Online selling - hobby or business?
If you sell products or services online, you need to understand
whether you are doing it as a hobby or carrying on a business.
A hobby is a spare-time activity or pastime pursued for pleasure
A business requires some form of investment and enough customers
to whom its goods or services can be sold on a consistent basis
with the intention of making a profit.
When selling online becomes a business, the income you earn from
it is subject
to tax. If this is the case, you may also be eligible for tax
There are questions you can ask yourself to work out if you are
undertaking a hobby, or carrying on a business that should be
- Did you set up your online sales with the intention of being a
- Do you pay for your online-selling presence?
- Is your main intention to make a profit?
- Do you make repeated or regular sales?
- Do you sell your online items for more than cost price?
- Do you manage your online selling as if it were a
- Is what you are selling online similar or the same as what
might be sold in a 'bricks and mortar' business?
Each time you answer 'yes' to a question the likelihood that you
are carrying on a business increases. However, all of the questions
need to be considered together to get an accurate picture of your
Do you sell or trade shares online?
A share trader is someone who carries out business activities
for the purpose of earning income from buying and selling shares -
this is considered a business. If you simply hold shares to earn
income, this is not considered a business.