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Thread: Starting a Woodturning Business

  1. #1
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    Starting a Woodturning Business

    I would like to start a woodturning business but do not know where to start. I have 2 people who will sell my work but I don't know the business part of it. Do I need to see an accountant first or what is the first step. Any help will be greatly appreciated. Feel free to post or PM me.

    thanks,

    Pete
    "Small Change got rained on with his own 38"

    Tom Waits

  2. #2
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    For a living or a hobby? Big money, pocket change? That has a lot to do with it. Assuming were not talking many thousands of dollars you wouldn't need an accountant to start off I don't think.
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  3. #3
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    Like Jeff said, depends on your scale. If you intend to write off your "shop" area, and tools as business expenses, you might want to talk to an accountant to get you started. Normal business can be kept track of with something like Quick Books. Be sure to keep good records and check on taxes, licences you will need too.

  4. #4
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    The best way to make a small fortune in woodturning is to start with a large fortune.

  5. #5
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    Although I have no real plans to make my sole living at it, I have a "woodturning business". I made it official last year, since the shows I wanted to sell my work at required that I have a Seller's Permit. In California, that meant registering a business name, getting a tax ID number (for sales tax), and then getting the Seller's Permit. I still haven't completed this year's taxes, but I don't intend to itemize equipment depreciation like a serious business would. I still need to finish studying the rules, but as I understand things, I shouldn't have any difficulty showing losses and treating the whole woodturning thing as a hobby on my personal taxes. I also need to file separate paperwork to pay the sales tax on my show sales. Yet another thing I still need to fully research, and soon.

    As for getting you started, look at the web site for your state's Secretary of State. I found a lot of info on this site, and perhaps your state has something similar.
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  6. #6
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    Quote Originally Posted by Vaughn McMillan View Post
    Although I have no real plans to make my sole living at it, I have a "woodturning business". I made it official last year, since the shows I wanted to sell my work at required that I have a Seller's Permit. In California, that meant registering a business name, getting a tax ID number (for sales tax), and then getting the Seller's Permit. I still haven't completed this year's taxes, but I don't intend to itemize equipment depreciation like a serious business would. I still need to finish studying the rules, but as I understand things, I shouldn't have any difficulty showing losses and treating the whole woodturning thing as a hobby on my personal taxes. I also need to file separate paperwork to pay the sales tax on my show sales. Yet another thing I still need to fully research, and soon.

    As for getting you started, look at the web site for your state's Secretary of State. I found a lot of info on this site, and perhaps your state has something similar.
    I think for the feds, if you treat your work as a hobby, you get to deduct expenses up to the amount of income from the hobby. In other words, you can't deduct your expenses from other income, like a salary or retirement income, only from income from your hobby. If you treat it as a business, you can deduct expenses in excess of income but you need to be careful because the feds will question whether it's a hobby or a business. Making a profit in two years out of five is considered proof of being a business for the feds.

    Mike
    Ancora imparo
    Go into the world and do well. But more importantly, go into the world and do good.

  7. #7
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    Peter for me I have 3 businesses that I run under 2 registered with the state one one that will soon be. They all have insurance on them. But for the IRS they are all filed as me. They are all registered as my name , doing business as. Or A DBA
    Depending on the size of your business you may want to go with an LLC.
    But an accountant can explain all that.
    Here is another question for all.. How do you put a price on your product?
    I have things coming out of my shop that if I where to a shop rate on They would scare me let alone a shopper in my booth
    Methods i have tried.
    Shop rate; (for me I have put 65 bucks per hour) hours spent working on a project in the shop plus materials.
    Materials X2; what ever the materials cost times tow thats what the price is.(really hard when the turning stock is free.)
    Just plane wing it; well it took 4 hours but it looks like it's worth 50 bucks but that seems high so, well put 35 on it and well see what happens.

  8. #8
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    Quote Originally Posted by Mike Henderson View Post
    I think for the feds, if you treat your work as a hobby, you get to deduct expenses up to the amount of income from the hobby. In other words, you can't deduct your expenses from other income, like a salary or retirement income, only from income from your hobby. If you treat it as a business, you can deduct expenses in excess of income but you need to be careful because the feds will question whether it's a hobby or a business. Making a profit in two years out of five is considered proof of being a business for the feds.

    Mike
    My method is simple. I have two wall-hanging plastic pockets. All receipts for shop expenses go in one. Income items in the other. I file quarterly estimate for tax due, always zero as in $0.00. At the end of the year I give the mess to my tax preparer and she totals appropriately. My office expenses are also calculated for my writing.
    Have to disagree a bit with Mike. Feds do want a show of a genuine effort to make a profit. Not likely a requirement to make a profit would hold up in the courts. I could expound but that would get political.

  9. #9
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    Thanks for the help! I don't know if I will ever show a profit but it should keep me out of trouble.
    "Small Change got rained on with his own 38"

    Tom Waits

  10. #10
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    Quote Originally Posted by Frank Fusco View Post
    Have to disagree a bit with Mike. Feds do want a show of a genuine effort to make a profit. Not likely a requirement to make a profit would hold up in the courts. I could expound but that would get political.
    You're right, Frank. I forgot to include that. The two years profit out of five is accepted as proof without any other evidence. But as you point out, it's possible to demonstrate a genuine effort to make a profit. It's just more effort with the feds.

    Mike
    Ancora imparo
    Go into the world and do well. But more importantly, go into the world and do good.

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