Is Your Hobby Truly A Business?
When you have a hobby that you do just for fun, it can easily morph into a small business without you needing to do too much about it. As soon as you start charging for your goods or services, and you're ideally making a profit, then you have moved from 'fun' to 'serious', and things will need to change. If you're not sure whether your hobby qualifies as a business, or if you want to know what you should be looking out for, below are some pointers.
You're Making A Profit
If you're making any kind of profit from your hobby, then it is a business. No matter how small you may think it is, it is still making money, and that means you need to declare it. You should look at registering your business to make it all legal and aboveboard so that you don't have to worry about these kinds of things later on.
You Pay Taxes
If you pay taxes on your income (which, if you're making money, you are legally obliged to do), then you are running a business. Taxes can be complicated, and if you get them wrong, it can cost you a lot of money, time, and reputation. Therefore, if and when you do need to submit taxes, it is best to outsource the work to a company such as Tax Return who will do all the hard work for you.
You Employ People
If your hobby requires you to employ people so that you can keep up with demand and process all the orders that you are receiving, then you are definitely running a business! Make sure that whoever you employ is paid in accordance with the law, and that you ensure their rights are upheld. It means they will need to have sick pay, holiday pay, and maternity or paternity leave. How much you will need to pay them during these times will depend on your country's laws and the contract they sign, which they will need to do when you are employing them.
It's Taking All Your Time
Although a hobby can indeed take up a lot of your time and it doesn't have to be a business to do so, if you're also making money then this time that your 'hobby' is taking up is actually your job, because it has changed into a business. It can happen gradually so you would be forgiven for not quite realising the changes that have happened, but there will come a point when you need to decide which direction you are going in and what you truly want to do in life.
It Has Taken The Place Of Your Day Job
If you once had a hobby and you did it alongside your day job, but you have had to quit that job to concentrate more on the hobby because it was growing into something much more and it is now paying you a salary, then this is a business. As long as you are registered and legal, then having a business is something that you can enjoy and really make your own. Make sure you take the time to stop and think about what you're doing if your business crept up on you, and you can then determine where you want it to go in the future.