When did your hobby become a business?

[Ronald Fox]

I have been making pens, peppergrinders and other stuff for some time. My story is probably the same as yours, I started out giving them to friends, Family and co-workers. Word gets out and people ask if they can buy them. You show them off in a gift shop and they want to sell them for you. Up until now I have been treating it as a hobby and figured it is not much different then people that sell stuff with garage sales. I am wondering about those that now have a business, when did you change from Hobby to Business? Also what did it intail? Did you get a business license, business checking account, did you start saving reciepts, hiring an accountant. I am just wondering what I would be getting myself into if I decided to start
supplying pens to a gift shop, lol.

Thanks for any insight you may
have,
Ron

[Curt Fuller]

A few years ago my turning hobby took about the same path you're talking about. Mine was with Christmas ornaments and I had an actual order for a bunch of them, more than I had ever made before. From my own perspective I have to say that it took all the fun out of it for me. What was once a relaxing few evenings in the garage after work and on weekends turned into a forced production schedule, kind of like having a second job. I tried to keep track of my time, material costs, etc to see if I was actually making any money (I wasn't). I got them done, they paid me on the spot and everything was fine until about mid March when they mailed me a 1099 which I hadn't expected. I'm a 1040EZ taxpayer that now had to figure out what to do with the income that was reported to the IRS. In the end, I think I ended up in the red if I paid myself a wage that was worth the headache. So the next year I passed on the chance to do it again and turning returned to being a fun and relaxing hobby. But that's just my story. I'm sure there are many that make it work as a business and enjoy it along the way.

[John Keeton]

Starting out, there can be some tax advantages. However, the one very important consideration is the issue of insurance. Most homeowner's policies will not provide coverage for a business venture. I have a friend that operated a woodworking business, making end tables and small furniture items for friends, and to sell at craft fairs. He had a fire that destroyed his shop, and all of his tools. His insurance company denied coverage on the building and contents because he was involved in a commercial endeavor. Please be certain that if you are doing this out of your home, that you have coverage. It would be disastrous to have a fire and find out your homeowner's policy did not provide coverage - perhaps even for your home if you were producing turnings as a business.

I acquired a commercial endorsement at an annual cost of approximately $600 to insure my stand alone shop and tools. I have also acquired a sales tax license, and have registered my business name with the state.

[Jack Mincey]

I have made money off turning for several years now. The only project I find a pain to make in this time are my crow calls. They are the only project I make after they are ordered. This does put pressure on one self to get them done and sucks most of the joy out of it. It is still good money so I will continue to make them. I make the rest of my turnings at my own pace and put them up for sell after they are complete. This gives me freedom to make what I want as I have time to turn them and gives me the joy of turning during the process. Since I have made a portion of my income as a fishing guide for 25 years a more complex tax return is the norm for me. By making income from my turnings I've been able to use turning expenses including the building of my shop 4 years ago and the equipment I put in it as a great tax break. I do use a good tax service to figure my taxes so that it is done correct and legal. I do hope to expand my turning sells next year when I retire to supplement my retirement income. I've made most of the large purchases for my shop so I should be able to make a descent profit on my turnings.
Jack

[George Guadiane]

Soon, i hope!!!

[Jim Burr]

I paid for my 1642 by selling stuff...mostly pens. I find that I don't like repeat business...sounds stupid...I know. I have several pens to drop off at work tomorrow that are 2nd and 3rd purchases. I got a call from the gallery 2 weeks ago and they want more stoppers and pens for the holiday season...I have a box to go out to them Tuesday. I always feel pressured and it does take the fun out of it. Niche markets are fun and do well...but I like my hobby...I already have 3 jobs and am not looking for a fourth.

[Michael E. Thompson]

For me, I really enjoy selling my items and see people appreciate my work. However, I could easily see the hobby turn into a nightmare. Personally, I don't seek out the large production type orders. I would get bored and begin to hate the whole thing. I do one art show each year (read art show not craft show) and supply to a couple galleries in my area. There is no pressure as long as I do a few turnings every couple weeks, it reamains fun. I make enough to support my hobby plus a little more, that is all I really want. It is way too difficult to make any substancial amount of money. Its called staving artist for a reason. HTH

Mike

[Reed Gray]

I planned to make some money, but not a lot. Doing way better at getting famous than I am at getting rich. I did form a LLC for business purposes, and just in case some one sues, they can only sue the corporation, and not me. I have a separate insurance for the business which covers shop, tools, students, visitors, my inventory both on the road, and at home, and my DVD. I do have an accountant as it is worth it to pay her rather than for me to try to figure it out, but I do kind of organize the books. It is possible to make a living at it, but just too much work, and it would take the fun out of it. Mostly it supports itself, lets me go to some functions like the Symposium, and pays a few bills.

robo hippy

[Alan Zenreich]

Reed,

Have no fear, they'd sue you too <vbg>

[Donny Lawson]

I'm glad I'm not in that boat. Mine is a "Hobby" and I want it to stay that way. I've only had a few cases where I thought it might turn into a job but I just backed off. I LOVE my hobby and when it turns into a job I will probally quit turning. Don't get me wrong, I like the extra money but I don't need another job.

[Bernie Weishapl]

I have the business license, insurance, building, tools, etc. but I don't openingly sell to the public. My sales have been thru the gallery and has paid for both lathes and all my tools. A few times I have people drop clocks off (antique clock restoration business) they will see my turnings and ask about purchasing something. I am like most though that if it becomes a job I will probably quit.

[Greg Just]

Like a lot of others, I started making things and giving most of it away. I starting sell to friends and co-workers and made a few bucks. I got both State and Federal Tax ID numbers, but did not need a license as my town doesn't require one. I do sell on Etsy and I have hooked up with a small consignment shop. I do take orders for custom jobs, otherwise I work to my pace. Otherwise, it won't be fun and I do have other things to do besides woodturning at this point in my life. After I retire, that will change.

Keeping track of expenses isn't too bad and I just keep a running tab of my sales. I save every receipt and make a note of travel. I itemize my taxes so it is not too big a deal to pay the taxes on my business income. I really try not to make any money, but rather invest the profits in my workshop. I did buy a Jet 1642 earlier this year and have my eye on a disk sander and a new compressor.

[Jon McElwain]

Insurance, insurance, insurance!!! I had a disastrous water leak in my shop a few years ago which resulted in a homeowners insurance claim to replace or repair severe rust on a majority of my tools. They must have asked me over a dozen times, in a dozen different (and often very sly) ways, if my wood shop was a hobby or business, if I ever made a penny from the use of the tools, if I ever sold things to family or friends, or if I had ever sold anything at a craft fair. Praise God that I was able to truthfully answer "no" each time, as I had never sold anything or taken any money for services rendered by using the tools in the claim. If I had made any money at all, they would have deemed the tools commercial and would have excluded them from my homeowners policy. As it was, they replaced almost all of the damaged tools under the homeowners policy.

So, make sure that if you are selling stuff made with those tools, that the tools are covered under a business/commercial insurance policy. I still do not sell anything, so I have not purchased business insurance, but I understand that it is not tremendously expensive. Look into it, and I am sure others know more about the costs etc.

Good luck!!

[charlie knighton]

still a hobby, just price everything at twice the norm, no problem, no pressure