Business or hobby?
You may be unsure whether you're in business, or your activity is just a hobby. A hobby is a spare-time activity or pastime pursued for pleasure or recreation. Unlike a hobby, a business is run with the intention of making a profit and has basic reporting requirements, such as declaring income and claiming expenses. It's important to know the difference between a hobby and a business.
Characteristics of a business
There is no single rule that determines if you're in business, but below are indicators that you may be.
- You've made a decision to start a business and have done something about it, such as registered a business name or got an ABN.
- You intend to make a profit or genuinely believe you'll make a profit from the activity, even if you're unlikely to do so in the short term.
- You repeat similar types of activities.
- The size or scale of your activity is consistent with other businesses in your industry.
- Your activity is planned, organised and carried out in a businesslike manner. This may include
- keeping business records and account books
- having a separate business bank account
- operating from business premises
- having licenses or qualifications
- having a registered business name.
If you’re an artist, creative or maker and receiving or plan to receive money from creating things such as jewellery, paintings or baked goods, you can use the Hobby or Business tool on business.gov.au to work it out.
If you determine your activities are a hobby, you don't have any additional tax or reporting obligations. You should check regularly to make sure your activities still qualify as a hobby.
If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you. As you don't need an ABN, you can use the Statement by a supplier form to avoid the business withholding an amount from their payment to you for not having an ABN.
Duration 3m:18s. A transcript of Starting your business – Are you in business? is also available.
Work out whether you're in business for tax and reporting purposes or if your activities are a hobby.