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Thread: General Business discussion - tax, license, equipment

  1. #1

    General Business discussion - tax, license, equipment

    I am curious about several areas of woodworkers and their business practices.

    I am more curious about part timers not a full time business.

    I know that each state has different policies about sales tax collection.
    I would like to know what you do to collect sales tax at shows in your state?
    Do you have a business license?
    Do you amortize your equipment for tax purposes?

    And many other things that deal with sales of your products - i.e. Pens, bowls, bracelets, pendants, bottle stoppers, furniture, cutting boards and other items you offer to sale.

    I have, as most of you do, a large investment in my hobby/business and I wonder how other people make this help them when uncle sam hold its hand out around April 15th.
    In no way do I consider this political or religious --

    Please let this be an open discussion not just restricted to what I asked info on.
    Last edited by Paul Gallian; 04-08-2010 at 07:07 PM. Reason: bottle not bootle
    Remember the tea kettle - it is always up to its neck in hot water, yet it
    still sings!

  2. #2
    Join Date
    Oct 2006
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    somewhere east of Queen Creek, AZ - South East of Phoenix
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    Sometimes, not if they pay me in cash
    Yes
    Yes
    Yes
    "There’s a lot of work being done today that doesn’t have any soul in it. The technique may be the utmost perfection, yet it is lifeless. It doesn’t have a soul. I hope my furniture has a soul to it." - Sam Maloof
    The Pessimist complains about the wind; The Optimist expects it to change;The Realist adjusts the sails.~ William Arthur Ward

  3. #3
    Join Date
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    Paul, Just a word of caution.

    I have a friend who does some crafts in her spare time. Really a hobby.

    I'm not sure of all the details, but she had got herself a taxpayer id and set up things as a small business sideline. More for the conveinence of ordering items wholesale than anything else. Well as things went, she got laid off from her job and had a devil of a time getting the state of New York to give her any unemployment benefits as they considered her 'self employed', even though she probably didn't pull in more than a few hundred bucks a year. I think there are also some IRS rules about how much you have to bring in to be considered a business.

    I'm sure there are some other folks here with more info than I have. Just saying you might really want to check things out to make sure its right for you before you totally jump in with both feet!
    Programmer - An organism that turns coffee into software.
    If all your friends are exactly like you, What an un-interesting life it must be.
    "A door is what a dog is perpetually on the wrong side of" Ogden Nash


  4. #4
    Join Date
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    You might want to check out Charlie Plesums' site
    http://www.solowoodworker.com/

  5. #5
    Join Date
    Dec 2007
    Location
    Hedgesville,WV
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    I'm not in business, nor do I sell any furniture that I make. I know that in these parts, local gov'ts target bizs for revenue much more than the individual. I once had a business license to sell archery equipment, and the hassles got to be more than it was worth, i.e; state tax license, county tax license, Business and occupation Tax,county tax Class 2 for my home being my "store",etc,etc.... no thanks... I quit after the 1st year, and sold just enough to pay those expenses... why bother. that was 20 years ago. things may be better now, but from the amount of bizs closed or closing, I'm bettin' they aren't. that doesn't mean, by any stretch of the imagination, that you would not do better with your business... you could turn a respectable profit, and I wish you well.
    "Treat everyone equally,keep your word, and overlook peoples' mistakes...you'll make plenty yourself "..... spoken to me by a much wiser man than I.

  6. #6
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    Quote Originally Posted by Brent Dowell View Post
    Paul, Just a word of caution.

    I have a friend who does some crafts in her spare time. Really a hobby.

    I'm not sure of all the details, but she had got herself a taxpayer id and set up things as a small business sideline. More for the conveinence of ordering items wholesale than anything else. Well as things went, she got laid off from her job and had a devil of a time getting the state of New York to give her any unemployment benefits as they considered her 'self employed', even though she probably didn't pull in more than a few hundred bucks a year. I think there are also some IRS rules about how much you have to bring in to be considered a business.

    I'm sure there are some other folks here with more info than I have. Just saying you might really want to check things out to make sure its right for you before you totally jump in with both feet!
    I agree with respect to unemployment benefits, at least in NY.

    From what I have read, the main thing from the IRS standpoint is whether you have a business entity and whether you are doing a very good job not comingling your business funds from your personal funds. There are a bunch of publications regarding this issue that the IRS will mail you for free - they make excellent light bedtime reading! Much more effective than counting sheep too.

    My opinion is to do it legally - whether as a hobby (keep good track of your sales and purchases - you cannot have a loss against your ordinary income and your hobby income will be taxed at your personal rate) or as a separate business (properly maintaining verifiably separate accounts for personal and business cash, depreciating equipment in accordance to GAAP or IFRS as appropriate, paying proper taxes on any salary you pay yourself, etc., etc.). If you form a C corporation you can arbitrarily choose your fiscal year - taxes do not necessarily need to be due 15 April.

    I don't know whether hobby income permits capital equipment to be depreciated or if it needs to be expensed in whole in the year of purchase. As an accounting student, I'm interested in whether anyone else knows about this.

    Sometimes it does seem like it is so onerous as to not be worth the effort to start an actual business (as opposed to hobby) as a part-time venture. It is good that you are thinking about this before just jumping in. Have you been to any seminars / training given for free or very low cost by your local Small Business Administration office?

  7. #7
    Mark,

    In the past (long ago and near present) I have had a business license in Florida - silversmith/jewelry and in Missouri for my wife's weaving business.

    Today I am not sure about the unemployment benefits for my retirement status.

    I know it would not affect my State of Florida retirement but not sure about S.S.

    This is good information -- I hope others are benefiting from the discussion.
    Remember the tea kettle - it is always up to its neck in hot water, yet it
    still sings!

  8. #8
    Join Date
    Mar 2008
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    new york city burbs
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    10,188
    Whatever small income Ive made from woodworking, I decided to throw it up in the air. Whatever the govt wants they can keep and not let fall back down to me.


















    only joshing.

  9. #9
    Join Date
    Dec 2006
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    Central Illinois
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    Since I usually spend more on new tools, mileage, show fees, materials, and state taxes. The impact is $0.00 for me.

    Bruce
    Bruce Shiverdecker - Retired Starving Artist ( No longer a Part timer at Woodcraft, Peoria, Il.)

    "The great thing about turning is that all you have to do is remove what's not needed and you have something beautiful. Nature does the hard part!"

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