Are you conducting a business or is it just a hobby?
Author │ MAS Tax Accountants Dandenong
A hobby is defined as a pastime or leisure activity undertaken for one’s recreation or pleasure. It is critical to understand the difference because operating a business has reporting requirements such as declaring income and claiming expenses. Failure to report a business could lead to fines and penalties.
Common indicators your new “hobby” might actually be a new business include
- You undertake the activity with a view to make a profit, even if this does not occur in the short term.
- You undertake the activity on a consistent and regular basis.
- The scale of your activity is consistent with other business’s in the industry.
- Your activities are planned and operate in a businesslike manner. This includes doing things such as keeping business records, having a business bank account, having licenses or qualifications, registering a business name, etc.
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