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.

Sunday, February 15, 2009

Take Chances

If you're serious about building a good craft business, you need to realize that you're probably going to make mistakes.  Possibly expensive ones.  I once set up a table at a bridal show with a very expensive entrance fee, but didn't get a single customer out of it.  No more bridal shows for me. 

I'm trying something new this week.  It's been and will still be a lot of work.  It's costing me $200 to enter the marketing project.  I was accepted into the program last night.  I have been working on making two hundred candles and promotional materials to go with them for The Doctors television show.  I'm assuming this means my candles will actually be shown on the show.  If not, at least the candles will go to the studio audience whom will hopefully turn into customers.  It's a risk.  It's an expensive risk.  But with the possibility of my product being on a national tv show, it's a risk I absolutely have to take.

Saturday, February 7, 2009

More Benefits of Working for Yourself

Please add comments if you have any others

Work in your pjs
Wake up when you want
Go to bed when you want
Spend pretty spring days outside
Change the laundry on a break
No time wasted sitting in traffic for the commute
Go shopping when the stores are practically empty
Beat the rest of the world to the good deals
Listen to your music as loud as you want
Watch tv while you work
Have time to exercise
Have time to think
Have time to play
Play solitaire without having to look over your shoulder every five seconds
Use curse words in your email if you feel like it
Have a beer or cocktail while you work
Take a nap
Use your own bathroom
No more expensive lunches
No more required lunches with people you don't like
Fix your wedgie when it happens
No expensive day care

Benefits of Working for Yourself

You get to choose your activities and you don't have to answer to anyone about it. It's wonderful. If you wake up one morning and aren't feeling creative, then work on something different. Go out and make sales calls to places that might want to sell your items for you. Work on finding more or better suppliers. Sit in front of the tv and just think about other things that could improve your business or your sales. Sort your coupons. Look up other deals. Read blogs or magazines. Or just stare off into space in your own little world for a while. Some of my best ideas come out of nowhere that way. How many other jobs could you have that allow you to stare off into space?!!

OR JUST TAKE A VACATION DAY!!! It's your choice. It's your business. It's your life. You are in charge of it. Don't feel like working 9 to 5? Don't. Work the night shift. Work for an hour, go shopping, come home and work for an hour. Go to the library. Go to the park. Go to a movie. Take a friend or family member out to lunch. Ask them for ideas to make your business better or any ideas they might have you and yay! It automatically turns into a business lunch that is tax deductible.

One really nice thing about running your own business, since you're doing something you love, just about anything else you do can strike inspiration. Sometimes in an odd way. Who knows what will pop into your head when you're out shopping? Who knows what will come up in an ordinary conversation that will hit the trigger for that lightbulb over your head? Realize that you are an artist, not just a business person. Think like an artist and let your mood dictate your day instead of the clock.

I love it because it takes about three or four hours for a pot of wax to melt before I can make candles. So during that time, I can work on the computer or clean my house. Or play with my baby. If I time it right, the wax can be ready to go once my hubby gets home so he gets baby duty a little while so I can focus exclusively on work. But I don't make candles everday. Actually, I haven't made candles in a few months. I've not felt like it. But I've been working on many other aspects of my business. And then I'll get in the mood and probably be making candles non stop for several days.

Tuesday, February 3, 2009

Craft Business Down Time

If you're like me, then this time of year is pretty dry with finding places and/or events to sell at. In reality, I should be working like crazy to make all sorts of candles for when the busy season for me does start up again. It's difficult to stay motivated during an off season when it's going to be a long time before you'll actually be selling things again. It can also be difficult to focus on the quality of your craft when you're working hard to build up inventory. Always remember the things that got you motivated to start a business to begin with . . . making money doing what you love! So many other things can get in the way of that. Advertising, accounting, packaging, etc, etc, etc. All of those things are important too. But the quality and craftmanship of your product so that you are selling something you are proud of is number one. And if you lose your focus, then eventually your hobby will become a job, and no one wants that. Keep it fun. If you find yourself too busy, or dreading to create, then give yourself a break, or find something that motivates you in the right way. Sometimes a handful of new supplies can do the trick.