Your Side Hustle a Hobby or a Business?
Sometimes a hobby or a side hustle can turn into a business. Let’s look at what constitutes being in business.
Generally a business involves repeated and continuous activities you do for the purpose of making a profit. Profit can be in money but it can also be through other means such as being paid with goods or services (including a barter deal).
You’re not in business if:
- a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated)
- done as an employee
- a hobby or recreation from which you don’t seek to profit
- a simple investment, such as passively holding shares on which you receive dividends or a rental property you let through an agent.
Even if you’re not in business there are some payments or income that might need to be declared. These might include:
- rent or income from providing services
- payment from a one-off transaction
- the market value of goods or services you receive in a barter deal
- dividends from shares (or crypto) you own.
Most companies are in business if they intend to and are likely to make a profit.
However, some companies are not in business. For example, a company is not in business if it:
- holds assets solely for its shareholders’ private use, and its running costs are funded solely by its shareholders
- provides social and recreational activities for members without seeking to make a profit.
The ATO has a useful page to work out whether you are in business.
If you need any help or clarification about business and taxation, don’t hesitate to get in touch with us at STS Accounting.
