It may seem fairly obvious whether a person is in business or not, but the distinction can be important for other reasons. Your client may be having fun AND making money. But is it a business or a hobby?
For example, if you are not carrying on a business, the option to deduct losses from other income is lost. So it’s important to establish, from a tax obligation point of view, that your “activity” is more than a hobby, and is, in fact, a bona fide business. Losses from hobbies (including most party plan ventures, such as Tupperware parties) are not deductible against other income.
Trusts are an important and very useful concept for managing one’s financial affairs, as well as estate planning.
A trust is established whenever there is a separation of the legal ownership (for example, the name appearing on a land title) from the beneficial (equitable) owner of an asset (in other words, the person that a court would deem to be the true owner).