I switched from a hobby to a business about 5 years ago. I keep receipts and reord everything in a spreadsheet as the years go. It is not bad to do if you stay on top of it. I try to claim a profit every three or four years if possible. I know people that have claimed a loss for over 10 years. It might catch up to them but if you keep good books it should not be a issue. In this economy I don't think anyone will question a loss.