Registering income from a crafting hobby

bart80

Registered User
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3
Hi all

just looking for some advice on my situation. I am a self employed block layer (soletrader) but in recent times I have been making wooden gifts purely as a hobby, but this has generated a lot of interest and have a list of willing customers. I never expected it to take off but it has, so what is the best way for me to go about this. I wouldnt class it as a business at the minute but potentially could be, I will be taking in payment for work so whats the best option for me to have it all above board. Also do I need to register another business name with CRO if its on such a small scale, its something I love doing but not enough to give up the day job, maybe attend a few craft fairs or farmers markets and possibly bring in a little extra income.
 
You don't need to register a business name.

You just include the extra income on your tax return, as your are already self employed then just include it in that.
 
As above on the tax return, the issue I see is how will you value the cost of making the gift and booking a legitimate cost of good sold.

I know you say its a hobby but, as I well know, its not a cheap one, elec, tools: purchase and repairs, your time, lighting, heating, etc

In passing a business name is pretty worthless as they are not unique: we both could have the same one and its up to us to sort out any business related issues
 
Thanks for replies, in relation to business name, if I dont register a business name but want to advertise my business for example "crafts by XXXX" am I right in saying my name has to be used to avoid having to register? Can it be first name only or has my full name to be used? or have I misunderstood that. You are correct when saying it is not cheap to turn a hobby into a business for me I think the hardest part will pricing as a lot of time goes into my crafts that people wouldnt even realise.
 
I don't know re the business name issue you raise.
Just on the cost of goods sold, you need to clarify can you, as a sole trader, charge your time against your own work on the woodwork.
Its open to abuse in the sense that you could make an item, say sell it for 100 euros and then decide it was 4 hours work at 25 euros/hr.....
Again I don't know but its best to get it teased out/answered.
Maybe, and I say maybe, a Ltd company might work better for the woodcraft: they can now be single director companies but there are extra layers of admin if you are a director, especially on the tax side.
 
thanks for that, my accountant is back from holidays next week, i will have a chat to him about those options.
 
thanks for that, my accountant is back from holidays next week, i will have a chat to him about those options.

No problem its an interesting one!
Please ensure that what ever the accountant says will get past the Revenue so I would be getting the opinion in writing...
 
As above on the tax return, the issue I see is how will you value the cost of making the gift and booking a legitimate cost of good sold.

I know you say its a hobby but, as I well know, its not a cheap one, elec, tools: purchase and repairs, your time, lighting, heating, etc

Just on the cost of goods sold, you need to clarify can you, as a sole trader, charge your time against your own work on the woodwork.
Its open to abuse in the sense that you could make an item, say sell it for 100 euros and then decide it was 4 hours work at 25 euros/hr.....

Not sure what you're getting at here - from a tax point of view the value of your time is what you are paying tax on.

Eg - sell item for €100. Cost of wood, elec, tools w&t, etc used on that item is €40. Taxable profit is €60. From a tax point of view it doesn't matter whether you spent 5 minutes or 5 hours on it, the €60 is your profit.
 
Not sure what you're getting at here - from a tax point of view the value of your time is what you are paying tax on.

Eg - sell item for €100. Cost of wood, elec, tools w&t, etc used on that item is €40. Taxable profit is €60. From a tax point of view it doesn't matter whether you spent 5 minutes or 5 hours on it, the €60 is your profit.

Thats exactly the point I was trying to articulate: thank you.
Which is why if he were to set up a Ltd Co and be an employee, then the answer would be:.... Thank you in anticipation
 
Lets not get carried away with ourselves. Is this a true hobby activity? If so, it is not liable to taxation. I think the Revenue also recently published guidelines for what constitutes a hobby, but this was in the context of individuals claiming losses from their hobbies against their employment gains.
 
Are your goods marketed? Sold to friends or to customers? Sold at nominal profit or real profit to reward the effort? (If someone could insert a link to the Badges of Trade from the 1954 Royal Commission, it would be very useful & illuminating)
 
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