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Hobby or Business?

Discussion in 'Starting a business' started by CoolGeek, Aug 31, 2009.

  1. CoolGeek

    CoolGeek New Member

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    Hello everyone,
    I am thinking of starting a home-based business for investing part of my primary income.

    However, I am unsure of which criteria to determine whether my activity is business or hobby. Could any1 please clarify this? (ie. is there a certain minimum transaction volume/value that I need to stay above in order to qualify as a business)

    Many thanks!

    p/s: I am still at the early stage of my professional life hence very inexperienced, so any other advises are most welcomed. =)
  2. ray_223

    ray_223 Active Member

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  3. Norwest Tax

    Norwest Tax New Member

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    For investing, I have had a few friends who have claim similar experiences, sent me an email and I will let you know.

    Regards

    Anthony
  4. Brendan the Bookkeeper

    Brendan the Bookkeeper New Member

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    Ray is spot on with the ato link.

    To sum it up in plain english - a business is something that is repetitive, ie you sell/buy each month and you're in it for a profit.

    A hobby is something that can be repetitive, but generally there is no profit motive.

    The size of the activity also contributes - e.g I make $1,000 per year selling home-made jewellery, this results in net profits of $200. I think the ATO would let that be a 'hobby' as the size of the business is tiny.

    Hope that helps!
  5. Tristan Boyd

    Tristan Boyd Member

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    I totally misjudged this thread from the heading. I was hoping to hear about someone who loved their home business so much that they still considered it a hobby. I'll keep living in hope :)
  6. Jenna

    Jenna New Member

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    Hmm interesting thread. This leads me to wondering, do I need to have set up an ABN (or anything else) before buying anything business related, if I'm going to later claim what I've spent money on as business related tax offsets??
  7. ray_223

    ray_223 Active Member

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    Hi Rainbowzyp,

    It's not what "you" think. It's what the Australian Taxation Office (ATO) thinks. The whole hobby / business issue is a gray area - which is why they ATO have a page trying to explain the process they go through to determine if you are running a business or playing in your hobby.
  8. Burgo

    Burgo Well-Known Member

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    Tristan,

    my business has now become my hobby. I just get such a buzz out of it I just cant seem to let it go.

    If your business isnt your hobby, STOP, THINK, and start all over again, because a hobby is something you just love doing a business earns you an income, and as soloists your business should be your hobby, otherwise you may as well go and work for a boss , your business.

    Do i need to explain this
  9. nelsonclassic

    nelsonclassic New Member

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    Hello Friend,
    You are starting your new business, whether you are starting it as a hobby or for income but take it seriously..
    I think it will be plus point for you that it is your hobby also..it will help in maintaining your interest in your business,which will make you work more harder,but take it seriously and professionaly..

    Regards,
    Nelson

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