Snakes and Taxes, Business or Hobby?
 

I have been keeping a growing snake collection for around a year now, and I breed them for the fun of it, and because I like playing with genetics, but I guess now I need to think about where I'm going with this. I'm up to nearly 50 snakes, plus a few hatchlings from '13 that I need to consider selling, but issues are a bit more complicated than I had originally assumed. I never intended to go into business, or even to make a profit. I was hoping, at best, that the sale of hatchlings might offset the cost of food and electricity, but now I see several other expenses. It costs money to be a vendor at shows, and you need to register anything other than your legal name as a business for advertising purposes. This results in you having a legitimate and traceable tax obligation for what is simply a hobby you do in your spare time. Even Paypal, I've read, will report your transactions over some limit to the IRS. I would think that few people are really making money selling snakes, and trying to jump from a hobby to a business wasn't my intent, and just sounds unnecessary.

So do most people just suck it up and pay the taxes in order to keep their hobby and be legally legit, or are they flying under some legal limit or exemption that reduces or eliminates the tax obligation? Is it really worthwhile to register a business name? Do you then get to claim your expenses (mice, cages) as tax exempt? Do many people form an LLC? I'm not trying to be cheap, but it just doesn't seem fair for the government to take even a tiny percentage of earnings from a simple hobby that really doesn't make any real profit.

I am sure that everyone here is legit and legal, but I'd be interested in hearing ideas/opinions on what you assume that others are doing. Thanks!

I don't know the dollar amount that the IRS decides you need to start paying taxes, but I opted to go ahead and make mine official.

I tend to worry about people questioning stuff, and although I make sure all of my animals are legal in my city, and verified no licence needed, etc, I chose to get my business licence, set up an LLC, and I even rented a commercial office, to keep supplies at and have a commercial address for my business. **I do not have a store there, nor do I have anyone go to that location, but it gives me the option to have a wholesale account.

Part of my business is modifying 10 gallon tanks for Crested Gecko enclosures, and I plan on (hope to) sell them at local expos.

Yes, you do get to claim everything that pertains to the business. (I would double check on the actual animal purchases, but caging, food, supplies, I believe, are all things you can write off on your taxes).

Honestly, I think most people here still fall under the "hobby" aspect, and probably do not need to worry about the necessity of becoming official, myself included, but I opted to do so anyways.

I did have a business and paid the taxes etc. I ended up closing it though as I lost some animals and the cost of replacing them was more than I made selling so I'm back to just breeding a few and if I sell, I add that as additional income and no longer write stuff off.

It is my understanding that if it is a hobby, you still need to report the income. And you can still take deductions, but only to the point of negating the income. But in a business, you can actually take a loss (greater than the revenue the business generates), and count it against regular income from a job or another business. However, if you continue to take a loss year after year, the IRS will eventually consider it a hobby instead of a business.

If you are making money at shows, it is a good idea to declare the income because your name will pop up if anyone checks to see a list of vendors. So you might as well keep records so that you can take legitimate deductions, too.

I am no accountant, but have asked plenty of questions of them over the years. It is probably worthwhile to pay for an appointment with a good accountant and take a list of questions to get cleared up, for your own peace of mind and to make sure you are getting the most financial advantage out of your business / hobby as possible.

I think I had to register my business name as part of my Florida Class III license, which is required to sell snakes. I don't sell at shows, but I do have a website, and sell on line, so I'm find-able.

That would be the day I ever made more money than I spent, though! Hobby!!

I include mine with my pet shop, so report every sale and every deduction. For sure, it's a hobby. Every year it's a small write-off for my pet shop, I'm not sure what sales would be needed to turn an actual profit breeding colubrid snakes. I'll let you know when I do!

time to back in business!