Hobby to Business: Craft Business Down Time

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.

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.

No comments:

Post a Comment

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.