COLUMBIA

Ss Are you in Business?

Or, to pay or not to pay (the taxman) By Derek Johnson

Do you have to pay taxes or at least file taxes?

First let’s deal with a couple of common misconceptions.

* I do this for a hobby, therefore I don’t have to pay taxes. WRONG.
If you are carrying on an organized attempt to make money (even
small amounts of money) and have a reasonable expectation of
making a profit, you are in business in the taxman's opinion. The
key phrase is “reasonable expectation of a profit.”

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Don't I have to fill out something to start a business? NO. The
moment you decide to carry out an attempt to make a profit and
take a step towards that, you are in business. Your business expenses
are eligible from that point on and of course your profits are taxable.
There still has to be a reasonable expectation of a profit. Notice a
theme?

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I get to write-off all the expenses of my pottery, my car, some of my
house expenses, telephone, etc. Maybe. First see point number one.

Are you in business? If you are a business:

Direct pottery costs are eligible, such as glaze materials, clay, tools.

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Larger costs like a wheel or kiln will have to be depreciated (only
part of the expense is allowed each year).

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Electrical or gas is deductable but it can be tough to figure out what
percent the business uses. If you have a “reasonable” rationale for
the allocation, the taxman will accept it. Have it written down and
please don't cause yourself grief down the road, make it reasonable.
‘The government does not accept “guess-ti-mates”.

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Vehicle expenses - you will need to keep a log of business trips and
subtract out your personal expenses. And with all expenses keep
receipts and organized records.

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Home expenses — This gets tricky. You can only write-off expenses
if you make a profit and only those directly related to your business
activity. Do not try to write-off mortgage interest without first
talking to an accountant. It is allowed, but may cost you dearly when
your house is sold.

When does a hobby become a business?

Many potters start out making pots for themselves and it evolves into
a business. If you make pots for yourself and sell the odd one to friends
and family, it is not a business. But when you actively attempt to make
things to sell and have that mythical “reasonable expectation” of a
profit you have crossed the line.... Welcome the world of business.

If this all sounds a bit convoluted, it is. The government is trying to walk a
thin line between not allowing people to write-off hobby expenses and taxing
any “reasonably real” income.

Derek Johnson fas more than 10 years experience providing advice
to small businesses. He currently works for the non-profit Community
Futures office in Powell River as a business advisor and loans consultant.
He also occasionally attempts to make his own pots in a joint home studio
with Melany Hallam, your newsletter editor, and was the mastermind
behind the building of our propane-fired Minnesota Flat-top kiln. For
practical business advice in your area (with no strings attached), look for
the Community Futures office nearest you at www.communityfutures.
ca/provincial/be/ or in the Lower Mainland www.smallbusinessbc.
cal, Revenue Canada also has guides and forms at www.cta-atc.ge.cal
menu-e.html.

Chop Marks and Signatures

Send in your chops and have them available through the Guild.
For the form, click on the link here:
www.bcpotters.com/forms/chop_marks_form.doc
You can email it back to Debra Sloan at sloanyip@shaw.ca as an
attachment. Or print and mail your sheet[s] to
Potters Guild of BC,
1359 Cartwright Street, Granville Island
Vancouver, B.C. V6H 3R7

attention: chops.

Clay Workshops at the Surrey Art Gallery — Fall 2008

Hands-On Throwing Workshop

Improve your basic techniques on the wheel through
repetitive disciplined throwing exercises. Focusing on
the dynamics of the basic cylinder, you will learn to have
more control of this form, which will allow you to create
a broader range of work.

Instructor: D'Arcy Margesson

2 Sessions $136 | #679810

Sun, Nov 9 & 16, 10am - 4pm

surrey
art gallery |

centre

13750 - 88 Avenue
604-501-5566
Www.arts.surrey.ca

surrey!

REGISTRATION
604-501-5100 | www.register.surrey.ca

Registration deadline:
4 days prior to start date

Kiln Operations Workshop

Learn all about electric kiln operations from an
experienced pottery instuctor and kiln manager. Topics
include: kiln loading and stacking, firing schedules,
cones and temperatures, trigger adjustments,
troubleshooting, maintenance and safety.

Instructor: Murray Sanders

1 Session $22.50 | #679754

Sat, Nov 22, 10:30am - 1pm

BRITISH
COLUMBIA
ARTS COUNCIL

Ba Stigrey

the future lives here.

Potters Guild of BC Newsletter : October 2008