This post is part personal development and personal finance.

I have a hobby that I am interested in trying and make some money from. It's a niche-type craft that I create. It would do super on ebay but I worry about people being unhappy and giving bad feedback. I prefer people to be able to hold the item in their hand before they decide to purchase.

I have a few questions:

When does a hobby become a business where you must report income? If I sell at a church craft fair, does this make it a business and I'll have to declare income for tax purposes? What kind of business license do I need to get before my business is "legit"? I'll need a license and a tax ID in order to buy my supplies wholesale right? How much income must I make from my business to be able to qualify for any tax benefits?

I guess I'm looking for a good all around book about how to start you own business. Any suggestions?

Check out NOLO press. They have some great books on this topic. Good luck!

Sandycheeks, do you have any friends who are lawyers or accountants? They're the best people to ask. Also, please be aware that rules on businesses vary greatly from state to state (and country to country).

To the best of my knowledge (which means: I could be dead wrong on some of this), you must report all income, regardless of whether it's a hobby or a business. In reality, you can probably get away selling a few hundred (few thousand?) dollars a year without anyone being the wiser. The troubles come when you start having to deal with other companies as a business entity. Then you're a business whether you like it or not.

The way my CPA puts it: the IRS expects a business to be profitable for two years out of five (I think that's the right ratio), otherwise they deem it the business a hobby, and then they get cranky about "business deductions" you might have taken. For example, if you're not making money at your business, but you're deducting your computer as a business expense, the IRS isn't going to like it.

Anyhow -- the more I type here, the more I realize I'm not qualified to answer your question. It really depends on where you're located and what you're doing, I think.

Good luck!

Thanks for both replies.

I'm fairly certain that the business would be profitable as long as I can get to the right buyers. The business would not be intended to replace a full time job, rather provide some part time income.

As a way of letting people know about the product I was thinking of starting a webpage. I checked out godaddy and they have a .info address for only 2.99 a year. Anyone know why .info is so much cheaper? It's no less known to me than .us, .tv, etc. I was thinking I might want to buy the domain and work on learning page design (or researching a person to do it for me for cheap) Or maybe just find a free web page?

Thoughts?

get a .com if you can. If not that get a .org. But the other extensions are rarely used and most people don't even think about them. Just spend the extra $6 and get a good address.

There are TONS of free and paid templates out there but you'll need to have some sort of editing software. I use dreamweaver and like it much. My template cost $25 and then I modified it a bit. Totally worth it though it took many hours of time/effort.

Sandycheeks, do you know about etsy.com? It's sort of like ebay, but it's all "self-representing artists"--everything is handmade, or supplies for other artists/crafters. One of my very favorite sites to browse. One of these days I may even get bold enough to sell!

I second the etsy suggestion.

It seems like a great community.

I checked out etsy, thanks. It looks like somewhere I would buy, but not necessarily sell.

I'm not really looking to sell online at this point, just host a website where local prospective customers could view samples. Sort of like an online flyer.

About my hesitancy to sell online, I'm concerned about people being overly picky and leaving bad feedback. I know the quality of my work but some people want a champagne product at beer prices. Then they complain about the most minor "flaw" which are inherant in handmade items and IMO add to their charm. Also, i'm not looking to sell one at a time. I'm targeting orders of mutliples.

A friend of a friend sells resin jewellery on Etsy. Apparently, she does very well for herself.