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Old 03.06.2013, 20:06
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Line between hobby and business?

I've gotten conflicting information concerning this, which is why I'm here!

I bake a lot for my friends and more recently friends of friends. I've had a few people offer to pay me for this and I always refused anything more than the cost of the ingredients as I was under the impression this is seriously verboten in CH.

But the other day I was told it's allowed until a certain profit? I'm not trying to set up shop in my kitchen. Just curious really...
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Old 03.06.2013, 20:24
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Re: Line between hobby and business?

If you want to be completely legal you should note down your sales and profits,
and declare the amount on your income tax return at the end of the year.

BUT your biggest problem will be getting permission to make and sell food.
It will involve hygene inspections, planning permission, etc etc.

My advice is to just sell to your friends and relations, unless you are desparate for a full time job,
or go to a local baker / patisserie and offer a partnership.
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Old 03.06.2013, 20:52
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Re: Line between hobby and business?

CHF 2300 profit is the sum you were thinking of. Above that you need to register as someone who is running a business as a sideline and start paying extra pension and insurance charges.
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Old 03.06.2013, 20:57
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Re: Line between hobby and business?

Otherwise, barter.

I do favors for friends, they buy me nice bottles of wine in thanks.

Tom
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Old 03.06.2013, 21:07
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Re: Line between hobby and business?

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CHF 2300 profit is the sum you were thinking of. Above that you need to register as someone who is running a business as a sideline and start paying extra pension and insurance charges.
The min AHV payment is about 475 CHF, so that can come as a shock if you declare 2400 rather than 2200 on your tax return! I found out the hard way.....
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Old 04.06.2013, 09:43
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Re: Line between hobby and business?

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The min AHV payment is about 475 CHF, so that can come as a shock if you declare 2400 rather than 2200 on your tax return! I found out the hard way.....
Why, you have to pay it even if you have no income!

Tom
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Old 04.06.2013, 16:36
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Re: Line between hobby and business?

I think it has to do with turnover and profit. If you're baking cakes and getting paid for just ingredients and a little time, I think it stays as a hobby until you've got significant turnover and/or profit.

It also has to do with whether you operate as the equivalent of a sole proprietorship (meaning you personally take on all liabilities) or as a true, registered business where you have insurances to cover liabilities, etc. Sbrinz is right - the food license might be a bigger issue than the income, if you plan to do this as a business.
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Old 04.06.2013, 16:45
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Re: Line between hobby and business?

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If you want to be completely legal you should note down your sales and profits,
and declare the amount on your income tax return at the end of the year.

BUT your biggest problem will be getting permission to make and sell food.
It will involve hygene inspections, planning permission, etc etc.

My advice is to just sell to your friends and relations, unless you are desparate for a full time job,
or go to a local baker / patisserie and offer a partnership.
Neighbour of mine built a small wood fired baking oven in a hut in his garden & started baking bread; it was very good but he failed his (unwanted!) hygene inspection. So no more bread
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Old 07.06.2013, 23:35
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Re: Line between hobby and business?

Hi tnt

I'm actually in the process of starting my own little home-based bakery, so here is what I have found out so far (bear in mind this is canton Aargau, not Zurich):

- If you earn more than 2'300 CHF per calendar year, you have to pay AHV on your earnings (http://www.sva-ag.ch/dienstleistunge...arbeitgebende/)
- You won't have to bother with MwST (VAT) as you won't be making more than 100'000 a year (at least I assume ;-)
- I've talked to the Lebensmittelinspektor of the Amt für Verbraucherschutz here in Aargau, and he told me that I would have to register with the authorities as a company that produces food and then he will come and inspect my kitchen.
https://www.ag.ch/en/dgs/verbraucher...lkontrolle.jsp
To me the interesting part was that Switzerland seems to have some sort of "Cottage Food Law" like some states in the US have, where you are allowed to produce & sell food made in your own kitchen.

If you're interested, you can have a look at my website, www.BarbarasBakery.ch

Regards,
bcwalti
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Old 11.06.2013, 18:19
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Re: Line between hobby and business?

Thank you all for the replies! I will keep baking for friends but maybe I should keep some kind of record, if it's all called into question at some point.
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Old 11.06.2013, 18:22
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Re: Line between hobby and business?

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Hi tnt

I'm actually in the process of starting my own little home-based bakery, so here is what I have found out so far (bear in mind this is canton Aargau, not Zurich):

- If you earn more than 2'300 CHF per calendar year, you have to pay AHV on your earnings (http://www.sva-ag.ch/dienstleistunge...arbeitgebende/)
- You won't have to bother with MwST (VAT) as you won't be making more than 100'000 a year (at least I assume ;-)
- I've talked to the Lebensmittelinspektor of the Amt für Verbraucherschutz here in Aargau, and he told me that I would have to register with the authorities as a company that produces food and then he will come and inspect my kitchen.
https://www.ag.ch/en/dgs/verbraucher...lkontrolle.jsp
To me the interesting part was that Switzerland seems to have some sort of "Cottage Food Law" like some states in the US have, where you are allowed to produce & sell food made in your own kitchen.

If you're interested, you can have a look at my website, www.BarbarasBakery.ch

Regards,
bcwalti
Good luck with your venture! As you said it doesn't really help me because I'm in Zurich but I'm not looking to open up shop. I just wanted to know if I could get into any trouble if I accept payment from friends and friends of friends
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Old 11.06.2013, 19:55
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Re: Line between hobby and business?

I like exchanging like st2lemans. I teach many students at the moment (French, English and German) in exchange for other services. The mum of 2 of my students teaches OH the accordion, and the students help me with a bit of fence painting, or watering when we are away. Another of my student's dad will be repairing 2 old clocks when he has time. Another student brings me homemade cheese and sausages. And one gives me Shiatsu and reflexology treatment.

In the Neuchatel/La Chaux-de-Fonds area there is a group called SEL, that organises such exchanges of services- and English lessons/conversation are very popular. When you join for a very small fee, you get a whole list of who offers and wants what. They also have regular meetings. Great!
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Old 11.06.2013, 20:22
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Re: Line between hobby and business?

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I like exchanging like st2lemans. I teach many students at the moment (French, English and German) in exchange for other services. The mum of 2 of my students teaches OH the accordion, and the students help me with a bit of fence painting, or watering when we are away. Another of my student's dad will be repairing 2 old clocks when he has time. Another student brings me homemade cheese and sausages. And one gives me Shiatsu and reflexology treatment.

In the Neuchatel/La Chaux-de-Fonds area there is a group called SEL, that organises such exchanges of services- and English lessons/conversation are very popular. When you join for a very small fee, you get a whole list of who offers and wants what. They also have regular meetings. Great!
That is very cool! I will definitely be looking to see if there is such a group around Zh. What an awesome idea, if there isn't already a group locally someone should start one!
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Old 18.10.2016, 08:52
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Re: Line between hobby and business?

Really old thread here ... So wondering if it's still valid in terms of numbers etc.

My missus is very "arty" and thinking about selling what she does, either making something or teaching others to do it at home.

it's still profit above 2300 that should be declared and will attract AHV? Any requirement to tell anybody before starting?

Her permit states that employment is permitted.So no issue there.
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Old 18.10.2016, 11:00
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Re: Line between hobby and business?

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Neighbour of mine built a small wood fired baking oven in a hut in his garden & started baking bread; it was very good but he failed his (unwanted!) hygene inspection. So no more bread
But he can still bake for himself, I assume?
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Old 24.01.2017, 16:03
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Re: Line between hobby and business?

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Really old thread here ... So wondering if it's still valid in terms of numbers etc.

My missus is very "arty" and thinking about selling what she does, either making something or teaching others to do it at home.

it's still profit above 2300 that should be declared and will attract AHV? Any requirement to tell anybody before starting?

Her permit states that employment is permitted.So no issue there.
The SG website (https://www.svasg.ch/de/produkte/ahv...beitnehmer.php) says 2300 so it looks to be still valid.

What happens to the amount < 2300 in terms of declaration - e.g. I have to do a tax return, my spouse has X (<2300) income, do I have to declare it and pay income tax on it? Or is it just ignored?

I did notice that if a spouse pays more than double the minimum AHV payment, the other doesn't have to pay.

Quote:
Sie müssen selber aber keine Beiträge bezahlen, wenn ihr Ehepartner erwerbstätig ist und auf seinem Einkommen mindestens den doppelten Mindestbeitrag (Mindestbeitrag = CHF 478.00) an die AHV entrichtet.
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Old 24.01.2017, 16:27
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Re: Line between hobby and business?

Is the 2300 threshold pure profit? I presume it is.

EG, for my little business that came out of a hobby I have costs for Internet services, computers and gizmos, software services etc.

How do you factor in costs for stuff I previously bought for my hobby that I now use in a business capacity? EG my old laptop I develop with(now replaced with a new one). upgrading my server so it can be used for automatic testing and integration etc... Do i need to somehow sell them to the company?

I really need to sort this out, I'm not turning a profit yet, but I have an Einzelfirma and I'm definitely not managing it correctly at the moment.

I have complete records of sales through itunes connect, and receipts for stuff bought, but not yet organised it all
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Old 24.01.2017, 16:37
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Re: Line between hobby and business?

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The SG website (https://www.svasg.ch/de/produkte/ahv...beitnehmer.php) says 2300 so it looks to be still valid.

What happens to the amount < 2300 in terms of declaration - e.g. I have to do a tax return, my spouse has X (<2300) income, do I have to declare it and pay income tax on it? Or is it just ignored?

I did notice that if a spouse pays more than double the minimum AHV payment, the other doesn't have to pay.
Yes, at least in theory; all income must be reported. In practice nobody will give a damn whether it's 2k or 4k, probably not even when someone takes a very close look.

When my father died three years ago he had about 200k undeclared wealth. We initiated the Straflose Selbstanzeige on behalf of my mother (you can do that once in your lifetime), who was the sole heir (+95% of his wealth). When we talked to the Steuerkomissar he said this was quite common and the sum a relatively small one.

You aren't released from having to pay into social security if you spouse earns enough. If I'm not mistaken the effect is that if you earn nothing, his/her contribution releases you from having to pay the minimum amount in order for the year to count as paid-into for you as well. Otherwise you could voluntarily pay the minimum amount (a few hundred CHF I believe) to have the year count for you as well.
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How do you factor in costs for stuff I previously bought for my hobby that I now use in a business capacity?
You could book it as value brought into the company, part of its equity. You need a balance sheet anyway once your company becomes operational, speaking from bookkeeping POV. Obviously you'd want these values to be assumed high, though not as high as to raise suspicions. Talk to the Steueramt, they'll be happy to guide you (but they will NOT help you avoid taxes, just show you the proper default procedure and process).

Last edited by Urs Max; 24.01.2017 at 16:50.
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Old 24.01.2017, 20:07
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Re: Line between hobby and business?

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Is the 2300 threshold pure profit? I presume it is.

EG, for my little business that came out of a hobby I have costs for Internet services, computers and gizmos, software services etc.

How do you factor in costs for stuff I previously bought for my hobby that I now use in a business capacity? EG my old laptop I develop with(now replaced with a new one). upgrading my server so it can be used for automatic testing and integration etc... Do i need to somehow sell them to the company?

I really need to sort this out, I'm not turning a profit yet, but I have an Einzelfirma and I'm definitely not managing it correctly at the moment.

I have complete records of sales through itunes connect, and receipts for stuff bought, but not yet organised it all
I used to do that, Einzelfirma, I handed in the book-keeping/balance/profit and loss account with my tax-form. I managed a minus every year - which was the whole idea actually as I just did it for fun on the side - and that was deducted from my income = less tax You can do that for 5 years in canton Zurich. And they know exactly when the 5 years are up, they let me know it was no business but a "Liebhaberei" (sorry, no translation of the exact meaning in English).

We had a good laugh, I stopped the book-keeping and felt off the hook and carried on. The past years I've not been active there though.
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Old 24.01.2017, 22:13
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Re: Line between hobby and business?

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I used to do that, Einzelfirma, I handed in the book-keeping/balance/profit and loss account with my tax-form. I managed a minus every year - which was the whole idea actually as I just did it for fun on the side - and that was deducted from my income = less tax You can do that for 5 years in canton Zurich. And they know exactly when the 5 years are up, they let me know it was no business but a "Liebhaberei" (sorry, no translation of the exact meaning in English).

We had a good laugh, I stopped the book-keeping and felt off the hook and carried on. The past years I've not been active there though.
Hobby.
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