7 ms·

If you turn hobby into hustle, you can claim it as business expense and save on taxes. I personally love to paint on exotic beaches in summer. My company is ba

If you turn hobby into hustle, you can claim it as business expense and save on taxes. I personally love to paint on exotic beaches in summer. My company is barely profitable, there are travel expenses, but I have some regular buyers for my paintings. Edit: why downvotes? It is not a joke, that is how it works in real life. Author obviously does not understand business. If you love cooking, you do not have to open restaurant and loose money, but once month you can organize "promotion event". That is nothing illegal.

clarkevans 5y ago
You're able to deduct expenses from revenue attributed to that activity.
- sombremesa 5y ago
  This is provably incorrect.
andrewzah 5y ago
Because not everything is about businesses or money. Nor should there be any expectation of monetizing our hobbies / personal time. There is a modern obsession with monetizing -everything- that one does, turning -everything- into a "hustle". Why can't people just do things in their spare time for fun without being bombarded about monetizing them?
- vmception 5y ago
  Fortunately for me, tax deductions are one of my favorite interests and talents.
- dudul 5y ago
  Are you just disagreeing to disagree here? If they like painting on beaches and have a way to make a few bucks to finance these trips why wouldn't they? Maybe you have unlimited funds to finance your hobbies, but others sometimes need to be a bit creative to fund their passion.
xyzzy_plugh 5y ago
Generally businesses have to eventually make money. At least, that's how it works in most of the world. If you constantly claim business expenses and only ever see losses, eventually you'll run afoul of the "expectations of profit". Most people's hobbies will never turn a profit -- that's why they are hobbies, after all.
- deleted 5y ago
  [deleted]
- ghaff 5y ago
  Which is why you don't make losses; you just don't make much of a taxable profit after costs. (I am not an accountant.) I did this for a number of years with a little side software business. The business paid for the expenses associated directly with the business, but also computer/office stuff I might have bought anyway. The business turned a profit every year. Just not much of one.
  - xyzzy_plugh 5y ago
    But that's much, much easier said than done. What if your hobby is ceramics or 3d printing or painting or craft cocktails or homebrewing or repairing old cars or gardening...
    - ghaff 5y ago
      Well, yes, you have to make enough money off your hobby that you have revenue to offset costs against. Which may be possible with art of various kinds but, then, you may not care enough about the money to bother going through the effort of selling at craft fairs or whatever.
    - throw737858 5y ago
      3d printer is 10k. Out of pocket it would be $10k plus income tax $5k plus $1k VAT. So you form "3d printing shop" company and put some money in (loan, services...). Company purchases 3d printer, but does not pay any taxes on printer, it is an expense. After a few years 3d printer is out of warranty but still functional, can be purchased from company for $1. Difference $5999. Obviously this is not advice, consult your accountant first. In reality it is bit more complex. But this is rough picture.
dvfjsdhgfv 5y ago
Downvoting usually means people don't understand your comment or don't like it, so I wouldn't lose any sleep over it. I do the same with one caveat: my tax advisor always reminds me to document not only expenses, but also make sure there is some income, preferably each year, to avoid any problems from the IRS.
- gus_massa 5y ago
  I agree. It looks like a joke, but I'm happy the GP has found a nice way to mix fun and work. A link to a gallery of the painting would have made clear it's not a joke. @GP: Can you post one? Perhaps you can get a few new fans.
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- ghaff 5y ago
  And it's probably not worth it to show losses as opposed to a small profit. In the latter case you can probably cruise under the radar so long as you're not trying to deduct anything unreasonable in the context of the business. (A computer or office chair for a small software business is probably reasonable; a car is not.)
  - koheripbal 5y ago
    We've been doing this for year and deduct tons of personal expenses from our business. We're small enough that the IRS doesn't care. I laughed when she asked if she should put her breast implants on the company card. Even I knew that was going too far :)
LegitShady 5y ago
That's pretty awesome. I only know a few people who have managed to make any money at all on art, and very few who have regular buyers. Art these days has become so cheap and commodified. Even if you don't break even getting to travel on it and 'break even' is worth it. The questions is how did you arrive where you did? Did you paint for years without any return and then found patrons who buy your works regularly? Did you market and advertise? Did someone you knew send buyers your way? There are a trillion people on youtube trying to make money selling art, and feeding themselves on other things. There are a much smaller number regularly selling physical paintings.
- deleted 5y ago
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- TheOtherHobbes 5y ago
  There are various ways. At the high end you relentlessly self-promote until a gallery takes you on in expectation of profiting from your work. You can make a lot of money at the high end - five, six, or seven figures for each item - but it's insanely hard to get into. This person does it by cross-dressing and being famous. https://en.wikipedia.org/wiki/Grayson_Perry https://en.wikipedia.org/wiki/Grayson_Perry Mid-end you need to find a niche and possibly a physical location. I know one artist who combined demo/live painting sessions for customers. The work took minutes, but it was cheerful holiday art sold in a tourist location by someone with a good line in friendly and engaging self-promotion, and he could clear four figures a day during the tourist season. If you're selling online - that's a much tougher sell, and you'll need to create some kind of social media scene for yourself that isn't just "Here's me and my brushes".
  - LegitShady 5y ago
    I think you misunderstood my post. I understand the idea of hustling/advertising/etc to get social media following or a gallery spot or whatever. I also understand the art class/demo scene. None of that is interesting and it's a harder hustle than being an engineer for less in return. 99% of the people doing those will not succeed at making a living doing them, and those activities need huge time investments to see any sales at all. It also means you're trying to sell a particular kind of art. Galleries want a particular kind of art. Tourists want a particular kind of art. Art you can make in demo/classes is very limited. I don't have any interest in hawking my wares to tourists (because it limits you greatly on what you can offer, and how long you can spend on a painting), running classes (of which there are a million more qualified artists doing the same, all with competitive social media already), or praying that some art gallery will find my paintings interesting. This person said they have regular buyers (what I call patrons) for their choice of exotic beach landscapes, to the point that it subsidizes travel to exotic beaches. How did this person get patrons for their niche without the rest of it? That's what I want to know. Not generic ways of selling art. Are they selling to rich buddies? Is their mom really wealthy and supporting their hobby? I think its awesome they are doing what they love and it sort of pays for itself, I wish I could do the same, but there's a huge leap from 'I paint exotic beaches' to 'I have patrons for my exotic beach landscapes'.
Merad 5y ago
It sounds like (based on this comment and several of your other replies) that you get joy out of running a business and using them to play games to minimize your taxes. That's great, you do you, but to me it all sounds exhausting. If I wanted to learn painting, or play with 3d printing, or whatever, then _that's_ what I want to put my time and effort into. I really don't care if I'm leaving a thousand dollars on the table in potential tax write-offs. That's a perfectly acceptable price to pay to just enjoy my hobby without having to spend any time thinking about managing a business or trying to optimize every single aspect of my life.
- koheripbal 5y ago
  I think you're imagining the tax advantage here as a lot of work, when it's really not. These sorts of tax avoidance strategies are only complicated the first time you do them, and then repeating the same thing each year is simple. ...as for selling enough of it to call it a company - again - it's easier than most people realize to register a company.
throwaway0a5e 5y ago
You've described the legit way of doing it. And on the other end of the spectrum you can run it as a cash only side gig and make a nice little slush fund for yourself.

clarkevans 5y ago

You're able to deduct expenses from revenue attributed to that activity.

sombremesa 5y ago
This is provably incorrect.

andrewzah 5y ago

Because not everything is about businesses or money. Nor should there be any expectation of monetizing our hobbies / personal time. There is a modern obsession with monetizing -everything- that one does, turning -everything- into a "hustle". Why can't people just do things in their spare time for fun without being bombarded about monetizing them?

vmception 5y ago
Fortunately for me, tax deductions are one of my favorite interests and talents.
dudul 5y ago
Are you just disagreeing to disagree here? If they like painting on beaches and have a way to make a few bucks to finance these trips why wouldn't they? Maybe you have unlimited funds to finance your hobbies, but others sometimes need to be a bit creative to fund their passion.

xyzzy_plugh 5y ago

Generally businesses have to eventually make money. At least, that's how it works in most of the world. If you constantly claim business expenses and only ever see losses, eventually you'll run afoul of the "expectations of profit". Most people's hobbies will never turn a profit -- that's why they are hobbies, after all.

deleted 5y ago
[deleted]
ghaff 5y ago
Which is why you don't make losses; you just don't make much of a taxable profit after costs. (I am not an accountant.) I did this for a number of years with a little side software business. The business paid for the expenses associated directly with the business, but also computer/office stuff I might have bought anyway. The business turned a profit every year. Just not much of one.
- xyzzy_plugh 5y ago
  But that's much, much easier said than done. What if your hobby is ceramics or 3d printing or painting or craft cocktails or homebrewing or repairing old cars or gardening...
  - ghaff 5y ago
    Well, yes, you have to make enough money off your hobby that you have revenue to offset costs against. Which may be possible with art of various kinds but, then, you may not care enough about the money to bother going through the effort of selling at craft fairs or whatever.
  - throw737858 5y ago
    3d printer is 10k. Out of pocket it would be $10k plus income tax $5k plus $1k VAT. So you form "3d printing shop" company and put some money in (loan, services...). Company purchases 3d printer, but does not pay any taxes on printer, it is an expense. After a few years 3d printer is out of warranty but still functional, can be purchased from company for $1. Difference $5999. Obviously this is not advice, consult your accountant first. In reality it is bit more complex. But this is rough picture.

dvfjsdhgfv 5y ago

Downvoting usually means people don't understand your comment or don't like it, so I wouldn't lose any sleep over it. I do the same with one caveat: my tax advisor always reminds me to document not only expenses, but also make sure there is some income, preferably each year, to avoid any problems from the IRS.

gus_massa 5y ago
I agree. It looks like a joke, but I'm happy the GP has found a nice way to mix fun and work. A link to a gallery of the painting would have made clear it's not a joke. @GP: Can you post one? Perhaps you can get a few new fans.
- deleted 5y ago
  [deleted]
- deleted 5y ago
  [deleted]
ghaff 5y ago
And it's probably not worth it to show losses as opposed to a small profit. In the latter case you can probably cruise under the radar so long as you're not trying to deduct anything unreasonable in the context of the business. (A computer or office chair for a small software business is probably reasonable; a car is not.)
- koheripbal 5y ago
  We've been doing this for year and deduct tons of personal expenses from our business. We're small enough that the IRS doesn't care. I laughed when she asked if she should put her breast implants on the company card. Even I knew that was going too far :)

LegitShady 5y ago

That's pretty awesome. I only know a few people who have managed to make any money at all on art, and very few who have regular buyers. Art these days has become so cheap and commodified. Even if you don't break even getting to travel on it and 'break even' is worth it. The questions is how did you arrive where you did? Did you paint for years without any return and then found patrons who buy your works regularly? Did you market and advertise? Did someone you knew send buyers your way? There are a trillion people on youtube trying to make money selling art, and feeding themselves on other things. There are a much smaller number regularly selling physical paintings.

deleted 5y ago
[deleted]
TheOtherHobbes 5y ago
There are various ways. At the high end you relentlessly self-promote until a gallery takes you on in expectation of profiting from your work. You can make a lot of money at the high end - five, six, or seven figures for each item - but it's insanely hard to get into. This person does it by cross-dressing and being famous. https://en.wikipedia.org/wiki/Grayson_Perry https://en.wikipedia.org/wiki/Grayson_Perry Mid-end you need to find a niche and possibly a physical location. I know one artist who combined demo/live painting sessions for customers. The work took minutes, but it was cheerful holiday art sold in a tourist location by someone with a good line in friendly and engaging self-promotion, and he could clear four figures a day during the tourist season. If you're selling online - that's a much tougher sell, and you'll need to create some kind of social media scene for yourself that isn't just "Here's me and my brushes".
- LegitShady 5y ago
  I think you misunderstood my post. I understand the idea of hustling/advertising/etc to get social media following or a gallery spot or whatever. I also understand the art class/demo scene. None of that is interesting and it's a harder hustle than being an engineer for less in return. 99% of the people doing those will not succeed at making a living doing them, and those activities need huge time investments to see any sales at all. It also means you're trying to sell a particular kind of art. Galleries want a particular kind of art. Tourists want a particular kind of art. Art you can make in demo/classes is very limited. I don't have any interest in hawking my wares to tourists (because it limits you greatly on what you can offer, and how long you can spend on a painting), running classes (of which there are a million more qualified artists doing the same, all with competitive social media already), or praying that some art gallery will find my paintings interesting. This person said they have regular buyers (what I call patrons) for their choice of exotic beach landscapes, to the point that it subsidizes travel to exotic beaches. How did this person get patrons for their niche without the rest of it? That's what I want to know. Not generic ways of selling art. Are they selling to rich buddies? Is their mom really wealthy and supporting their hobby? I think its awesome they are doing what they love and it sort of pays for itself, I wish I could do the same, but there's a huge leap from 'I paint exotic beaches' to 'I have patrons for my exotic beach landscapes'.

Merad 5y ago

It sounds like (based on this comment and several of your other replies) that you get joy out of running a business and using them to play games to minimize your taxes. That's great, you do you, but to me it all sounds exhausting. If I wanted to learn painting, or play with 3d printing, or whatever, then _that's_ what I want to put my time and effort into. I really don't care if I'm leaving a thousand dollars on the table in potential tax write-offs. That's a perfectly acceptable price to pay to just enjoy my hobby without having to spend any time thinking about managing a business or trying to optimize every single aspect of my life.

koheripbal 5y ago
I think you're imagining the tax advantage here as a lot of work, when it's really not. These sorts of tax avoidance strategies are only complicated the first time you do them, and then repeating the same thing each year is simple. ...as for selling enough of it to call it a company - again - it's easier than most people realize to register a company.

throwaway0a5e 5y ago

You've described the legit way of doing it. And on the other end of the spectrum you can run it as a cash only side gig and make a nice little slush fund for yourself.