Is Your Hustle A Business Or A Hobby?

Posted on by Rolande Sumner

IRS, SBA, and SBDC does not consider your hustle a business because you are not doing the below things.

  • Time Keeping: You do not keep track of your time. You’ll need to prove that you are actually working on a project, client, general administrative tasks. You need to know how long you have been working on the task.
    • Refer to DCAAM 7641.90, paragraph 4b-d for audit compliance.
    • Look for free or inexpensive time keeping apps like AllHours and MyHours.
    • Use an excel worksheet.
  • Policies and Standard Operating Procedures (SOP): You do not have policies or SOPS created.
  • Revenue: You do not have any revenue and you can’t prove that your business will generate revenue in coming years. Keep the below on line.
    • Profit & Loss Statements (P&L)
    • Client/Customer List (This is secure document and needs to be handled via the Privacy Act.)
    • Bookkeeping System
      • Wave Apps: Free book keeping system
      • Quickbooks: Most used book keeping system
      • Xerox: Another common book keeping system
  • Operating Agreement: You do not have an Operating Agreement.
    • Seek the advise of an attorney, especially if you are apart multi-member ownership.
    • Legal Zoom
    • Rocket Lawyer
    • Legal Shield
  • Insurance: You do not have insurance to protect your business. Look to your industry or sub-industry associations. Most will have partnerships with insurance companies to provide comprehensive insurance for your business.
  • Corporate Minutes: You are not keeping copies of your corporate minutes.
    • Should be done no less than once per quarter.
    • Should include all major decisions of your organization
    • Should be filed in a secure place with limited access
  • Membership Certificates: Owners of your organization do not have membership certificates. Obtain a corporate kit that will have certificates, a binder, a stamp, etc.
  • Legal Registrations: You do not have the basic documents to establish that you are a legal entity.
    • Business License/ Articles Agreement (The name will depend on the state)
    • EIN: This will be issued by the IRS. You need to keep the original document.
    • State/County Auditor Tax Filing: Some states require a resale license. Check with your state how to obtain one.
  • Resume: You do not have a resume outlining your qualifications to run your business.
    • Credentials and Training
    • Past work experience that contributes to your current business

Published by Rolande Sumner

Rolande S. Sumner is a retired US Army veteran and the CEO & Founder of Life After Service Transitional Coaching LLC®. Rolande enlisted in the US Army National Guard in 1995 and retired in 2015. During her career, she was an Admin Clerk, Heavy Vehicle Operator, and Human Resources Manager. She served as both a traditional National Guard Soldier and as an Active Guard/Reserve (AGR) Soldier; and stationed in Massachusetts, South Carolina, and Afghanistan. She is an Associate Certified Coach (ACC) via the International Coaching Federation, a Certified Professional Coach (CPC) and Energy Leadership Index Master Practitioner (ELI-MP). Rolande is also one of the bestselling authors of Behind The Rank, Volume 3.

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