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Characteristics of a business Here are some factors or indicators that the courts and tribunals have taken into account in determining if a business exists for tax purposes. While no one factor can be used to determine whether you are carrying on a business, taken together they should indicate whether your activity is a business. * Does your activity have a significant commercial character? It is important to consider whether your activity is carried on for commercial reasons and in a commercially viable manner.
* Is there more than just an intention to engage in business? You need to have made a decision to commence business and have done something about it. If you are still setting up or preparing to go into business, you might not yet have commenced business.
* Do you have a purpose of profit as well as a prospect of profit? Do you intend to make a profit or genuinely believe that you will make a profit, even if you are unlikely to do so in the short term?
* Is there repetition and regularity to your activity? Businesses usually repeat similar types of activities, although one-off transactions can constitute a business in some cases.
* Is your business similar to other businesses in your industry? Is the way you operate consistent with industry norms or other businesses in your industry?
* What is the size, scale or permanency of your activity? Is the size or scale of your activity consistent with other businesses in your industry? Is it sufficient to allow you to make a sustainable profit?
* Is your activity planned, organised and carried on in a business-like manner? This may be indicated by business records and books of accounts, a separate business bank account, business premises, licences or qualifications and a registered business name.
MINOR EDIT: The short answer to your question is when you start charging or getting paid to do it. Then and only then is it considered a business.
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