The Business of Doing Business: Are you a Business or a Hobby?

There has been a lot of talk about pricing. Lots of talk about too high, too low! I think it really comes down to are you a hobby or a business? Having a small business in your home can give you great tax breaks, many great deductions and a loss can be deducted from you other household income.

See these links for more great information:
http://www.nolo.com/legal-encyclopedia/article-30176.html

http://sbinformation.about.com/od/taxes/a/Topdeduction_ga.htm

http://images.businessweek.com/ss/09/02/0217_unsung_deductions/index.htm

How do you know if you are a business? There is the "3 of 5" test, need to make a profit 3 out of the 5 years you are in business. A loss more the 2 years in a row can get you flagged for an audit by the IRS. So if you have a loss on year 3 be prepared to prove you are a business.

See these links for more great information:
http://www.nolo.com/legal-encyclopedia/article-30000.html

http://www.ipowerweb.com/iboost/manage/business/your_business/40004.htm

http://www.bankrate.com/finance/money-guides/turning-hobby-into-business-means-tax-breaks.aspx

Pricing is hard to figure out and there are many formulas. The base to all of them is figuring out your cost. Cost - supplies + fees/overhead + Expenses + your time (wage) = Wholesale. Retails is double wholesale. Most Etsy shops that are making real money/"quite your day job" also do wholesale. Make sure you do your math before engaging is consignment and wholesale ventures.

See these links for more great information:
http://www.whatthecraft.com/arts/pricing.htm

http://artsandcrafts.about.com/od/accountingandpricing/a/priceyourcrafts.htm

http://www.associatedcontent.com/article/301520/how_to_price_your_crafts_for_online.html?cat=35

Hope these tips help you see the difference and help you on your way to having success!

Have a pricing formula or great tax tip add it to the comments to share with others!!