Making a Business?

Aaron Beaver

Member
Messages
427
Location
Missouri
I have a question now that I am doing more woodworking and wondering aobut making a business name, etc.

I have someone else making me pieces and they own their own business (single guy out of his own shop) and I of course I will be paying him every so often for the next few months. I then in turn will be using these pieces in projects and selling them to others.

My questions relates to whether I should come up with a business name, maybe register it (I think I have to in the state, not sure though), or just pay him out of my own personal account and not worry about it.

I didn't know if making business name and doing all of that had any perks or if just made better sense to do it since money will be changing hands all the time. Any suggestions, ideas or thoughts are appreciated.

Thanks
 
If you want to be a business and go for some serious bucks. You must jump through all the hoops. If you just want to make some side money without dealing with bureaucracy, start the paperwork.
 
If you want to be a business and go for some serious bucks. You must jump through all the hoops. If you just want to make some side money without dealing with bureaucracy, start the paperwork.


This wont be a serious business, depending I guess on what you consider serious. I have a 45-50 hr week job so this is just side money but the it could be some good side money (at least to me) if this goes well. Not sure if there is an amount you make from doing "side" work that you must start considering calling it a business. I just do woodworking as a hobby and only get to do it in the evenings and weekends. Just sure what might be the best plan of action to take.
 
In many states the determiner of if it is a business or a "hobby" is if you are making money. Keep careful records and if you are loosing money hand over fist you are having FUN with a hobby. :rofl: :rofl: :rofl:
 
It's easy in the U.S. to file a D.B.A. (doing business as) with the city in most cases and be setup. For an official business you need to get a business license and file quarterly taxes also. I would reccomend keeping it simple, file the D.B.A. so you can use the name, get a bank account, but I wouldn't move so fast on the whole business license and paying quarterly taxes just yet, but get your feet wet and see how it goes. You can file any income on your personal taxes at the end of the year, for any business you do.
 
In many states, you can set up as a Limited Liability Company (LLC), which offers certain tax and legal advantages. This usually doesn't cost much, basically involves registering with your state and paying a small fee. See if your state has a database so that you can choose a name that isn't already in use for the same kind of business.

What kind of business relationship are you planning with this other person? Will you be considering a partnership, or will he just be a supplier? Be careful that you are not considered a "common law" partnership with the other person, unless you want his liabilities to become yours, and vice versa. In many states, a small business is deemed a common law partnership by default, until that business incorporates or is otherwise registered as some kind of limited liability entity. In a common law partnership, all owners are jointly liable for actions of one another. Thus, you can be held legally accountable if your partner incurs some liability. Creditors can reach personal assets. That's where registering as an LLC can provide some protection. If you plan a partnership with the other person, you could also set up a Limited Partnership (LP), or a Limited Liability Partnership (LLP), which have some similar legal protections.

Cheers,

Kevin
 
If you are going to earn an income from woodworking, don't be a cheap skate about it.

Get a sales tax number, set up a business checking account, pay for your Worker Comp Insurance, have an accountant determine what you can and can not deduct as depreciation in your shop, and most importantly

Pay for business insurance.

You never know when some friend will walk in your for profit shop and injure himself and sue you. I am not joking either. THere are a bunch of people here that have never owned a business and just ignore this important stuff.

Also, what happens if your shop sustains damage. Are you properly insured for a fire or someother calamity?

If you are going to earn money from woodworking pay your fair share of taxes and don't cheat the system or society.

I can not stress this enough, once you start accepting pay for your product or services, you are no longer a hobbiest.

Do it right.

Joe

I am sick and tired of amatuers undermining for profit businesses
 
If you are going to earn an income from woodworking, don't be a cheap skate about it.

Get a sales tax number, set up a business checking account, pay for your Worker Comp Insurance, have an accountant determine what you can and can not deduct as depreciation in your shop, and most importantly

Pay for business insurance.

You never know when some friend will walk in your for profit shop and injure himself and sue you. I am not joking either. THere are a bunch of people here that have never owned a business and just ignore this important stuff.

Also, what happens if your shop sustains damage. Are you properly insured for a fire or someother calamity?

If you are going to earn money from woodworking pay your fair share of taxes and don't cheat the system or society.

I can not stress this enough, once you start accepting pay for your product or services, you are no longer a hobbiest.

Do it right.

Joe

I am sick and tired of amatuers undermining for profit businesses

[size=+1]Everything that Joe said, PLUS:

Get a Federal Employer's ID Number; and,

Regarding the insurance - MAKE SURE YOU HAVE IT! Even if that friend who walks in and injures himself doesn't sue you, there's a good chance that, if he needed medical treatment, his insurance company will sue you. His insurance company will certainly want to find somebody to reimburse them, and guess what? You're him! DAMHIKT...[/size]
 
Another in agreement with Joe and Jim. I also see a lot of people in the "house renovations and building" field getting into the business with no insurance, no license, etc.

Be honest, go through all the hoops and...Best of luck.
 
If you are going to earn an income from woodworking, don't be a cheap skate about it.

Get a sales tax number, set up a business checking account, pay for your Worker Comp Insurance, have an accountant determine what you can and can not deduct as depreciation in your shop, and most importantly

Pay for business insurance.

You never know when some friend will walk in your for profit shop and injure himself and sue you. I am not joking either. THere are a bunch of people here that have never owned a business and just ignore this important stuff.

Also, what happens if your shop sustains damage. Are you properly insured for a fire or someother calamity?

If you are going to earn money from woodworking pay your fair share of taxes and don't cheat the system or society.

I can not stress this enough, once you start accepting pay for your product or services, you are no longer a hobbiest.

Do it right.

Joe

I am sick and tired of amatuers undermining for profit businesses

Guess I struck a nerve with ya Joe? :) I am not a cheap skate and I am not trying to undermine anyone. I am trying to go about this the right way, that is why I am asking. I never expected to do anything like this it just happened.

I can understand where a wood worker that does this for a living and depends on it for his income would have issues with someone just selling stuff without going through the proper channels.
 
Another in agreement with Joe and Jim. I also see a lot of people in the "house renovations and building" field getting into the business with no insurance, no license, etc.

Be honest, go through all the hoops and...Best of luck.

That's a hoss of whole 'nuther color.
Where I live, I have long tried to get control of folks who do roofing. It seems that the only qualification to be a roofer is to own an old truck, hammer and know a piece of hidden woods somewhere to dump the tear-offs. Old roofing material is known as a 'friable' material and should be disposed of only in an approved, legally permitted, landfill. Making a cabinet for the neighbor on a cash deal is a lot different than polluting our environment. I believe roofers, and other renovators, should have a permit before starting a job.
 
Another in agreement with Joe and Jim. I also see a lot of people in the "house renovations and building" field getting into the business with no insurance, no license, etc.

Be honest, go through all the hoops and...Best of luck.


I know I will have to "report" this and pay taxes on it at the end of the year, which I have no problem doing. I just didn't know if I had to do it as a business.
 
I know I will have to "report" this and pay taxes on it at the end of the year, which I have no problem doing. I just didn't know if I had to do it as a business.
Yes, you can pay at the end of the year, and unless you're going to be doing this 100 percent of your time, and you know for certain, getting all the licenses, federal IDs, tax numbers, etc...will only insure that you'll pay often and pay early. Incorporating will also protect you, and will also insure that you pay quarterly taxes and will need to pay at LEAST $800/year in CA (I think all states vary). This means that you will need to pay a minimum of $800 come the first quarter of the year, to cover your corporation for that year, because even if you don't do any business you will still need to pay that $800.

At that point you will also pay extra money for taxes, because it's harder for the CPAs to do your taxes when your incorporated, and you need to have a payroll company that can deposit the taxes directly to the state/feds, just to pull any $$$s out of your account.

I don't agree with those comments to get all of those documents/licenses/insurance right away. While it is the best thing to do for having an established business, more often than not a small business doesn't succeed and fails miserably. Until you know your business is going to succeed, there is no reason to spend money that you could use to establish and promote your business. Getting a simple D.B.A. and use that to get a bank account, so you can do business under such a ficticous name, is all you really need to start with.

Again, if you want to make sure you pay often and pay early, get all that stuff right off the bat, and just start sending your $$$s to the state/feds. They accept it happily!:rolleyes:
 
Aaron,

I would suggest you first sit down and make a "business plan". Buy a program that is available at a reasonable price or just some paper and pencils. Whether you do it on your computer, or on a note pad, decide what you want to do, how you want to do it, who your customers will be, what your products will be, suppliers, costs, expenses, income, profit/loss....

Once you see the "big picture", you can decide what kind of business structure would best fit your needs.

Greg

P.S. Accounting programs like Quick Books will probably handle all your accounting/payroll/tax needs, no matter what you do structure wise, but you need to keep "business" and personal $ separate, IMO.
 
Guess I struck a nerve with ya Joe? :) I am not a cheap skate and I am not trying to undermine anyone. I am trying to go about this the right way, that is why I am asking. I never expected to do anything like this it just happened.

I can understand where a wood worker that does this for a living and depends on it for his income would have issues with someone just selling stuff without going through the proper channels.

Aaron:

My comments were not aimed at you. You just provided an opportunity for me to comment on amatuers and professionals who cheat!

These people conduct their business on the cheap and ruin the profits of good honest hard working people who abide by the laws.

Any dope can earn a living building, producing or growing some product if they don't pay the required Taxes and Insurance.

I have these type of people in my real world business and I am tired of them not paying their fair share.

Joe
 
Any dope can earn a living building, producing or growing some product if they don't pay the required Taxes and Insurance.
That's really not true, but most any dope believes that any dope can run a business.

If it was so easy, we wouldn't see so many of them fail miserably due to mis-management.

Sounds like you work with a fair amount of deadbeats that don't pay taxes. I don't think anyone was suggesting Aaron didn't pay his taxes (at least I know I wasn't), I was suggesting Aaron pay the taxes at the end of the year on his personal income, there is a section to file this type of additional income, when it's not directly related to your profession. This would allow him to determine if he's actually capable of being profitable at this type of business, or if he ends up being one of the dopes that thought it was easy to run a business.

I can tell you first hand, it costs as much or more to close a corporation as it does to start one. Just because someone wants to do business doesn't mean they need to go to such a length at the start. Jumping in whole hog insures one ends up with roasted bacon in many cases.

Legal advice on the internet is worth what you pay for it in most cases.
 
That's really not true, but most any dope believes that any dope can run a business.

If it was so easy, we wouldn't see so many of them fail miserably due to mis-management.

Sounds like you work with a fair amount of deadbeats that don't pay taxes. I don't think anyone was suggesting Aaron didn't pay his taxes (at least I know I wasn't), I was suggesting Aaron pay the taxes at the end of the year on his personal income, there is a section to file this type of additional income, when it's not directly related to your profession. This would allow him to determine if he's actually capable of being profitable at this type of business, or if he ends up being one of the dopes that thought it was easy to run a business.

I can tell you first hand, it costs as much or more to close a corporation as it does to start one. Just because someone wants to do business doesn't mean they need to go to such a length at the start. Jumping in whole hog insures one ends up with roasted bacon in many cases.

Legal advice on the internet is worth what you pay for it in most cases.

Alan:

This sort of problem occurs in all businesses.

I was not talking about income taxes, specifically.

FICA, FUTA, SS, Medicare and state asscociated state taxes.

How about sales tax that goes unreported.

Cash Sales where the business doesn't report the income to State and Fed taxing agencies.

To continue .... how about dealing with Wholesale suppliers that sell wholesale to anyone walking in their business. How do you compete with that?

There are a whole host of small business issues, that make competing legitimately in the market place difficult.

I hope this clarifies my position better.

thank you
Joe
 
Joe,

You make a lot of good points, I don't deny which are important. I have had as many bad experiences as I have had good experience with some of the workers I've hired, and I work though things the best I can. Me and a colleague were talking about this recently (and I will bring this around to the thread, bear with me), he had hired a company to do some work at his house installing a water heater. In the contact it stated they would pull all permits, which they did, but they never got them signed off for properly. The city told my colleague there was nothing he could do, except make sure the work is signed off, and even though it was a licensed contractor, there was nothing that *they* could do about that, he would need to follow that up with the contractor/license_board.

I have been in business quite a few times, with a pretty good success rate, and I've learned that it's better to plan out and move slowly and carefully, before jumping in feet first.

Maybe there are other ways to create a business, but at minimum you need to advertise in a local publication for a D.B.A., and get a bank account. With the D.B.A., the bank will allow you to open a bank account for your business name. In California, this is limited per county, so 2 different counties could have a business with the same name, in theory.

I would do this as a first step, if I was Aaron. This will secure a business name, and that can be used if one does want to take it further, such as a Corp/LLC/etc...

If he makes enough of his income derived from his woodworking, he can claim that as his profession on his taxes, FWIW, and that could get allow for some perks in the way of getting commercial accounts at wood and tools suppliers for instance.

I certainly didn't mean to sound as if I was reccomending Aaron didn't pay taxes, but I think it makes sense to take things slower and plan things out, before handing them over so willingly. I like to know exactly what I'm paying for, and why.

And BTW, there's plenty of folks that use their business license so they don't have to pay sales tax, but don't pay the use tax on some of that stuff that is purchased for use. This doesn't mean others should do that.
 
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