• Home
  • Work with CfB
  • Contact
    • Bloglovin
    • Facebook
    • Instagram
    • Pinterest

Cutting for Business

  • New? Start Here!
  • Visit the Shop
    • Ebooks
    • Business Names
    • Craft Business Consultations
    • Order Forms
    • SVG Files
    • Etsy Shop
  • Must Have Products
  • Join the Insider’s Club
  • Etsy Shop
  • Free Cut Files
  • Free Etsy Listings


Affiliate links may be present in the following article. For my full disclosure policy, see this link.
Additionally, as an Amazon Associate I earn from qualifying purchases.

Do You Have a Craft Hobby or a Business?

Filed Under: Starting Your Business

Happy Tax Day! Do you ever wonder if your side hustle is a hobby or a business? Let’s take a look from the eyes of the IRS.

While you might call yourself a hobbyist – you’d better be sure that the IRS agrees with you. Today, I’m sharing criteria about how to IRS defines a business, and I’m giving you a list of benefits if you decide to incorporate your business.

Did you know that in many states you can register a new business online – without the help of an attorney!

IRS Criteria for Businesses versus Hobbies

“In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. No one factor alone is decisive. You must generally consider these factors to establish that an activity is a business engaged in making a profit:

  • Whether you carry on the activity in a businesslike manner.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.” Source

Benefits to Registering or Incorporating Your Business

  • Reputation: You are no longer just a person that crafts at home, you are a registered business. For many potential customers, this increases your credibility.
  • Tax deductions: All the supplies that you’ve been buying become tax deductions!
  • Legal protection of your name: Once registered, another company cannot legally use your business name (this varies state to state).
  • Loans and grants: Once you have a registered business, you may be able to qualify for small business loans or small business grants to help grow your business.
  • Liability: Rather than being personally liable for the products you make, in many cases, the business becomes liable.
  • Wholesale pricing: Registered businesses and companies can apply for tax ID numbers which allow you to purchase from select wholesale sites, or buy items for resale and not pay taxes on them.
  • Credit card processing: Businesses can often negotiate better credit card processing rates – which will ultimately allow to you save money.

How to Register Your Business or Incorporate It

Unfortunately, each state is different for registering a business and requires different forms and fees. Head to this post for links to where to go in your home state. If you are not confident about the process of starting a business in your state, or don’t want to take a chance of omitting something, I have used incorporate.com in the past. They make it really easy and it’s fast – generally a few business days.

Was this information helpful? Save the image below to Pinterest.

Do You Have a Silhouette Cameo or Cricut Explore or Maker Craft Hobby or Business? - by cuttingforbusiness.com

Related Posts

  • Free Adoption ‘Family by Choice’ SVG Cut FileFree Adoption ‘Family by Choice’ SVG Cut File
  • Facebook Likes versus Followers: What’s the Difference?Facebook Likes versus Followers: What’s the Difference?
  • Active versus Passive Income – What’s the Difference?Active versus Passive Income – What’s the Difference?
  • 20 Christmas Songs in the Public Domain for Crafters to Use20 Christmas Songs in the Public Domain for Crafters to Use
  • Blog Recap – July on Cutting for BusinessBlog Recap – July on Cutting for Business
  • How to Price 3D Printed DesignsHow to Price 3D Printed Designs

Connect with Cutting for Business

  • Bloglovin
  • Facebook
  • Instagram
  • Pinterest

Get Cutting for Business in Your Inbox

Buy Books


Cutting for Business is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com and affiliated sites. See the disclosures page for full disclosure information.


« Cautions on Selling Candy, Cookies, and Alcohol in Your Craft Business
Free ‘Craft More Worry Less’ Crafting SVG Cut File »

Comments on Cutting for Business are moderated before posting. This ensures that this blog does not get overrun by spam or inappropriate comments. Please allow up to 7 days before you'll see your comment. Thanks, Christine

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Make Money

Love to craft and ready to make some money? You're in the right place! Whether you own a Silhouette Cameo, a Cricut Maker, a Silhouette Curio, a Cricut Joy, or even a Glowforge, get tips and tricks to make an income with your machine.



Ready to Buy Craft Business Names



Free Fonts

Copyright © 2021 · Cutting for Business
Disclosures · Privacy Policy
This site is not affiliated with Silhouette America or Cricut (Provo Craft & Novelty, Inc.)

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.