Risk, Taxes, and When to Stop
While these hobbies are low-risk, they aren’t no-risk. The biggest danger is over-enthusiasm. It’s easy to get excited and buy every tool or all the materials before you’ve even made your first item. This is how a money-saving hobby becomes a money pit. Set a firm startup budget—say, $75—and stick to it. Do not buy more supplies until you have used what you have or made enough money from sales to cover the cost of the new supplies.
Burnout is another risk. If your bread-baking side hustle means you’re suddenly waking up at 4 a.m. every Saturday and you start to dread it, it’s no longer a rewarding hobby. It’s a low-paying job. Protect your time and your enjoyment. It is perfectly fine to say “no” to an order or take a week off.
Know when to stop. The “sunk cost” fallacy we mentioned earlier is powerful. Give yourself a clear off-ramp. “If I don’t sell at least 10 items in the next 60 days, I will re-evaluate.” This isn’t failure; it’s smart data collection. Maybe your community isn’t the right market for what you’re making, or maybe you simply don’t enjoy the selling part. It’s okay to pivot to a different hobby or just enjoy the skill for your own savings.
Finally, a brief note on taxes. In the U.S., income is income. The IRS generally makes a distinction between a hobby and a business. A hobby’s primary purpose is recreation, not profit. You can often deduct expenses up to the amount of hobby income you earn, but you can’t claim a loss. If you start earning consistently, it may be considered a business. A safe harbor is a provision that can shield you from penalties if you meet certain conditions, but the rules can be complex. Keep simple records of your sales and all your expenses (keep receipts!). For official guidance, it’s best to consult a tax professional or review resources directly from the source. Small business basics via the U.S. Small Business Administration (SBA) and tax information at the IRS are the best places to start.
