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!!

My Studio

 Dream Board

Okay, so I am using the term  studio very loosely. Like when you are first moving to a big city and look at a  "studio" apartment and find out it means that your closet in your childhood  bedroom is larger then the whole apartment! My room is 5' by 9' and with that  kind of space you need to design upward!
 
I also had to get better lighting,  and so, I made a spot right by one of my windows to use as my photography area.  I have a shipping and packaging area, display area, idea in progress area, and  lots of storage. I reused what I could, bought items from IKEA and got some from  Freecycle! 
 
My IKEA storage is great for keeping all my little items organized  and I have two great little helpers that love to do inventory for unfinished  pieces they can paint! Hope you like getting a glimpse into my world.





Next week I will show you my new space as I have taken over the room adjacent to this small room. I have been finding great Etsy Finds for Business Solutions and I can't wait to share them with you.