In this episode, Jeff discusses:

• Is it a hobby or a business?
• Deciding whether your project is a business or a hobby
• Know the numbers and see the patterns.

Key Takeaways:

• The biggest difference between a hobby and a business is that a business operates for profit, whereas a hobby exists for pleasure and recreation.
• Keep complete and accurate records and keep a businesslike approach to your project to decide whether it's a hobby or business. Always keep in mind that the IRS will have a lot to ask you if you get audited.
• The people at the IRS are trained to understand patterns and numbers from your previous tax returns, so it's very important that you don't try and lie. To file your taxes as a true business owner, you just have to remember a couple of simple rules: tracking, keeping a P&L, and supporting documents.

“Sometimes the line between having a hobby and running a business can be confusing, so knowing the difference is important." —  Jeff Hockett

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