By Vera Wilson
For transitioning servicemembers, veterans and military spouses, turning a hobby into a business might make sense.
The positives seem obvious. Most hobbies are easily done from home. Monetizing something you already are skilled at means no big learning curve. With access to the internet and social media, you are only keystrokes away from marketing your business and creating an online store or using an existing platform like Etsy.
But before you set up a jewelry case in your front yard, there are some things to consider.
The first step is determining if your hobby is even marketable. Playing tennis might give you joy, but unless your name is Serena Williams, no one’s probably going to pay to watch you. On the other hand, if you truly excel at the game, maybe you can give tennis lessons.
Although not expressly forbidden, it’s smart to check if a home-based business (HBB) is even allowed if you’re on base. All HBBs must be registered and approved by the housing office; if your business competes directly with the local exchange, you might be denied. And what might be allowed on one installation might not be on another. Rules for operating an HBB overseas can get particularly complex.
[RELATED: Why This DoD Memo Could Open Doors for Military Spouse Entrepreneurs]
Some entrepreneurs who have turned their hobby into a business complain it takes the joy out of it for them. Are you ready for the pressure to finish that quilt by Christmas? Will dealing with customers put an end to the welcome solitude you find while you woodwork?
The IRS disallows expenses related to a hobby, but will consider your hobby a legitimate business if you follow general business practices that imply you are engaged in the pursuit of profit, like a separate checking account (refer to the IRS website for a comprehensive list). Losses year after year can be a red flag.
It’s unlikely you’ll get rich quick, but a hobby just might let you bake your bread and earn some, too.