Wondering which best describes you? And more specifically, how important is it to know the answer?
It's actually very important, but luckily determining the answer is pretty simple
If the intention is to make a profit - its a Business. If you are making and selling a product but basically you just charge enough to buy more raw materials and you are doing it more for the love of it than making money - its a Hobby. The key here is profitability not quantity of sales.
Why is it important to know which category you fit? Primary it is the Tax Man (SARS is not my favourite four-letter word and I am sure you can relate). If its a hobby and you are not really making a profit, then you don't need to declare the earnings. But if its a "hobby" and you are making a profit, you should be declaring the income and you should be paying tax on it. And all good, if you are happy to pay 28% tax on that side hustle income.........
But, if you would rather reduce that tax obligation, you need to run your affairs more cleverly. Small businesses pay a much lower tax percentage and you are able to deduct far more running expenses through a business than in your personal capacity.
With a separate, simple bank account for your business and a bit more effort each month you can significantly reduce the money you need to pay over to SARS.
If you'd like to learn more or need my assistance, give me a shout and we can meet for coffee to chat and strategise. (email) beancountingforcreatives@gmail.com (tel) 072 389 4128