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I'm wondering at what point one becomes a business and needs a license and such, instead of being a 'crafter'. Is it different state-by-state? If so, does anyone know about oregon? I have no idea even where to start.
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Oregon
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Re: Hobby vs. business
Thu, June 4, 2009 - 6:29 AMHi Katrina!
Licenses vary state by state AND sometimes county by county.
Where I am, I do not need a license. Some performance venues need a license in order to have live performances, but performers do not. I am a sole proprietor in my taxes.
For people who teach a lot and/or organize events often, forming an LLC is an option to look into.
The IRS website states how much you need to make in a year in order for a pursuit to be considered a business, not a hobby.
In your region I'd recommend talking to an accountant who is familiar with small home-based businesses. Also look up info at your chamber of commerce. -
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Re: Hobby vs. business
Tue, June 9, 2009 - 5:48 AMSamira, would you be willing to explain why an LLC would be a better option for people who teach a lot?
Thanks!
~Kaytee -
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Re: Hobby vs. business
Tue, June 9, 2009 - 7:26 AMLLCs are taxed like a sole proprietorship or a partnership, but they offer limited liability to its officers and shareholders/partners like a corporation. So, if someone gets hurt in a workshop or an event, they can't reach your personal assets but only those of the business. Also, contractual liability among vendors and the promotion company/LLC doesn't affect the officers and shareholders/partners. Provided of course, none of the operators of the company sign personal guarantees on the contract.
Also, a promotion company can operate as the owner of copyrights to the videos and sound recordings made at the events. This has certain tax and contractual advantages as well.
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