Hobby to Business: Benefits of Working for Yourself

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.

Saturday, February 7, 2009

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.

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Shameless Self Promotion

There's a rule when interviewing for a job that goes something like, "if you can say good things about yourself, then who else will?" Keep that same mentality for selling your products. After all, each customer is the same as a job interview. You want to be paid for your work. The only way the customer is going to place value on your work is if you place value on your work.

So how do you do this? Most important, be excited about your items!!! You put a lot of work into what you do. Because you love it. Make your customers excited through your excitement. If they put one item down, don't give up on getting a sale, put a different thing in front of them. Most people won't be rude to you. At the very least they'll humor you and look at what you're trying to show them. And it might end up being just the thing they were looking for once they've seen it close up.

When not actively selling, find any reason possible to bring up your business in other settings. This past year when I was handing out candy to trick or treaters, I handed out candles with business cards to the mommies. It may seem inappropriate at times when you're bringing up your business to the person you're sitting next to at the movies or church or the person standing behind you in the line at the grocery store. But get used to it! You aren't actively selling, you're just promoting. Big difference. People are usually open to the conversation.