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On Business Dave Says

jazzmanJim Wrote: Jan 03, 2013 10:24 AM
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Dear Dave,

In your opinion, how do you know when a hobby officially becomes a business?

Dan

Dear Dan,

This is a great question. But when it comes to something like this, my opinion doesn’t matter nearly as much as what the Internal Revenue Service says.

According to the IRS, if you run a business for two years or more without making a profit, then it is not a business. You have to become profitable at some point. Otherwise, the IRS will declare your endeavor a hobby. Personally, I think that’s a pretty good marker. I mean, if you’re making...