jimjum12 Posted December 26, 2022 Share Posted December 26, 2022 (edited) On 12/24/2022 at 4:47 PM, Dr. Love said: The IRS is not fond of you classifying your hobby as a business just because it suits you. They have a set of criteria that should be met in order to be allowed to file as such. One of the big reasons is that business losses, once they exceed gains, can be applied to personal income. Hobby losses can only be applied to hobby gains. In our State you are only allowed to suffer a loss two out of every five years before you face becoming ineligible to renew the Business License. That's not as easy as it sounds. GOD BLESS... -jimbo(a friend of jesus) Edited December 26, 2022 by jimjum12 Link to comment Share on other sites More sharing options...
namisgr Posted December 26, 2022 Share Posted December 26, 2022 (edited) Sounds like Mike's going to have inventory primarily going out the door rather than coming in. Any strategy that can change from a collectibles tax rate of 28% to either a long-term capital gain or net income (which can be significantly lower rate for a retiree than when working) sounds useful. I bit the bullet and paid the collectibles rate on the net gain years ago when selling the high grade Silver Age collection, but I was still working at the time and so the rate was similar to income tax from my job and investments. Also, the selling was spread out over a >5 year period. Edited December 26, 2022 by namisgr jimjum12 1 Link to comment Share on other sites More sharing options...
lizards2 Posted December 26, 2022 Share Posted December 26, 2022 On 12/26/2022 at 4:31 AM, namisgr said: Sounds like Mike's going to have inventory primarily going out the door rather than coming in. Any strategy that can change from a collectibles tax rate of 28% to either a long-term capital gain or net income (which can be significantly lower rate for a retiree than when working) sounds useful. I bit the bullet and paid the collectibles rate on the net gain years ago when selling the high grade Silver Age collection, but I was still working at the time and so the rate was similar to income tax from my job and investments. Also, the selling was spread out over a >5 year period. What I'm hearing from all these threads is that my effective tax rate as an individual would be lower than that 28% capital gains rate. Probably 22%, unless Sandi quits substituting, or I quit working seasonal wildfire assignments. Also, I lose my social security supplement this year when I turn 62, and I was contemplating not drawing real Social Security until I am older - that would constitute a fairly significant drop in income. Hmmm...., maybe I need to crunch some numbers, as the Social Security "gap years" might prove a great time to sell a bunch, and only pay 12%. Hmmmm....., Randall Dowling, PopKulture, namisgr and 1 other 4 Link to comment Share on other sites More sharing options...
jimjum12 Posted March 3, 2023 Share Posted March 3, 2023 (edited) On 3/2/2023 at 3:14 PM, benhlelsaw said: I haven't set up my hobby as a business yet, but I've definitely contemplated it. I think the key would be to make sure you're actually running a business and not just trying to avoid taxes. Around here, the entry level Business License is $50 for businesses that generate 50K or less in sales. You can write off expenses and forego sales tax on inventory acquisitions ... so far no laws against enjoying your inventory. Their expectation is that it will sell within a year, and that the License will be denied if there are losses in 3 out of 5 years .... so they kind of already weed out those who are only angling for a tax break. GOD BLESS ... -jimbo(a friend of jesus) Edited March 3, 2023 by jimjum12 Dr. Love 1 Link to comment Share on other sites More sharing options...
the blob Posted March 3, 2023 Share Posted March 3, 2023 I looked this up in New York, as expected, it ain't cheap to do because you need a certificate of authority at the least and the filing fee is like $300. Of course, they say you need to do this if you make ONE sale a year that would be subject to sales tax! So much for cash pickups via facebook market... Link to comment Share on other sites More sharing options...
Popular Post Robot Man Posted March 3, 2023 Popular Post Share Posted March 3, 2023 I am an expert in buying and selling junk. Not so much in keeping track of it. Takes all the fun out of it and just becomes a job. PopKulture, ThothAmon, Bookery and 2 others 5 Link to comment Share on other sites More sharing options...
universal soldier Posted August 17, 2023 Share Posted August 17, 2023 On 5/10/2023 at 5:24 PM, KanyChandler said: Great question! I've thought about turning my hobby into a biz, but I haven't made the leap yet. There are advantages to running your own business, but there are also some potential disadvantages, such as the extra paperwork and responsibility for running the business. But as long as you're willing to put in the effort and stay organized, it could be worth it. It's just as essential to get your business noticed online and to do that, you need to focus on developing On-Page and Off-Page SEO to really boost your rankings. Overall, I'd say it's definitely worth exploring if you're serious about your hobby and looking to take it to the next level. Nice attempt at a link drop that ties into the topic but reported... Link to comment Share on other sites More sharing options...
Chisililltan Posted August 18, 2023 Share Posted August 18, 2023 (edited) I've actually considered turning my own hobby into a business too. It's tempting to explore the benefits of managing taxes and expenses differently. Like you, I've wondered about the pros and cons. On the one hand, it could be a way to save costs and invest back into what you love. But on the other hand, it might add more responsibilities to something that was once pure enjoyment. Finding that balance between turning your passion into a business and keeping the joy alive is crucial. And hey, if you're ever thinking about funding, Finding investors who share your passion can make all the difference. Have you checked out the founders shares guide? It could provide some valuable insights into navigating this journey. Edited August 21, 2023 by Chisililltan Link to comment Share on other sites More sharing options...
OuterBanks Posted August 18, 2023 Share Posted August 18, 2023 On 8/18/2023 at 10:41 AM, Chisililltan said: I've actually considered turning my own hobby into a business too. It's tempting to explore the benefits of managing taxes and expenses differently. Like you, I've wondered about the pros and cons. On the one hand, it could be a way to save costs and invest back into what you love. But on the other hand, it might add more responsibilities to something that was once pure enjoyment. That is the downside to it - if you want to make a profit you'll have to make tough decisions (i.e. selling books you love). In my situation - my CPA said based on the amount I was just selling/buying and trading anyway I should go down this path. If you're selling a lot of books (or in my case - lower volume, higher dollar value) - his opinion was that the IRS would view the hobby as a business so I should just get ahead of it. I'm glad I did it - CGC expenses, bags/boards, pressing fees, shipping/handling, GPA subscription, collectors insurance are all business expenses now. My CPA specializes in e-commerce sales and basically - all my comic expenses (new purchases) can also be written off (the stipulation here is that stuff has to be sold at a profit or a loss at sometime). So far all I have to do in addition to what I did before: - Update a spreadsheet weekly with any expenses and save all my receipts in a folder - Fill out a sales tax form on the Virginia state website once per month It was a bit of a learning curve but worth it IMO. I now have comics in the "for business" and "for personal" categories. jimjum12 1 Link to comment Share on other sites More sharing options...