Is Your Art a Hobby or a Business?
Your Guide In Differentiating Art As A Hobby Or A Business
The stigma of the “poor artist” (unless you’ve suddenly shot to fame with your work and have garnered the attention of the organizers at the Louvre, or something else similarly extravagant) has plagued many a creative mind and talent for centuries.
Having a profession in the arts is nothing like applying for a position in a conventional company. Where the latter has the size of its manpower to think of, the first is a specialized profession. Only the creme de la creme get in. Even then, a lot of the most talented persons are sidelined. They say it’s luck. And truly, many of us believe that to be true. If the door of opportunity stops at your front door, that’s almost a one-in-a-million shot to “making it” as an artist.
Yet today, opportunities for art businesses have been seeing a rise. It isn’t swift. Nonetheless, progress is progress regardless of speed. In any case, it’s but sensible to wonder if your art is a hobby or is a business, especially when you’ve started putting a price tag on your crafts.
Misconceptions And Art According To The Law
The thin and almost blurry line between being a hobbyist or a self-employed artist can be a source of a problem that you can avoid by knowing how the law and the government look at your works of art.
Before we get there, let’s brush up a tad on the misconceptions that many artists fall prey to. There are those who call themselves “hobbyists” and sign up under the guise of a non-profit because of wanting to avoid hefty taxes.
On one hand, tax-deduction claims are the means to save yourself from the burden of taxation. Despite that, losses cannot offset or compensate for other incomes and sources of income. Hence, in the long-run, you’ll be paying more than if you were to lobby yourself as a full-fledged business.
How is this so? When you conduct transactions the way a business does, you’ll be eligible to fill out a Schedule C. Through this, expenses and even net loss may likely be approved for the deduction.
What To Consider In Tagging Art As A Business
When your dealings are undertaken in a business manner. It sounds redundant but, trust us, the implications certainly aren’t. Think formal business plan-type, fixed rates for products and services, etc.
Add to this collecting receipts, filling out tax forms, the list goes on. At this point, you should already have a good idea as to what your art passion is— a hobby or an enterprise you want to grow. And this, by the way, the desire to make it more profitable is another sign that it’s much more than something to do to pass the time.
Profits For Income
The moment you start looking at the profits you make as a source of income, this alone is telling of a business. You’re earning from it and your goal is to generate income from it in a regular and consistent manner.
In parallel to this, future goals, future business plans and expansions, only a business-minded person ponders on these notions. In your case, a business-minded artist.