Do you have a side interest? A hobby or business idea that you are passionate about and one day, hope to turn into a small business venture?
With more than 2.2 million actively trading small businesses across the country, there is a growing trend of Australians making the transition to becoming their own boss. In fact, from June 2016 small business numbers have jumped by 3.1 per cent, with growth primarily driven by non-employing businesses.
So, whatever your reason for making the move to self-employment, whether it’s time for a career change, a desire to have more power and flexibility, or the need to weave your passion into what you do every day, the fact is entrepreneurship is on the rise.
The big question to ask yourself though, is whether your business is actually a business or just a hobby?
The Australian Taxation Office (ATO) recently released an article outlining the differences between businesses and hobbies, including the parameters around GST registration.
We’ve put together a quick list to help you confirm whether your activity is a business or a just hobby. It might be a hobby if:
- Your activities are irregular;
- You don’t worry about making a profit;
- Your activities are small in size and scale;
- You don’t carry out business in an organised manner;
- You conduct business in your own spare time;
- You do it for your own satisfaction not for the customers.
So if your activities are more suited to a hobby, what does that mean for you and your business idea? It will affect your ability to register for GST and impact how you can claim on your tax return. Speak to your accountant for details about your specific situation.
Need more help? Our accountants and advisors can provide advice whether you are a business or hobbyist. They’ll take the time to understand your situation and provide advice to suit your needs. Contact us on (07) 4632 1966 or click here to fill out our online contact form.
GENERAL ADVICE WARNING | The information provided in this article is for general information purposes only. It is not intended to be, nor should it be read as specific financial advice. Before acting on any of the information contained in this article you should obtain special advice from a specialist advisor, which is appropriate to your specific business risk needs, objectives and financial situation.