A Hobby or A Business? What’s the Difference?

If you have a hobby and are making money off it, you may be wondering if it’s a business or not. The line isn’t blurry as there’s a multitude of differences between a hobby and a business, which we’ll be discussing below. So, read ahead.

You’re Registered

One of the major differences between a business and a hobby is the fact that you pay taxes. Businesses are entities that make you money and feed the government with income. You’re not going to be paying the government for your hobbies, in fact, they won’t care, but with a business, everything needs to be regulated by them.

This is why if you’re in Australia, you’ll need to get yourself registered for ABN. This can be done through online ABN registration, thankfully.

You Have A Plan

One of the key aspects of a business is the fact that you make money. Yes, you can make cash from a hobby, but at the end of the day, you won’t make that much. With a business, you’ll be making a lot as you’re focusing on creating revenue and a profit.

This is why you’ll have a business plan and employees.

You Think About the Future

The hobby is just a passion. It’s something you do to pass time, after all. When it comes to businesses, you’ll always be thinking about the future. You want to see yourself grow which is why you’ll think about how you can better yourself.

You’re Looking For Investors

You won’t find any business that isn’t looking for investors After all, getting capital is not easy, especially if you’re small. You could speak to a lender, but lenders come with a huge interest rate.

This is why you’ll be socializing quite a bit, going to events and parties. Obviously, this won’t take place if you’re focusing on a hobby, now would it?

You’re Branching Out

Let’s say you’re the owner of a cake business. You love cakes, which is why you decided to make it into a living. You work with thousands of orders, and make quite a bit of cash. Although it’s a good amount of money, you’re not making as much as you want. This is why you move away from cakes and start working on other confectionaries and even savory treats.

If it was just a hobby, you’ll only focus on cakes as you have no intention of branching out and making more money.

You’re Making A Name for Yourself

As you want yourself to succeed, you’re making a name for yourself. Not only are you networking, you’re advertising a lot. You’ll be in contact with a myriad of digital marketers and affiliate networks trying to get people coming to you. You may be even have a website as you want people to easily find you, which if you had a hobby, you wouldn’t focus on.

As you see, there’s a multitude of differences between a business and a hobby, so which are you? Are you someone with a hobby or a business?

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