When am I a “business” or considered “doing business?”

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When am I a “business” or considered “doing business?”

If I have a lawn mower and my neighbor asks me to mow his lawn and offers to pay me and does, am I a business? Or if my neighbor asks me to paint her garage door and offers to pay me and does, am I a business? And if I am, do I also have to pay sales tax and property tax on my lawn mower or paint brushes? Basically, can I do anything or make anything for anybody, get paid for it and NOT be considered a “business” or “doing business?”

Asked on January 19, 2011 under Business Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

Don't worry about whether you're a "busines" or not--it's largely irrelevant. Here's what's  important:

1) If you make any income doing anything, you have to pay income tax on it.

2) If you provide a good or service which is covered under your state's sales tax, you have to pay sales tax on it.

3) If you're doing anything which could incur liability (e.g. damage property or injure a  person), you could face legal liabilty (e.g. be sued) and need to think about whether you should either (a) set up as a corporation or LLC to protect your personal assets; and/or (b) get some form of insurance.

If you regularly provide services or sell goods, you may need to register as a business or as doing business--but that's secondary to the issues above and is not something you'd face unless you are regularly doing some economic activity.


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