Hobby or business? Whats the difference?
Someone once said that sailing was like standing in a cold
shower tearing up $20 notes. It's a hobby, obviously.
But until you start thinking about it, the distinction between a
business and a hobby seems pretty clear. If you enjoy it and it
costs you money, it must be a hobby, right? Probably yes, although
the wreckage of the "fun" business, OneTel, might suggest
the contrary. But plenty of people manage to make money out of
hobbies, which gives rise to the question of whether the activity
might need to be treated as a business for tax purposes.
Is the activity being conducted for commercial purposes?
To tell the difference between a business and a hobby, the first
question is often whether the activity is being conducted for
commercial purposes. However this is not always an easy question to
answer.
