[Tommy_Joe]

Little background... I've been doing Woodworking since 2002. I've done maybe 3 to 5 projects on average each year. This year so far, there's been 3 completed, 3 on the bench and another 2 due before June. That's a total of 8... and the year's not up. There's still a small kitchen re-do in my house and maybe two other projects before the year's out. Seems like good news... Except... I'm either getting the cost of material returned to me (New Church Building Projects) or nothing at all (House and Church gifts).

Obviously I have the website name registered. (RhodesWoodsmith.com) I also in '06 registered Rhodes Ave. Woodsmith as a fiticous name with the state due to two cabinets I built for a local University. That means I have rights to the name of my shop for five years. Also according to law, I've opened a seperate checking account for the shop. I've even worked out a price list and shop time billings per hour. I've been told by a couple of people in the know that the last thing is to get a business license. Not ready for that yet as I'm not convienced I'm that good. However...

I thought about some "cheap" advertising. I have Business cards I print out myself with my cell number and such. But I'm thinking something bigger... Maybe like a magnetic sign that I can place on the truck door as I'm driving around. With the name, some simple slogan, and the website. (Maybe the cell Phone Number, but right now I'm not too comfortable with that.)

The reason is to drum up a little business. I don't do Woodworking full time, and I'm sure I'll starve if I did. But a little extra money doesn't hurt. Last year I had a few projects that I actually made money on... And I liked that. Granted these projects were for friends of mine who insisted on paying a "Fair Price" or were on the decision team for the University. I want to branch out a bit more... Not too much, but a bit more than my neighborhood. So I was thinking (when the remaining 5 projects are out of the shop) about order a couple of signs and just make my truck a temporary rolling advertisement.

It's either this or working part-time at a BORG for a little while. I've got at least one Credit Card I just want to pay off ASAP and not hurt my family by not saving.

So... That's what's on my mind. Who else has done what I'm thinking about? Does it work? I can get two magnetic signs from a place for $80.00 for both. It's simple Black & White and the wood stove (if I stay with that) is Microsoft clip-art. (A friend of mine does pencil drawings and I though about him drawing one of the fancy tables I've done.)

I'll be waiting on your feedback. Thank you.

Tom

 

[TexasTimbers]

There's alot of questions and ramifications here but if you distilled down to one simple question it would be:

"Should I turn my hobby into a business or not?"

That a fair assessment? My inkling is to say yes, but do it slowly and research all the tax ramifications both pro and con with your CPA or whomeber you place that trust in.

I don't know about MO but in Texas if you place an ad in the paper or a magnetic sign on your truck, or advertise at all for that matter you are going to receive a tax bill on your tools from the county assessor. Never mind that they never asked you what you had. If you don't go in volutarily and render you tools and inventory and declare what you have they will use a bling assessment and be assured it will be for alot of money.

I learned the hard way about 7 years ago on November and got a bill over $10K. I went in and asked them what it was about. It is a personal tax on property. Needles to say I hate these kinds of communistic taxes. I already paid tax on the tools when I bought them I am not paying them again so I told "I just closed my business". The guy raised an eyebrow like Spock would to Captain Kirk and I repeated what i said and walked out. I never got another bill and I quit advertising. When I did go back a couplke of years later I gave them a rendering that amounted in a yearly tax bill of less than $30. So cast a keen eye at your local tax man.

Federal taxes. Everything is deductible. Even stuff you don't think is. i went over to a customers house one time to install a back door and eneded up doing a $70K remodel job that took 8 months. Cpould have built a house, but what had happened was the customer discovered since he was renting the house to his daughter and she worked in his insurance office it was deductible as Employee Housing.

You also need to look at an LLC or some other legal entity that will limit your liability (Limited Liability Corporation) when you are doing work on site - if you burn someone's house down or run over their 1959 Corvette you want your personal home and bank accounts untouchable. You would be shocked how many hardworking but ignorant schmoes are running around with everything at stake not even knowing it.

Don't try to get too much business too fast. Word of mouth is always the best form of advertisement. you've heard that a million times but still it is true. the people in your circle of influence don't know you want referrals yet most ;ikely. If you simply tell them you are expanding your business and want them to remember you when their friends want work, you are probably going to get responses almsot at once like "Funny you mention that! Sarah just told me yesterday she wanted her bathroom cabinets redone but is afraid to call anyone she doesn't know . . ." Your church friends are going to keep you busy alone once they realize you want to shift gears a little. Just takes a little time.

There's alot more for me to blab about but i have to get the sawmill inside baseball size hail is coming.

P.S. Most important tip: Don't forget to spend time with your family.

 

[Tommy_Joe]

Thanks for the info. I'll have to ask about the property tax stuff.

As it stands now, the state (I guess the fed now too) know that I'm doing this "on the side." It would of been reporting extra income if it wasn't for the University paying Rhodes Ave. Woodsmith instead of me. But oh well... It is what it is.

The CPA I use (now... Use to do my own taxes) siad to me "OK... You made this out of your shop. What did you donate?" I presented a list. (It was a few things.) Then it was "How far from your shop to the College for the custom cabinet job?" Reported that. She then asked as a final question "Did you do any advertising?" I stated that donated turned pens out of my shop had my business cards in them. She said "Good enough." and BOOM... I made nothing for the feds to claim.

A freind of mine, who's son is a lawyer and I build a Fireplace Mantle for, has offered his son's services to setup an LLC. If more business comes in, I'll do that. I'm not too worried about the Business License as the City is pretty easy. It's the insurance (or seperation of insurance) that worries me. That has yet to be discussed.

Thanks again for your input. Hope the storm leaves you un-damaged.

Tom

 

[Daren]

I'll have to ask about the property tax stuff.


A freind of mine, who's son is a lawyer and I build a Fireplace Mantle for, has offered his son's services to setup an LLC.

I would set up an L.L.C., ....even for a hobby with potential to make money part time. I will not go into all the tax stuff in a open forum, but I am an L.L.C.. I do not have garbage service, the business does. I don't have 2 cells phone either, or pay for any gasoline, tools, long distance...I have a website so my internet service is a write off. I am home based so part of my utilities (water/gas/electric) are written off, rock for my driveway. New tires and oil changes , stamps and my P.O. box rent...are you starting to get the picture? Or do I have to fill this page with a list of things I would use anyway that the "business" now owns/uses. L.L.C.s are not just for big business. I started mine when I opened a one man plumbing shop for liability and tax purposes. That was a profitable business (that turned into several employees) and incorporation helped ease my tax burden.
I closed the plumbing shop and I got into the wood business and it was a rough start. I did not know the market and there were lean times, but I wanted to stick with it. I was in a different situation as you, it was my sole source of income. My wife had a good job and any loss the L.L.C. incurred (do to all the write offs) helped with her taxes married filing jointly.
I am not going to blab on, but even as a part time thing, incorporate.

 

[JP Sinclair]

Great topic. I've actually been thinking LLC would be a good idea for me too. Not to sound ignorant but how do you go about setting it up?.

 

[Big Dave]

I formed an LLC for my company and did it online. In MO. they offer it online and it cost me $105.00 and took about 30 minutes

 

[Daren]

I formed an LLC for my company and did it online.

Me too.
I don't even remember where now, but there are many places. My brother just did it here. http://www.legalzoom.com/legalzip/b...YmuUGvMUIAAEyhiV0AAAAJ:20070426162737&sRefer=
I still have to pay $250 a year to the state (they all vary, Illinois likes to charge big for everything) to keep the status.
I went on a little about the tax end of it, and for me it is the best part, but there is liability isolation like Kevin mentioned. If Nelson Company L.L.C. sells a product that someone hurts themselves with, or someone comes to Nelson Company L.L.C. WORLD HEADQUARTERS (my shed) and does something stupid to get hurt. They can sue the company, but can't touch me just the companies insurance. That was a big plus when I was running service and working in others homes.
You can't get blood from a turnip, Nelson Company is usually on the verge of bankruptcy...sue away:laughing:.
My wife owns everything else (the house, cars...) I am the sole proprietor of the company and have no real assets.

 

[JP Sinclair]

Awesome, thanks guys. A very good idea.

 

[solidwoods]

Search the internet for Free Classifieds (your state)
I use free classifieds in TN and it gets great results.
Also 3x5 cards (nice graphics) posted on bulletin boards.
Talk to home decor shops and interior design shops your area,, you need to offer a commission. If they have showroom space, ask to put in some spec pieces.

When advertising, choose areas that people with money frequent,, golf, horses, real estate offices.

And don't rule out Commercial work. Doctor, Dentist, etc may want some lobby fix up items like shelves, counter top, bulletin board, coffee table.
jim

 

[Lee]

Hi Darren,

I didn't realize you are / were a fellow plumber! I still don't bite my fingernails, and paydays aren't always on Friday, but the third part still holds true.:laughing:

All the responses on the topic are pretty much dead on the money, so nothing to add there.

Lee

 

[Daren]

Hi Darren,
but the third part still holds true.:laughing:

Yep it still rolls downhill :laughing:

 

[Lee]

Yep it still rolls downhill :laughing:

Nice to know some things never change!

Lee