Hobby or business?

[John Rogers]

I agree with the honesty remarks made earlier. If the work is done in the garage with the door open and/or she uses any power tools the neighbors might not be happy with the "hobby". I worked with a fellow many years ago who did furniture repairs or refinish at night and weekends. A neighbor did not like the noise and called the county inspectors and he nearly went into shock when he found how many rules there were for a "home furniture business" and he had to get all sorts of permits and licenses evne though he shut down!

[scottmandue]

Originally Posted by Chocaholic

Here’s a crazy idea. Why not just pay the taxes that are owed and let her enjoy making some money with her hobby?

Honesty my friend. Honesty. Nothing to worry about that way.

On one hand most small businesses start out of a garage.

On the other hand $1k a week is a decent income... heck it is close to what an average Joe takes home.

[Don Ro]

Pocket the cash, keep a low profile, and keep your mouth shut.
The end.
Next case.
.
Edit: If I want no one to know what I'm doing, I tell no one.

[craigster59]

Originally Posted by Don Ro

Pocket the cash, keep a low profile, and keep your mouth shut.
The end.
Next case.

Hey, I'm as honest as the day is long, but I'd be following this advice.

[HardDrive]

My wife has had her own business for the last 2 years. Expenses? Roughly $40,000.

Income? ZERO. We both know an real schitty conversation is coming soon. I'm kinda hoping she gets the picture and pulls the plug herself, but she's a proud SOB, and that may not happen. Its fine, you gotta have the space to try new ventures, and fail. But ya gotta know when you have failed.....

[greglepore]

How does she get paid? That's the open question.

[greglepore]

The issue with the accounting isn't the taxes so much as the hassle of keeping track.

[biosurfer1]

Originally Posted by HardDrive

My wife has had her own business for the last 2 years. Expenses? Roughly $40,000.

Income? ZERO. We both know an real schitty conversation is coming soon. I'm kinda hoping she gets the picture and pulls the plug herself, but she's a proud SOB, and that may not happen. Its fine, you gotta have the space to try new ventures, and fail. But ya gotta know when you have failed.....

One more year of that and the IRS will make the decision for you. 3 years of losing money and it's a "hobby" not a business, and no expenses can be written off. That used to trigger an automatic audit but since they are down to Skelton crew now, I doubt it happens much.

[Don Ro]

My tax man was a genius. Traveled the world doing work for overseas US companies.
He knew exactly what I could write off.
For example, I could only write off a percentage of "entertainment" that a business rep could.
He kept me in check for 34 years. Never an audit.

[A930Rocket]

Cash only. No checks. No PayPal. No Venmo. No IOU.

Originally Posted by greglepore

How does
she get paid? That's the open question.

[A930Rocket]

It’s a really simple idea. She goes to goodwill, thrift stores, habitat for humanity, etc and gets decent furniture really cheap, that she paints a color she came up with. It looks really nice. No tools really, except an occasional sander or drill. Very quiet, as it’s 90% brush painting. Neighbors love her idea and have bought from her.

Originally Posted by John Rogers

I agree with the honesty remarks made earlier. If the work is done in the garage with the door open and/or she uses any power tools the neighbors might not be happy with the "hobby". I worked with a fellow many years ago who did furniture repairs or refinish at night and weekends. A neighbor did not like the noise and called the county inspectors and he nearly went into shock when he found how many rules there were for a "home furniture business" and he had to get all sorts of permits and licenses evne though he shut down!

[porsche930dude]

Lets see some pics of this furniture. I always hear about people doing what Mrs. Rocket does. I dont have any luck selling furniture and I kinda doubt paint will help. I bet its all in the presentation.

[A930Rocket]

Originally Posted by porsche930dude

Lets see some pics of this furniture. I always hear about people doing what Mrs. Rocket does. I dont have any luck selling furniture and I kinda doubt paint will help. I bet its all in the presentation.

Staging it does help.

She uses three colors: a grey with white highlights, a robins egg blue and a greenish color. Sometimes a white.

[drcoastline]

Originally Posted by A930Rocket

Ms Rocket has a hobby of buying used furniture, rehabilitating as needed and selling it on the market place on Facebook, etc. she sells it out of our garage. No store front, booth, etc.

Her expenses are about $200 per week and she usually deposits $1k to $1.5k per week.

It’s all cash.

Anything to worry about?

If it's cash don't deposit it and don't try and writ off the cost of supplies, etc. Once the cash is deposited it is traceable. Stuff it in the mattress or better yet give it to me Ill hold on to it for you.

[greglepore]

If its cash only, its a moral issue only until either a) you deposit it and incur an audit or b) make so much of it that its obvious.

[wdfifteen]

Originally Posted by greglepore

If its cash only, its a moral issue only until either a) you deposit it and incur an audit or b) make so much of it that its obvious.

It maybe a moral issue, but it is also a legal issue. Failure to report or under reporting income is a crime. You may get away with it, you may not.

[GH85Carrera]

Originally Posted by wdfifteen

It maybe a moral issue, but it is also a legal issue. Failure to report or under reporting income is a crime. You may get away with it, you may not.

This. And tax evasion is a federal crime that the feds take seriously. They can add in some big fines.

[1990C4S]

Hobby or business?

Neither if you keep your mouth closed. Nothing to see here...

Suffice to say that a business I worked in generated a lot of cash and fringe benefits. A lot of tax payments were avoided with common sense and a low profile.

[Shaun @ Tru6]

just pay the taxes. why is that even a question.

[MBAtarga]

Does she hang out with any Russians?