, county, state, and federal issues.
Go down to county and register business, you have to do this usually...the fee around here was 10 bucks. {American law}
You wont be able to do EZform taxes will have to use 1040 even if income is small. Fortunately in my case, I like doing taxes, yes I am weird so did husbands.
Assuming you are resident in the US, the first thing you must do is be sure that you will turn a profit. You would probably be filing a 1040 Schedule C as a sole proprietor (the abbreviated version may be possible if your costs are below $5,000, I believe), but if you do not show a profit, that is a red flag to the IRS that what you are doing is a hobby and not a business and it is very highly likely that you will be audited (happened to a friend of mine).
Then you have to apply to register as a sole proprietor business with your county (possibly also with your municipality). You must also make sure, then, that your business is zoned as a home business in your area. Therefore look up online or call the county clerk's office and find out the rules in your zoning area for home businesses.
As a rule of thumb, your business may not emit odors, gasses, noises or other emissions that would disturb the neighbors, your business must be within your house, not take up more than 15%-20% of the square footage, sometimes a garage is prohibited, almost always a separate building on your residential property is prohibited, you may not have traffic in and out of the house that would disturb the neighbors, sometimes there is a restriction of one customer at a time, you cannot put any distinctive sign on your property announcing or advertising your business, and, finally, there may be more restrictions.
In short then, 1) make sure you will turn a profit, 2) check out zoning for home businesses - and your home business in particular - in your county and possibly your municipality.
I hope this helps, and I wish you success in your endeavor, in pursuing the American dream which is - not being a home-debtor egged on by a corrupt bankster-infected ruling class - but to run your own business and not be taxed to death for it.
I am wanting to start a business selling of my hobby items. I have been makeing things for family and friends, which has increased my output. Most of this up to now has been in the form of gifts. Now I am thinking why not? Do I have to have a license, pay taxes or can this go under the heading of household income? I have a seperate shop set up. Will not have any employees as yet. I haven't kept close track of my costs, but can pretty well figure it out.
Any information or suggestions will be greatly appreciated
Since your post is so very vague in what it is that you do I'd suggest
that you make a "Business Plan" to operate your business with.
Just the effort of writting your own business plan should make you
smarter about what it is to run a business and the laws governing it.
It really is a worthwhile effort to keep your business ship off the reef
of failure.
Home based hobby business sounds very exciting and this will be surely very much interesting too after having this class. As we all know that hobby is such passion which we never forget and having this passion as your business can be proved very much profitable as well as you can have any kind of home based business which you are having a keen interest to develop as your future.
If you are making a product and don't expect many sales, I would keep it as either income and file it with your personal taxes or try to sell on eBay. When you create a business entity, there are many business fees that are associated with creating a new business. It's best to start slow and see how well things go. If you don't expect more than a few hundred dollars extra, it might not be worth it. If you expect to grow into a giant company, then do it right by forming the right business entity and protect your assets and business.
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