ForumsHome Based Business

1. Is the purpose
   of your activity to make a profit? Generally, your activity is considered a
   business if it is carried on with the reasonable expectation of earning a
   profit.

1. Do you
   participate in your activity just for fun? Hobbies – also called
   not-for-profit activities – are those activities that are not pursued for
   profit.

1. Do you depend
   on income from the activity? If so, your activity is likely considered a
   business.

1. Have you
   changed methods of operation to improve profitability? If so, your hobby may
   actually be a business.

1. Do you have
   the knowledge needed to carry on the activity as a successful business?
   People who carry out hobbies just for fun, often don’t have the business acumen
   to turn their not-for-profit activity into a profitable business venture.

1. Have you made
   a profit in similar activities in the past? This may indicate your activity
   is a business rather than a not-for-profit hobby. An activity is presumed
   carried on for profit if it makes a profit in at least three of the last five
   tax years, including the current year – or at least two of the last seven years
   for activities that consist primarily of breeding, showing, training or racing
   horses.

1. Does the
   activity make a profit in some years? Even if your activity does not make a
   profit every year, it still may be considered a business.

1. Do you expect
   to make a profit in the future from the appreciation of assets used in the
   activity? This indicates your activity may be a business rather than a
   hobby.

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