Hobby vs. Business: where do you draw the line?

[Clan Delaney]

Curiosity here...

For those of you who have dealt with this question or have pondered it yourselves, when did/does your maple operation cross the line from being a hobby to being a business? Is it when you've graduated to a threshold level of taps, or syrup produced, or overall size of operation? Is it a legal issue: the income requires you to call it a business? Something else I can't think of?

I'm interested to hear your stories.

[gmcooper]

Well I'll jump in here. Our maple business became a business when we went from 40 taps and made 5 gallons on the wood stove to 350 taps , new sugar house and 2x8 evaporator. It has been a business since 1989 and will always be run as one. It is part of our farm and most years generates at least a small profit. Hopefully the profits will keep growing after all our investment certainly keeps growing.
Mark

[802maple]

When you start keeping records and filing taxes and don't make a profit for a few years the IRS will tell you if you are a business or not. LOL

[PATheron]

Keep your reciepts. Youll be boiling on a homade rig thinking who in the hell would ever think they would want to do this as a business, theyve got to be idiots. Then youll get up the next day and see a whole mountainside of sugar maple and think, you know I really think I could keep up with that, If I sold my motorcycle and bought some more sapline, on and on and on. Theron

[Russell Lampron]

I decided to call mine a business when I went from 25 taps to purchasing my 2x6 evaporator. At that point I went up to 300 taps and made enough syrup to sell to the public. Some years I show a small profit but most of the time I have enough expenses to show a loss.

[Parker]

hobby= you know your going to lose money,,,,,business=you hope to break even or make a profit,,,,,,,(not counting your time, of course),,,,,

[Valley View Sugarhouse]

I went from a hobby to a business when the wife asked why I was spending so much money. (investing in my business and our future hon)

[Thompson's Tree Farm]

Definitely this is a business for me. I make my living from this land the same as 5 generations before me. Maple is a large portion of that. I love what I do and have little doubt that syrup runs in my veins. Is this business always profitable? Definitely not! I do strive to make appropriate investments in the long term viability of my business. I realize that my own time is very low paid most years but the enjoyment and peace of mind I get from from doing it is worth a great deal. Does it stress me? You Betcha! Does it limit my sleep hours? Yup. Do I Like having my wife show up at the sugar house in the late evening with a hot supper? No question! Fresh air, hard work, family, good friends, tradition. Could one ask for a better way to make a living?

[Jim Brown]

Is it a business, you bet! We are approching it with the long term in mind. My youngest son and oldest daughter (37 and 40 respectively) are taking a major role in the operations and are willing to spend the money now for the rewards down the road.Do we intend to make money? sure but do we expect to make it right now? no . We are putting every dime the operation generates back into the operation-adding taps-buying RO's-increasing vacuum pumps-buying tranfer pumps-etc;you guys know the drill.At some point Mom and I will say we have had enough and the Kids will be able to say they own a profitable maple syrup operation all they will have to do is maintain it!

Jim

[802maple]

Just make sure you don't lose money more than 3 years in a row and everything is good with the feds. A buddy of mine got a little greedy and wrote off a few things he probably shouldn't have even though it was legit to do so, (ie pickup and tractor) and on the 4th year of losing money the IRS deemed him a hobby and he didn't have a leg to stand on and they decided he was to be a hobby after that. Though the argument could be made that he used them for his operation, 500 taps didn't seem to need all that depreciation.

[maplecrest]

growing up on a farm that has produced maple products for over 200 years, the so called profit always went back into the operation. yes petty cash buys gas, bar and chain oil ect. but have never shown a profit. yes this year with the increase in income i have upgraded to a new r/o ,vac pump, s,s steel drums. needed changes on the evaporator ,smoke stack, cross flow pans, new insulation inside.and hope to add 1500 more taps by feb.i would say when you sell your first quart of syrup you are in business

[Dill]

Heck the 10k+ bales of hay my Father and I do a year, is only a hobby.
If I still have to go to the office in the morning its a hobby.

[Amber Gold]

When I produced a couple of gallons a year I considered it to be a hobby. Now that I'm buying a real evaporator, sugar house, and etc. I'm considering it a hobby/business because it's a hobby that I enjoy doing and hope to at least break even if not make a profit which is the business part. I do not expect to make any money because I plan on turning it back over into the business to expand and buy better equipment.

[lpakiz]

My accountant tells me that you are a business when you "engage in an activity to make a profit". He also says that if you show a loss more than 3 years in a row, it will send up red flags to the IRS. So, every fourth year, we show a bit of black ink. Been going on this way for 20+ years....

[maple flats]

I think if you "fudge the numbers" to show black or red ink you are looking for trouble in the long run. Do your best to show a profit every year. Keep accurate records, sell for an honest business price and show your sales. I feel that if you make enough to sell you are a business. The best way to become honestly profitable is to get to a point where you get economy of scale. Equipment and facilities that are under utilized make it hard to generate a profit.

[tessiersfarm]

I'm with Dill, Its a hobby as long as I have to work off the farm to pay for it all. I sell enough to pay expences but when I put in that many hours in for little or no financial gain thats no business.