Kickish Custom Restoration: Squeezing Money Out Of Rust

My friend Adam Kickish recently turned a passion for restoring old vehicles into a small business. He works for someone else during the day, but for years he has been specializing in restoring and modifying CJ series Jeeps and has recently focused his attention on vintage Willy’s trucks (a hobby that can be as expensive as it is rewarding!). 

His hobby’s transition into a small business began with the year long restoration of a rusting shell of a Jeep. To do the job right he needed tools, parts, and materials. In order to manage the restoration cost he purchased the things he needed over time, from individual sellers at discounted prices. Restoring this particular Jeep was going to be a large job, but Adam didn’t mind. He loved this kind of challenge. Although, the challenge of funding the project was a different story!  

A little polish turns tarnish into money.

At some point Adam discovered that if he was selling his restored vehicles, or his know how and advice, he could turn his hobby into a business. The tax deductions would greatly ease the financial burden of parts and materials purchases. For example, while he may not have intended to sell his Jeep, he certainly intended to use it to demonstrate his skill to others, which would lead to others hiring him to work on their vehicles. Many of the expenses he would incur to restore his Jeep were now tax deductions! Additionally, when Adam is hired by someone else to help them with their vehicle he will be making extra income.    

The benefits of doing what you love, but for profit.

Adam was already good at restoring vehicles. Now, however, he turned it into a small business that can start generating income. Running his small business isn’t as hard because he is doing something he loves. He uses an accountant to assist him with the taxes, which frees him up to spend more time working on vehicles.  

What used to be expenses are now deductions.

When Adam would buy a tool it was strictly an expense. Now, those tools are assets that will allow him to operate a business for profit. The tools are tax deductible because he is using them to operate his business.   

Recordkeeping

Adam is careful to keep accurate records on all his expenditures. For example, he keeps a log of his mileage when on company business, receipts from tool purchases, and invoices from his truck and Jeep magazine subscriptions.  

Turning expenses into tax deductible assets

What made his hobby a small business? His intent to make a profit and his activities support that goal. In order to get started it was as simple as deciding on the name, Kickish Custom Restoration, and applying online for an Employer Identification Number (EIN). Adam continues to buy Jeep magazines to keep up on current trends, attend Jeep conventions, and subscribe to an internet service so he can shop for automotive parts. All of those things used to be non-deductible expenses, but now his hobby activities are business activities and can be deducted.  

Do you have a “hobby turned business” success story? I would love to hear from you. Email your story to mike@bowmansmoneycollege.com and you may be featured in this weekly column!