Starting a small business questions.

[smokineod]

Bought the wife a Cricut for her birthday awhile back. She etched all of our wedding glasses with the stencils she made with it and made some T-shirts for the bridesmaids. Well since then people have done nothing but bombard her with orders for these things.

Think it's time to have her go legit! Where do we even start?

Do we need a lawyer?

We will have an extra room in the house shortly when we kick the toddler upstairs. Would like to rent it to the business but not sure how that works.

Any advice would be greatly appreciated.

[rad14701]

Running a business from home differs somewhat from state to state, assuming you are here in the US... In my area, for example, you can write off expenses for up to 25% of your living space as business related - but don't get greedy and declare 25% automatically... Other things like telephone, long distance, and other utilities vary... Your local government should be able to point you in the right direction... Very few home businesses require legal advice prior to startup... A financial advisor or tax preparer should be able to answer most of your questions better than a lawyer...

Good luck...!!!

[smokineod]

Thanks Rad! We'll have to talk to our tax lady and see what she says.

But we are located in central PA not too awful far from Mr Jebneck!

[rnw349]

+1 on what Rad said. You need to figure out what type of business you are going to be... An LLC, a sole proprietorship, a corporation????? Your answer to that will determine what you may take or claim on your taxes. You will need an FEI number, possibly and probably a business permit in your local community. There's several questions to be considered, and as Rad stated a smart CPA or tax preparer can help you, and help keep you out of trouble with the IRS. Good luck on your adventure.

[T-Pee]

Nice you're not tryin' to start one in Californee. The Board of Equalization is a pita. I got to give 'em the finger when I drove through Bakersfield the other day.
Regardless, if done right, it provides some good cash for the family account. The eldest daughter did kinda the same thing your wife did. Came up with a great idea and everyone wants one. These days you hardly need to advertise 'cept for yappin' about it on social media. Word of mouth is boss these days. I've had a small biz for >10 years and not a dime in advertising the entire time.

tp

[rager]

i run a small contracting business. When i filed with the state i filed as a DBA ( doing business as). Probably one of the biggest things help not get screwed at the end of the year when claiming taxes it to pay quarterly or put like 25% of your income set aside ffor the end of the year so when taxes do come up you are ready.

Also cash is king


good luck

[bitter]

I wish you the best with your new business!

B

[smokineod]

Thanks for the encouragement! Looking forward to this! Believe it or not, she even wants me to build her a work table and some shelves. Maybe it'll take off and I can take a break from the oilfield and work more on the stillin instead of the drillin.

[MoonBreath]

I don't know bout quittin the oilfield ifn ya'll are drilln everyday, then runnin casing and moving the rig to the next hole ...You gettn untaxed drivin pay? ..I worked on oilrigs all over, big and small ...
" Right when you say your done, they pull you rite back in ".
Nothin like a drillstem test, layn down pipe, runnin casing, tearing the rig down, then swampin behind a D7 Cat hooking up a big A-leg rig some 23 loads to the next location.
Every time I quit I went rite back ...For 15 years ...Plus the wife's pay, was a good living.
Yep, roughneckn is a tough man's gig, seen many, many toughest, baddest guys cry for their mom and never come back lol.
One of the rigs I worked on was named 'Hole Smoker #1'..That company owned a few rigs.

[smokineod]

Yea the patch gets in your blood and your bank account! Makes it hard to get out then!

[HDNB]

unless you can make so many sales that the work cannot be done by one person, set it up as sole prop.

the only reason to incorporate is to limit liability, like if someone could sue you for your products failure. I don't think decorations are likely going to risk anyone's property or person to loss...will it? LLC's cost about 500 here (DIY) or thousands if a liar does it...then every year tax returns are minimum 1500.00 instead of filing as a sole prop (personal tax return)

unless i don't get what a cricut is (and with all due respect of gettin' out an doing your own thing) what kind of revenue are you talking? Is this not more of a cash crop, farmer's market kind of thing? most of these types of sales are pocket money (although with some things, you may need deep pockets to put all the cash in)

i'd look at the math. If you can do a deal a day, make a clear 100 bucks and work 200 days a year, that's 20,000...as an individual in Canada, there would be no tax payable on that (because you would starve to death in the cold anyway)
200 units x 100 profit =20,000
1000 units x 20 profit still equals 20,000
So...here, on that volume, you pay cash for supplies and pocket the cash from sales, and declare nothing. (and get a good job)

now...if you can do 24000 units and clear 20 bucks a unit, that's 480,000 and government is deffo gonna want their cut...but you would probably need a new f-350 diesel to do all the deliveries, so that would be an expense to declare...

ya really got to look at the gross sales, gross profit, expenses and net profit to start answering the question of what to do. There is lots of business planning websites that (are free to use) will help with a plan and a proforma cashflow that will tell you viability withing a few hours of research.
http://www.bplans.com/sample_business_plans.php" onclick="window.open(this.href);return false;" rel="nofollow

[smokineod]

Sounds like sole prop is the way to go. It's pretty much the wife's hobby but taking it to the next step. Probably talking 1000 units at 10$ each over the course of a year. If it's more then that great! But since most of these things seem to be going to weddings and party type of events.

[HDNB]

At that volume, she can make a nice little bit of spending money. I don't think you need to go to the expense of registering a trade name or anything.
keeping it a hobby will be a lot more fun than trying to ramp up a bunch of overhead and doing reports and tax returns for 10 grand.

Very awesome of you to clean up a workspace and some shelves though! i'm sure she will appreciate your contribution and support!

[varocketry]

Here's where you can get some actual FREE assistance from the federal government. The Small Business Administration (SBA) has offices everywhere and they have a number of programs to provide informative information to new entrepreneurs and business start-ups. A host of programs including mentoring.

I agree with the sole proprietor route while very small. Some businesses may require local permits but Internet businesses DON'T for the most part. And building a viable Internet business has a bunch of attractive benefits.

I can still remember a call from my sister-in-law after I built a rudimentary PAYPAL system for her website where people could order her products directly. She called me and said "I just got $125 from the Internet." No store, just a business started in a couple finished rooms out in the barn. That was 8 years ago.