Ask Terry Questions LLC vs doing business as

LLC vs doing business as

By Terry Savage on January 17, 2024 | Financial Planning / Retirement

I’ve been a self-employed artist for over 30 years now. And I’m beginning to see certain aspects in which I want to take my business to another level. Is an LLC or doing business as registration fit for this. It is a caricature business we offer a service, both caricature and face painting, and I want to try and, make it less like a hobby and more like a business. Savage.
Thank you

Terry Says

The “official” difference between a business and a hobby is that you make a profit.
According to the IRS: “In general, it is assumed if you have profit 3 out of 5 consecutive years, you are engaged in a for-profit activity and therefore not a hobby. If you have more years of losses, you have to prove you are involved in operations for profit, not just for fun.”

I suggest you consult a CPA about the potential tax benefits of creating a business, with its own set of deductions that could potentially minimize your taxes — IF you become profitable!

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