Author: Lisa McGrimmon | Published: February 26, 2018 | Modified: September 23, 2019
Is selling crafts a hobby or business for you?
You might be surprised to discover that just because you're selling crafts doesn't automatically mean you're building a business. One is not inherently better than the other. Whether you're developing a hobby or business, that's okay as long as your venture fits with your goals and expectations.
It's helpful to determine what, exactly, you aspire to when you sell your crafts. If you have a clear understanding of what you're trying to achieve, you'll be able to make smart decisions and experience success.
On a more practical note, the differences between having a hobby or business can have tax implications as well.
Craft businesses run a broad spectrum.
In one studio, you'll find a profitable business that provides full time income to the owner and perhaps some employees. In another craft room, you'll discover a small enterprise that provides immense enjoyment, brings in a bit of money, but isn't designed to be truly profitable.
As long as your business is meeting your needs and expectations and fulfilling your reasons for selling crafts, it's all good.
Do you dream of quitting your day job and completely supporting yourself with a full time income from a creative business?
You're ready and able to make a commitment to working long hours each day on your business. You know you may sometimes need to put business decisions ahead of creative preferences, and you're willing to make those tough choices to build your business.
Maybe you want to make some extra money on the side.
You don't need your craft sales to provide a full time income that pays all of the bills, but you do want a business that turns a profit to supplement other sources of income.
You may have other commitments and priorities, like a full time job or a young family, which require a lot of your time. Or you may be retired and finally have time to devote to your craft. You want to fulfil a dream of selling your handmade products, but you don't want the hassle and commitment of building a full time business.
Your craft business is a source of income, but it's not the only source of income, and it shares the stage in your life with other commitments and priorities.
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You might be selling crafts purely for fun.
You make some money at it, but it's more hobby than business. You don't think of your craft sales as a significant source of income.
Perhaps you like to set up a booth at a local show from time to time because you have made more jewelry than you could possibly wear or give as gifts. Maybe you love being a part of your local arts community.
For you, selling crafts is a way to have fun, enjoy a creative outlet, connect with other like-minded people, reduce your stash to make room for more, and earn back some of the money you spend on your hobby.
One caution I would add for those who want to sell crafts as a hobby is to please be wary of underpricing your products.
Some hobby sellers price their crafts low because they aren't worried about making a profit. The problem with that low pricing is you'll be selling alongside craft professionals who are striving to build a profitable business. Those lower prices can make it harder for others to sell their handmade items at prices that sustain a business.
Please be thoughtful to other craft professionals and price accordingly.
All of these ways to approach selling crafts are completely valid. There are many wonderful reasons to start a craft business, and many worthwhile goals for selling crafts.
What is your reason?
If you know exactly what you want out of your business, you'll be in a better position to make smart choices. You'll be able to assess opportunities to determine whether they are likely to lead to your end goals.
After all, if you're not clear about what your end goal actually is, how will you get there?
The person who wants to build a large-scale business will make different choices than the person who sells a few items for fun from time to time. Clarifying those goals will help you make the right choices.
Determining whether you want to build a hobby or business will help you to develop a clearer vision of what success means to you. It's easy to get caught up in comparing ourselves to others. We see the surface, public face of what other creative entrepreneurs are doing and compare our own progress.
A business that looks fabulous from the outside looking in might actually be fabulous for that business owner, but running a similar business might feel terrible for you because it's not in line with your own values and priorities. If you know where you want your own business to fall on the scale of full time income to hobby, you'll make more insightful and helpful assessments of your own progress.
If you sell some paintings, adore participating in a couple of shows a year, love being a part of your local arts community, and that's everything you want to get out of selling crafts, then you can fully enjoy your accomplishment. You have no reason to feel envious of the person who sells thousands of prints online and attends multiple shows all around the country. Their business might be wonderful for them, but it is not in line with your goals.
Your craft business (or hobby) should be wonderful for you.
It turns out, governments have their own ways to determine if you have a hobby or business. Just because you make some money selling items doesn't automatically mean you have a business for tax purposes. That differentiation can make an impact on what you are able to claim on your income tax return.
I am not a professional accountant by any stretch of the imagination, so I can't give you specific advice about when an endeavour moves from hobby to business in the eyes of the government. Plus, the rules will be different for different people depending upon where you live.
If you have any questions or concerns at all about whether you have a business or a hobby from your government's point of view, you should definitely have that conversation with your accountant.
If you haven't really thought about your real goals for selling crafts, take a little time to do so. What do you really want from this venture? Are you building an empire, enjoying a hobby, or something in between.
That knowledge will help you make smart choices, and enjoy your own successes on your own terms.