Cashing In On Your Creativity: Turning a Hobby into Income
By: Maria Nerius, FaveCrafts.com Resident Craft Expert
In today’s economy every little bit helps and selling your crafts might be a way for you to earn some extra income from your creative passion. The first step is deciding just how much time you have available to craft and create an inventory to sell, then you’ll need to take a few steps into turning your hobby into a business. You have many options and can create your own schedule.
Some people earn what we call pocket money from their crafts. They make 3-5 items and can easily give these crafts to friends as gifts or sell these crafts for income. If you are going to devote a quarter or less of your free time to creating crafts to sell and you plan to just sell to friends or a few community craft shows, you don’t need to take many business steps as you are still considered a hobbyist by most local, state, and federal governments.
You do need to contact your local government for any rules that cover selling handmade crafts. Your city, township, or country may or may not have regulations you need to follow. For example my city asks that you not sell out of your home if it is going to create a traffic problem for your neighbors. You also need to contact your state government to see if you need to collect state sales tax on any 
Don’t be intimidated! It’s just a quick phone call and each government agency will have the information you need. City and state regulations vary, there is no set standard so it’s important you do your regional homework.
If you’ve decided that you want to seriously earn some income from your crafts, you’ll need to understand that you’ll need some inventory (ready to sell items) and avenues to sell these crafts. To work part time or full time as a professional crafter you will have to take your business seriously. The biggest mistake most potential professional crafters have is not making a business plan and not keeping the records needed as a business. Your hobby has become a business and needs to be treated as a business.
You need to keep records of all your expenses, time, labor, and overhead. Again, don’t be intimated by the paperwork. Keep an accounting journal and your receipts. Keep a time card. Working part or full time also means you’ll be introduced to the Schedule C when you go to do your tax return for Uncle Sam. You can pick one up at your local IRS office or download the form. Look this form over carefully and note all the records you’ll be responsible for as a small business owner.
You’ll also need to contact your local and state government to notify each of your business. Some cities and states have few rules and regulations for home businesses, but others have rather complex ones that you need to be aware of. Most hobbyist who turn their hobbies into business work as home businesses, but you do have the option to rent space for your work. This is a personal decision, but I recommend that you start as a home based business and as you grow you may wish to move your business out of the home.
I’ve given you the basics. I’m going to be honest and tell you that some of the business aspects of earning an income from your creativity can seem boring and tedious, but you must be aware of your business responsibilities to be successful. Spend some time thinking about what you want out of your creative business including time spent creating, marketing, displaying, and selling your crafts.
Write down what you want to accomplish on a weekly, monthly and yearly basis, this is your business plan. You’ll be investing your time, energy, and in the beginning you are spending your own money to purchase supplies. As your business grows, you can pay yourself back and then reinvest in your business. Write these numbers down and review them often.
I’ve successfully made a great living from my creativity for 25 years now. I started as a professional crafter selling my handmade dolls at outdoor arts and crafts shows and expanded to become a craft professional who has published articles, books, and made hundreds of TV appearances. This leads me to the discussion of all the creative options accessible to you as a passionate crafter!
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