How do I determine if what I’m doing is a hobby or a business?

Characteristics of a business

There is no single factor that determines if you are in business, but here are some of the characteristics of a business:

• You've made a decision to start a business and have done something about it to operate in a business-like manner, such as:
  • registered a business name
  • obtained an ABN.
     
• You intend to make a profit at some point.
   
• You repeat similar types of activity.
   
• The size or scale of your activity is consistent with other businesses in your industry.
   
• Your activity is planned, organised and carried out in a business-like manner. This may include:
  • keeping business records and account books
  • having a separate business bank account
  • operating from business premises
  • having licenses or qualifications
  • having a registered business name.
     
• You pay for your online-selling presence. If the online space looks like a shop, has a brand name, proper business name or any other signs that people would be likely to expect from a business, you are likely to be carrying on a business - especially if you paid fees for this to occur.
   
• You make items to sell online and charge more than they cost you to make. If you charge more for items than they cost you, then you are likely to be carrying on a business.

If you aren't in business yet, it is important to keep these factors in mind as your activities change or grow, so you'll know when you need to register for tax and other business responsibilities.

Not carrying on a business?

If you determine that you are not carrying on a business, you may still have tax obligations and need to report the income you earn.

How we can help

TaxAssist Accountants are here to help with all of your tax and accounting needs. Call us now for a free, no obligation consultation.

Date published 10 Mar 2022 | Last updated 11 Mar 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.