1. Profit Motive

You have a reasonable expectation of making a profit.

2. Effort and Income

You invest significant personal time and effort. You depend
on the resulting income of the activity. 

3. Reasonable Expenses

Your expenses are ordinary and necessary to run your business.

4. Background

You have a track record or reputation in this industry, and/or a history of making profits. 

5. Customers

You have multiple customers or professional clients.

6. Professionalism

You maintain professional records, including a separate
checkbook and balance sheet; you have business
cards, stationery, and your own branded
business website.

1. Profit Motive

You may sell occasionally, but making money is not your main goal.

2. Effort and Income

It’s something you do in your free time; you earn the bulk of your money elsewhere. 

3. Reasonable Expenses

Your expenses are driven by your personal preferences and not strictly necessary. 

4. Background

You don’t have professional training in the field and have rarely or never turned a profit. 

5. Customers

You have a few customers, mainly relatives and friends. 

6. Professionalism

You do not keep strict professional records of your
activities; you also do not have a formal business
website or business cards.