At what point does a hobby become a business?

Discussion in 'Starting a Lawn Care Business' started by DrGreenThumb, Jan 11, 2019.

  1. DrGreenThumb

    DrGreenThumb LawnSite Member
    Messages: 31

    Ok, back in June, I decided I was done working in the corporate world. After 10 years in a cubicle. I have 5 full seasons of landscape experience with 2 very established local landscapers. The heat, is where I belong.

    Lawn care has always been a passion of mine. In 2008 I got my business to 25 accounts, the next year I discontinued because I was missing a ton of time with my small children.

    Fast forward to last June ‘18. I started acquiring machines. Found a free Toro 36 inch Proline chassis, it needed an engine I used that machine until I found a 48 inch Lesco, low hour machine needed an engine, built it, then I found a 2004 Scag Advantage 52 Hydro. The Scag is my winter project. I bought all my machines broken when I started.

    So now I have a 36, 48 and 52 mowers I own all 3. 2 blowers, 2 trimmers, 2 hedge trimmers, hand tools, 60 gallon barrels etc. My truck is an 03 Ram 1500, and a 5x8 trailer, I have had.

    I did manage to complete 22 fall clean ups, I was able to upgrade my hedge trimmers, line trimmer, and backpack blower. The rest was saved

    Looking to upgrade my truck and trailer this coming summer, I’m super frugal with business money. I own everything, no note on machines or trucks. My goal was to buy or build everything with cash. Obviously, there are machines and tools I will need to complete particular tasks. At that point I would have banked enough to support the purchase.

    I have 6 clients that have signed on for weekly lawn service, I will be getting insurance this spring, just to be safe. At what point does the “hobby” become a “business”? I treat this little business as a business, but at what point is start up over and it’s time to form and LLC?
     
    TrainingWheels and hort101 like this.
  2. Matthews Lawn Care

    Matthews Lawn Care LawnSite Bronze Member
    Messages: 1,972

    As soon as it makes you $.

    A single person LLC is just an expensive version of a sole prop. It won’t limit your liability the way most think it will.
     
  3. Smith Lawn & Landscaping

    Smith Lawn & Landscaping LawnSite Senior Member
    Messages: 594

    The IRS states if you haven't made a profit within 3 years then they consider it a hobby.
     
    TrainingWheels and hort101 like this.
  4. Charles

    Charles Moderator Staff Member
    Messages: 10,862

    You must have saved up plenty of money while in the corporate world. You sure cant support children with 6 average residential lawns. Get about 60 average lawns. Then you have a small business and meet the poverty level for Rhode Island
     
    DrGreenThumb likes this.
  5. BigJlittleC

    BigJlittleC LawnSite Gold Member
    from Chicago
    Messages: 3,710

    Hello my name is Dr. Greenthumb!
    I'd like to tell you just where I'm from:headphones:
     
    DrGreenThumb and hort101 like this.
  6. hort101

    hort101 LawnSite Fanatic
    Male, from S.E. New England
    Messages: 14,674

    GO FOR IT:weightlifter:

    just realize what your getting into the physical work can take a toll and
    the weather and mother nature call the shots

    what about winter income?

    I cant sit at a desk for hours either :wall
    any questions just ask Lawnsite is a great resourceThumbs UpThumbs Up
     
  7. Rockbridge Lawn Care LLC

    Rockbridge Lawn Care LLC LawnSite Senior Member
    Messages: 985

    yea the post that if your making profit by year 3 then the IRS considers it a business over a hobby is all fine and dandy....

    but....

    when you 'depend' on the 'hobby' for income then it mentally becomes a business. When the struggle is real and you don't have the luxury option of quitting, then your in the business grind.

    when you sit down an look at an income statement and evaluate it for your personal goals/needs, then its a business
     
    Koehn's Lawn Service likes this.

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