Hobby or Business?

If you make crafts and sell them, then the main difference to worry about is the difference that the IRS requires. Either way you can manage your accounting and keep track of your income and expenses the same way. The main difference is if the IRS says you have a hobby, then you report income, and you can subtract expenses, but you aren't allowed to report a loss. If the IRS says you have a business, then you are able to report a loss which will lower your taxes overall.

Check here for the official IRS classifications:
http://www.irs.gov/newsroom/article/0,,id=172833,00.html

IRS vs. Reality

Now that you know what the IRS thinks of you . . . (the IRS doesn't care what we think of them unfortunately,) how do you classify yourself? Almost all business big and small have two sets of books. One for the IRS and one for personal use. Even if you only count as a hobby for IRS purposes, you can still do everything else as a business.

The main difference in being a hobbyist or a business is how you present yourself. If you only want to make your crafts and maybe go to a craft show or two, or sell them to friends, then you probably don't want to go to the trouble of acting as a business.

To come across to your customers as a business, start creating a professional image for yourself. Building a website is a good start. It doesn't have to be anything super. Maybe just put together a blog that talks about your business and where people can buy your things.

Then order a set of business cards. I highly recommend Vista Print if you haven't noticed already! Then when you do your craft shows, make sure everyone who buys, and everyone who seems interested gets a business card. Voila! You have a business. From there, just take things a little bit at a time to include more advertising, nicer displays, and a phrase a certain salesman taught me to live by . . . Shameless Self Promotion.

Wednesday, January 28, 2009

Making Customers Comfortable

There's a delicate balance to keeping your customers comfortable. No one likes to be watched while they're shopping. But if they have a question, they want immediate attention. Learning body language becomes very important. Typically I will bring along some busy work. A book, a crossword puzzle, my cell phone to play games, something. Something I can do, and at important moments, only pretend to do. I can happily be reading a book when I'm alone. If a customer steps up to my booth, I'll look up and smile and go back to my book. But at that point, I'm only half reading. And half watching the customer. So long as they're looking down, they're just looking. As soon as they look up, you look up, "realize they need help," and then jump up to answer any questions.

Then of course, if they start to walk away, catch them first and point out the good reasons to purchase your products. If they walk away and ignore you, no harm, no foul. You don't know them anyway and will never see them again. Don't feel stupid or rejected. And if you're able to get a business card in their hand before they walk away regardless of anything else, at least count it as a small success.

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