CessnaPilotBarry Posted January 27, 2012 Report Share Posted January 27, 2012 Don't trust "I heard" information on the Internet. Speak to a tax professional. The IRS allows for hobby losses up to the extent of revenue. IOW, you can break-even but not apply any losses to other income. My experience is exactly the same. I've had the fun of audit letters, too... Once, as a sound rental provider, I had a promoter send a 1099 reporting FIVE TIMES what he actually paid me. Once the shock wore off, decent records on my part made it easy to prove, and I had no issues with the IRS. I've dissolved two part-time businesses, including legally converting legitmately depreciated business property to personal use. Under the guidance of a locally respected CPA, it was no big deal. Legally operating a part-time sole proprietorship with no employees is neither black art nor rocket science, it just requires good records from an early point. The hard part is finding good customers and being profitable. I hope folks trying to make a legal go at small business are not dissuaded by scare stories. Good things can come from tiny, including part-time, businesses. Remember, the Wright Flyer was built by bicycle mechanics as a part time pursuit. Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 27, 2012 Report Share Posted January 27, 2012 My experience is exactly the same. I've had the fun of audit letters, too... Once, as a sound rental provider, I had a promoter send a 1099 reporting FIVE TIMES what he actually paid me. Once the shock wore off, decent records on my part made it easy to prove, and I had no issues with the IRS. I've dissolved two part-time businesses, including legally converting legitmately depreciated business property to personal use. Under the guidance of a locally respected CPA, it was no big deal. Legally operating a part-time sole proprietorship with no employees is neither black art nor rocket science, it just requires good records from an early point. The hard part is finding good customers and being profitable. I hope folks trying to make a legal go at small business are not dissuaded by scare stories. Good things can come from tiny, including part-time, businesses. Remember, the Wright Flyer was built by bicycle mechanics as a part time pursuit. Improperly classing your hobby as a business is the issue. If you want to take thebenefits of a legit business you have to run like one. If you want to be a hobbiest then be that but you dont get the benefits. Don Quote Link to comment Share on other sites More sharing options...
dvoigt Posted January 27, 2012 Report Share Posted January 27, 2012 Improperly classing your hobby as a business is the issue. If you want to take thebenefits of a legit business you have to run like one. If you want to be a hobbiest then be that but you dont get the benefits. Don Ok well since you have veered completely away for the OP's question. Let me point out the obviously oxymoronic circular reasoning that has been established between this post and some others: If you charge money on your hobby and not following business accounting and tax laws you are a horrible person and stealing from the government and legit businesses (summing up a point made in a different post). But if your hobby ends up not making money after expenses and write offs then shame on you for not having a real business you should have kept it as a hobby. You can't have your cake and eat it too. If you are going to beat up on the guys making money on a hobby and demand they treat it like a business you can't then look negatively at them if they aren't running a profitable business 5 years into it. If I'm totally off base here let me know, but this what I'm hearing. 1 Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 27, 2012 Report Share Posted January 27, 2012 I have paypal for my website and Intuit Go-Payment for my local sales. I do have terms and conditions on my site and also mention in the terms that decals come with the boards and must be applied by the customer. I do take my own pictures and I have back drops and green screens. I have a business license, naming rights and my own business bank account. I also keep track of all my records. I am just trying to find marketing techniques. My site has empty pages that are waiting for pictures and pricing. I also have business cards and most of my sales are face to face. I am not doing anything business wise wrong, I have done my research. I just want some Marketing Ideas. John, You came asking for advice on marketing. You showed us your web page, the form of marketing you are currently using. We come back with comments explaining that bad marketing is not good marketing. I graduaded with a Business degree over 30 years ago and with a Law degree a few years later. I realize that was a long time ago, but one thing has never changed. People do not want to do business with dishonest people, thats just the way it is. IP firms use script applications to mine the web 24 hrs a day looking for stolen IP. The application searches every web sites even file folders that cant be seen by the public. It mines the internet looking for IP theft and reports back to the IP owner. What they do with that information is up to them. Being 17 years old does not make you exempt nor is ignorance a defense. Lastly you are not old enough to legally own a business in the US. You cannot contract with anybody period, your putting your parent or guardian at risk. From a woodworking business perspective. If your going to take someone else photo's you should at least make it a product that is actually made out of WOOD. The chair on your front page is made from Poly Wood. These photos are not taken with a cheap canvas back drop and photoshopped.They are taken in a professional protography studio with tens of thousand of dallars of high end photograhy equipment. It cost companies thousands of dollars to properly photograph thier products for their marketing. If you want to compete with them then you will have to buck up your own money and have your own photo's done. I can appreciate a young person starting an adventure such as this and to be honest I wish we saw it more often. Your getting off on the wrong foot, I suggest you do a quick change step and get back in cadence to build an honest, hardworking business. Don Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 27, 2012 Report Share Posted January 27, 2012 Ok well since you have veered completely away for the OP's question. Let me point out the obviously oxymoronic circular reasoning that has been established between this post and some others: If you charge money on your hobby and not following business accounting and tax laws you are a horrible person and stealing from the government and legit businesses (summing up a point made in a different post). But if your hobby ends up not making money after expenses and write offs then shame on you for not having a real business you should have kept it as a hobby. You can't have your cake and eat it too. If you are going to beat up on the guys making money on a hobby and demand they treat it like a business you can't then look negatively at them if they aren't running a profitable business 5 years into it. If I'm totally off base here let me know, but this what I'm hearing. This is very basic business. You are waaay off base. First to be a hobbyist and claim to own a woodworking business and not pay taxes is theft period. Second being a hobbyist and taking the tax benefits of being a business just to supply yourself with toys is theft period. Running a legit for profit business involves more than just dinking around in your home shop part time while supporting yourself with a day job. You can be a hobbyist and make money on the side but do it right. So many want to claim their a business and others whant to claim their a hobbyest. There is a line between the two and its pretty black and white. If you dont know where the line is then you put yourself at risk, ignorance is no excuse. Don Quote Link to comment Share on other sites More sharing options...
dvoigt Posted January 27, 2012 Report Share Posted January 27, 2012 SO you want people that aren't "legit" to pay taxes on income they earn from there hobby and not be able to take any expenses into account. Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 27, 2012 Report Share Posted January 27, 2012 SO you want people that aren't "legit" to pay taxes on income they earn from there hobby and not be able to take any expenses into account. It has nothing to do with what "I" want. I do take the stand that if I have to run my business by the book everyone else morally should also. If your a hobbiest and want the tax benefits you need to step up and cross that line. If your not financially prepared to do it right then dont do it at all. Dont take money out of what could be my pocket by not paying. Not paying your self employment taxes along with others takes money out of my pocket. As a hobbiest you have the right to write off your cost of goods up to the amount of your earnings to a degree depending on your AGI. You dont get ordinary business expenses because your "business" was not put in place to produce a profit. If your just looking to buy tools to equip your shop then work some overtime at your day job or pay the income taxes on your hobby "business". Pretty simple. Don Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 27, 2012 Report Share Posted January 27, 2012 My appologies for taking the thread off track. My intensions were to save the kid alot of grief. I think I put it fairly well in post #29 addressed to John. Businesses and hobbiest that run on paypal are going to be in a world of hurt in the next couple of years, blame congress. Marketing a business means that you are trying to build a business to produce a profit. John seems like a decent kid willing to work hard. He does need to think about the people that he is putting at risk with poor and illegal business practices. A poorly run business is not just a mistake its something that can haunt you your entire life. Better to do it right or dont do it at all. Thanks Don Quote Link to comment Share on other sites More sharing options...
MIKWoodworking Posted January 27, 2012 Author Report Share Posted January 27, 2012 I went through the whole process and have a business license. I am not lying. If you are telling my local government is wrong in letting me own a business, you can consult them! There is no reason why I cannot own a business. I dont want to argue about my business practices. If any of you have marketing advice that is great, but I do not want negativity. I am old enough to understand how to run a business, I have research and I have had people teach me everything business wise that I need to know. Thanks to all the people with marketing advice. Nothing is at risk. At am not at risk with PayPal because I have adequate records. I am honest and did start off right. Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 27, 2012 Report Share Posted January 27, 2012 http://www.poly-lumber-furniture.com/p-Siesta-Windsor-Adirondack-Chair.html 1 Quote Link to comment Share on other sites More sharing options...
MIKWoodworking Posted January 27, 2012 Author Report Share Posted January 27, 2012 Is it a good idea to sell in stores like a consignment? Quote Link to comment Share on other sites More sharing options...
dwacker Posted January 28, 2012 Report Share Posted January 28, 2012 Is it a good idea to sell in stores like a consignment? You bet. Don Quote Link to comment Share on other sites More sharing options...
duckkisser Posted January 28, 2012 Report Share Posted January 28, 2012 This is very basic business. You are waaay off base. First to be a hobbyist and claim to own a woodworking business and not pay taxes is theft period. Second being a hobbyist and taking the tax benefits of being a business just to supply yourself with toys is theft period. Running a legit for profit business involves more than just dinking around in your home shop part time while supporting yourself with a day job. You can be a hobbyist and make money on the side but do it right. So many want to claim their a business and others whant to claim their a hobbyest. There is a line between the two and its pretty black and white. If you dont know where the line is then you put yourself at risk, ignorance is no excuse. Don if your a hobbyist and sell stuff doesent that make you a business? what is the best way to sell stuff that you make and not a busness? i have been tinkering around and selling a few ods and ends to people i work with or have met mostly to buy supplies and tools. do i have to put the few bucks i have made on my taxes or is it more like a garage sale and no one notices since its such small dollers. basicly what exactly the line is don? Quote Link to comment Share on other sites More sharing options...
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