Hobby or business?

At what point does your hobby cross the invisible line and become a bonafide business?

This is my dilemma.

The cost to obtain a business license and file the accompanying DBA is more than I made from my sewing pursuits in the preceding twelve months.

If the teaching partnership with the quilt shop moves forward, then I will definitely go ahead and get the business license in my name only.  Any cutesy business name that requires filing the expensive DBA paperwork can come later – if it is really needed.  (FYI – A “doing business as” form is required to be filed in the local superior court if you use a business name other than your own given name (or some derivation including your last name) and are a sole proprietor. It is a civil matter actually filed with the court, advertised in the local legal paper, etc.)

Adding an insurance rider to my homeowner’s policy is less than $15/year provided I keep my gross receipts under $5,000.00 annually. This covers me for private lessons, craft fairs and any sewing I do for hire.  Of course the insurance rider was added.

The business license application includes a line for NAICS/SIC codes.  My business pursuits fall under “handicrafts instruction” and “quilts from purchased materials.”  You can only list one code and the part of your business that generates the largest portion of your revenue determines your classification.  For me, that is “handicrafts instruction” (much like private music lessons).  This works out especially well for a home based business with HOA covenants like mine.

Stay tuned for more fun and games.