Making money with a hobby

[PeoplesElbow]

I've always seen the section about making/spending money on a hobby part of taxes and never paid it much attention until I stumbled onto making quite a bit of money with a hobby. Anyone ever do this? Advise on leaving it as hobby vs officially being a business? I really didn't intend to make any money at it and just kid of fell into it.

 

[TPD]

If it’s cash money, no one needs to know about - especially Uncle Sam!

 

[limblips]

If you turn a hobby in to a business it becomes a job! Enjoy your hobby and make any sales cash only.

 

[vraiblonde]

I've always seen the section about making/spending money on a hobby part of taxes and never paid it much attention until I stumbled onto making quite a bit of money with a hobby. Anyone ever do this? Advise on leaving it as hobby vs officially being a business? I really didn't intend to make any money at it and just kid of fell into it.

The first rule of Fight Club is....you do not talk about Fight Club.

 

[Sneakers]

If you turn a hobby in to a business it becomes a job! Enjoy your hobby and make any sales cash only.

That's my take. I'd do it because it's fun. Once you make it a business, the fun is gone. That's why I never tried to monetize any of my talents.

 

[spr1975wshs]

I stumbled onto making quite a bit of money with a hobby.

I looked into it a while ago when I heavily involved with medieval re-creation activities and was starting to make enough armor pieces, leather pouches and other stuff to sell..

Below a certain income threshold, one can file under Profitable Hobby. If you think you'll make much more, you can create a Sub-Chapter S corporation.

I did file for an S corporation, and was getting a start when my wife took a spiral and could no longer work due to PTSD and other effects of her service connected disabilities. Store manager let me work 45 - 50 hours a week, so I let the corporation lapse.

 

[vraiblonde]

That's my take. I'd do it because it's fun. Once you make it a business, the fun is gone. That's why I never tried to monetize any of my talents.

OTOH, if you love what you do you'll never work a day in your life.

Or something like that. But I agree, once you turn your passion into a business it loses a lot of its pleasure.

 

[PeoplesElbow]

I'm not thinking of making it a necessary income stream either way, I am just looking at are there any tax advantages/disadvantages and liability advantages/disadvantages either way. Not sure how I could have any liability either way but you never know. Someone just wants to hand me a $2500 for something that I had maybe hoped to make up some of the costs of the hobby at most.

 

[PrchJrkr]

My foray into hobby turned for profit was on the small side, so never had to claim it as income. I poured lead heads, painted them, and added tails and spinner hardware. I sold them to local 7D businesses when the family was young. It paid for my equipment and put extra food on the table when the kids were little and Wifey was stay-at-homing it. I still use the same equipment, but only to stock my own tackle box and for sharing with friends and family.

I never took it too far, because I was also always working two jobs.

 

[GURPS]

That's my take. I'd do it because it's fun. Once you make it a business, the fun is gone. That's why I never tried to monetize any of my talents.

OTOH, if you love what you do you'll never work a day in your life.

In 2000 I turned my Computer Hobby into a JOB, I've been working Various IT Related Jobs in the past 23 yrs ... sure there are shitty days, but over all work is good

 

[vraiblonde]

I'm not thinking of making it a necessary income stream either way, I am just looking at are there any tax advantages/disadvantages and liability advantages/disadvantages either way. Not sure how I could have any liability either way but you never know. Someone just wants to hand me a $2500 for something that I had maybe hoped to make up some of the costs of the hobby at most.

If it's a steady income stream an accountant would tell you to set it up legal so you don't get in dutch.

If it's something that could potentially injure someone you'd want to set it up as a business to separate your personal life from any liability.

If you're going to be advertising it for sale, definitely get legal because some malcontent rat fink will surely turn you in.

Fun fact: the odds of a moderate income person getting audited are extremely low. It's like .30% or something like that. But there are certain triggers that bring you to IRS attention, which are worth googling so you know.

 

[rio]

I don't want to turn my hobbies into a business, but sometimes people have asked if I will make something for them. So I do it as a favor, then they will return the favor with a gift card. I didn't ask for money and they didn't give me any.

 

[Gilligan]

I've often been asked why I don't build engines, vehicles, motorcycles and boats as a business. I'm quite certain that doing so would have destroyed any interest in it continuing to be a hobby.

That and few people really want to pay what that kind of work requires.

 

[stgislander]

If you turn a hobby in to a business it becomes a job! Enjoy your hobby and make any sales cash only.

My wife has a very bad habit of this.

 

[PeoplesElbow]

I've made some really nice wood furniture, but it takes me forever because I'll down a path and decide that isn't what I want to do and stop for a while then pick it up later when I decide how I want to do something. Someone wanted me to make them a hutch, I turned them down because I told them I take forever, they kept pushing, didn't want to do it for a lot of the reasons mentioned above (its an art for me). I spent two years making a bed before I decided it was how I wanted it.

I guess this is also more trouble than it's worth.

 

[Clem72]

I'm not thinking of making it a necessary income stream either way, I am just looking at are there any tax advantages/disadvantages and liability advantages/disadvantages either way. Not sure how I could have any liability either way but you never know. Someone just wants to hand me a $2500 for something that I had maybe hoped to make up some of the costs of the hobby at most.

$2500? Whats your hobby, shaking your butt at toots?

 

[Monello]

for sharing with friends

 

[Monello]

$2500? Whats your hobby, shaking your butt at toots?

I don't want to turn my hobbies into a business, but sometimes people have asked if I will make something for them. So I do it as a favor, then they will return the favor with a gift card. I didn't ask for money and they didn't give me any.

On the road we ran into a bartender that also did butchering. He had some of his products vacuum packed. But he told us he couldn't sell them legally. So we suggested that he gift us his goods. In turn, we dropped him a nice tip at the end of our time in his establishment. If you ever find yourself in Interior, South Dakota, a stop in the Horseshoe Bar is a must.

 

[Monello]

I've made some really nice wood furniture, but it takes me forever because I'll down a path and decide that isn't what I want to do and stop for a while then pick it up later when I decide how I want to do something. Someone wanted me to make them a hutch, I turned them down because I told them I take forever, they kept pushing, didn't want to do it for a lot of the reasons mentioned above (its an art for me). I spent two years making a bed before I decided it was how I wanted it.

I guess this is also more trouble than it's worth.

A while ago, I made some simple furniture. 1 piece I made was a 3 level shelf to put my plants on at work. When I brought the piece in, 1 of the other guys checked it out. It was plain, mostly right angle stuff with lap joints. Sanded down then topped with a nice finish. My coworker said that I should make those to sell. I told him I'd never make any money, since it takes me forever to get it just the way I want it. I probably could have made some jigs to speed up the process but then I'd lose all the passion of taking my time and enjoying the process as it develops into my vision.

 

[PeoplesElbow]

$2500? Whats your hobby, shaking your butt at toots?

I'm flattered, I shake my butt for $20 for whoever wants me to though. Hey $20 is $20. Since Covid I have been riding my bike alot and do have the ass of a greek god.

It's actually 3D modeling items to be 3D printed. In this case a couple blocks worth of historic buildings and a train station.