OK.. sit down.. It is not that you don't need to report profits for 3 years. You have to report profits period if your running a business. If your doing this as a hobby then you can get away with not reporting profits because it is a hobby. The term hobby goes away if you making money after the first year. Are you selling retail or wholesale or both. Then you need to register with your franchise tax board to get a resale Lic. It is free in California as long as you tell them you expect to make a small amount off money. If however you go in there and thinking your going to make 50,000 the first year well then they just might ask for a front end deposit because they do not trust you collecting there taxes. If you w wholesaler, like I am 90% then you do not have to worry about collecting taxes but you need to make sure the people you are selling to give you their resale certificate number. Still with me.. You do need to register with your county for a factious name so that you can do business with a bank and most credit card companies.You need to deposit that 50 grand some where and a bank will not let you Cash a check that someone sent you with a business name on it.. You should turn your profits into the business but go get a beer ever so often. My first big job bought me a new press. You should keep an itemized account of every penny you use out of your pocket . Those are business expenses and tax deductible. If you go to office depot and buy pencils. That is an office expense. Did you drive anywhere to discuss business. That is an mileage expense. Do you have a web site.. expense. Do you have a host expense. Do you use your computer to do designs.. expense.. and by the way if you bought your computer 2 years ago and are now using it for business the day you started using it it became an expense.. Do you know excel. make a spread sheet. Feel free to email me and ask. been down this road so many time my tires are bald as well as my head.Lou
Business law questions
I know you all have probably heard a hundred questions like this, but I haven't exactly found a thread that answers my questions. Thanks ahead of time for your patience and time. Well, I'm a newb in about every sense of the word. A friend and I are about to start a shirt business online and I would appreciate any advice. I've heard sides from a few different people, but I'm about ready to just drop the coin for some legal advice. We want to be as legal/moral as possible. From some, I've heard you really don't need much of anything to sell stuff online. I've heard comments stating that you don't need to report a profit for 3 years, then I've heard you don't need a bus. license, you just report it as income on your taxes. On top of that, I've heard you don't really need anything since you probably aren't going to be making thousands of dollars. I figured maybe someone here has already traveled down this road and could help me. Since we're just getting started, we planned on turning all the profit back into making more designs and just getting shirts out into the market. Since we've not really sold anything yet, I don't have any idea about the profits. All the money has been spent out of pocket and we have an inventory of about 70-80 shirts ready to go. Any help/advice would be great. I just thought I'd start here before I spent money on legal advice or where ever else. Thanks.
-ben
-ben
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2 errors. It is not franchise tax board but board of equalization and I said as a hobby one year I meant 3 years.. See what happen when you start getting old..Lou
Thanks for the reply. I'm learning more and more as I go on here. I'm fairly new to all of this so I'm not quite sure of what to expect. Is this a hobby? Yeah, it's kind of a hobby. I don't honestly anticipate making $50,000. Currently, I have no real idea how many shirts would be sold. The entire business will be ran online and right now it is in it's infant stages. My friend is the art side, I'm the business side. Apparantly I'm not doing so well on the business side. I've footed the cash to produce a small stock of shirts because I do believe in my friend and his ability. We have a website us and almost available to the public. We're in the stage of setting up a bank account and on-line checkout to handle the transactions. Neither of us really know how well this will take off. We just wanted to stay on the right side of the law. I know how to use Excel, Access, and various other business software. I have some accounting experience and an almost useful Business Management degree, but I'm somewhat useless in terms of business law. I'm sure we'd have to record and report a profit, I just didn't know if we needed a business license, or an LLC, or something like that. Then again, if we only sold 20 shirts, I'm not sure I'd want to burden the expense of getting some type of license. This is the boat I'm in. -or out of rather, up to my shoulders in water. Thanks for the read and input though. I appreciate it.
I'm in a very similar boat Ben. I'm in the very early infant stages of my planning, and figure I'll be WELL below $15K a year. I can't say I really want to inherent $2K+ worth of fees, especially if my little venture doesn't pan out at all. I'm looking forward to other more senior / experienced members to chime in here. Thanks all!
Put a sign on your wall "I don't know, What I don't know" You both need to chill. don't go build a new office building. Growth is by inches not feet. You just need to focus on your ideas and get the basic stuff. Factious name.. resale lic. that's it. I am sure your working out of your house right?. Your not running a corporation. You want to be in business? You are now in business! Feel free to ask anything. I Will gladly offer any ideas I have. You can contact me by email also. I know a bit but only because I have traveled the road and read the signs. (Badalouism #3247)
Man, I didn't know you had gotten up that high!badalou said:I know a bit but only because I have traveled the road and read the signs. (Badalouism #3247)
I need to keep up with the Badalouisms!
Ahh it's my friend Greg who first found my wisdom and gave it the great name, badalouisms. You must remember my wise friend I use several in every thread.. It is a warm wind that blows from my bellows. Some time the wind flows and there is nothing more than that.
one more, it's a sellers permit, not a resale permit.badalou said:2 errors. It is not franchise tax board but board of equalization and I said as a hobby one year I meant 3 years.. See what happen when you start getting old..Lou
This is a really big topic and way to large to cover in a single post or thread. You can actually loose a lot money if you start out unorganized. Taking the time to talk to a CPA would be worth the time and fee. Our CPA talked to us for free for the first year. He gave us advice on how to organize the business and how to account for our expenses. Talking to an attorney would not be a bad idea either.
I am assuming you are in the USA.
I would recommend you look at the blog of Kerry Kerstetter at taxguru.net and his web site at taxguru.org. You will find no better resource on taxes.
Good luck and come back with specific questions if you need more help.
I am assuming you are in the USA.
I would recommend you look at the blog of Kerry Kerstetter at taxguru.net and his web site at taxguru.org. You will find no better resource on taxes.
Good luck and come back with specific questions if you need more help.
CPA.! talk about over kill. Vote.. how many of you visited a tax attorney, or accountant, before putting up a website to sell tshirts?? He said it is a Hobby! He has 70 shirts tio sell! I do that in a week and I never been to a CPA. Just keep records of your expenditures. Go visit your state franchise tax board on line for all the info on what to claim or not.
badalou said:CPA.! talk about over kill. Vote.. how many of you visited a tax attorney, or accountant, before putting up a website to sell tshirts?? He said it is a Hobby! He has 70 shirts tio sell! I do that in a week and I never been to a CPA. Just keep records of your expenditures. Go visit your state franchise tax board on line for all the info on what to claim or not.
Doesn't sound like a hobby to me.Costante said:... friend and I are about to start a shirt business online ...
But he stated it was. Binki, you know darn well that a lot of people want to get into this game. They are clueless as to the business side of it. What could be a big turn off is they get hustled out of a lot of money that they could use effectively in their business. I would bet the average person selling tees on line is selling less than a few hundred dollars a month. If you own a shop, brick and Mortar, that is different and if you run a business that does custom work like most screenprinters do or like i do then it becomes more of a business structure. But selling tees on line.. How many are out there and how many are making the kind of money that would require just keeping sound business expense reports. You can buy bookkeeping software that could handle all this also. I use Turbo Tax and it breaks it all down for me. I have not had an account for over 15 years. Oh and my daughter is an accountant with Apple and my son is a tax attorney in New York and I don't even ask them questions.
For me personally, it's one of those issues where I don't want to spend unnecessary time and/or money. I'm fairly busy as it is, and don't want to over complicate anything. I guess my biggest concern is if I don't create an LLC and get seperate state and federal tax ID's. If somehow they were able to see that I had an extra $10K of income (though I can't say how, maybe through PayPal?), then that might get me in some trouble. Though as a student I don't probably make enough to raise and eyebrows to begin with.
You not going to get in trouble. if you do 10,000 in sales this year here are a few things you need to consider. Is that clear profit which means you may have to make $30,000 in sales. What is your selling point. $15? cost of product using everything $5.00 Shirt+ink. so your cost so far is 33%. But what about your expenditures. Did you know you can write off a lot of thing. Computer + Printer + office supplies + Mileage +shipping + phone+ fax machine+ advertising+ Postage+ Shipping supplies +web design cost + Hosting fees + Where are you doing all your work.. I am sure if I wanted to I could come up with enough expenditures that show zip profit. But you need to put it down. I buy shirts and use them for test and show.. write it off. Lou
that makes sense Lou.
Write-offs ------- I see.
so thats why my Dentist Started an Art business. He's not trying desperatly to sell any of the art..... i always wondered about that.
Write-offs ------- I see.
so thats why my Dentist Started an Art business. He's not trying desperatly to sell any of the art..... i always wondered about that.
Any practical business person know that profits mean government sponsorship.. they call it taxes. People like doctors, lawyers invest in other things. because they need spread their money out so that the govt does not get it all. Everyday I pull up my spread sheet and enter anything that is legal expenditures. yesterday I drove down to Walgreen's and got some ice cream They had some tee shirts (seconds) on sale. I bought 2 and printed some sample designs to show. Can anyone tell me how many things I got to write off. This is a test and you will be graded. Hint... it is over 4 items and none of them is the ice cream.
Here are a few more.
~ Rent of the space in your house for the storage of your items. By they way, this qualifies your home as a home office
~% of all utilities (electric, gas, water, trash)
~% of property taxes
~Insurance
~Section 179 accelerated depreciation for all capital equipment
~ Rent of the space in your house for the storage of your items. By they way, this qualifies your home as a home office
~% of all utilities (electric, gas, water, trash)
~% of property taxes
~Insurance
~Section 179 accelerated depreciation for all capital equipment
Wrong Lucy.. They are an inventory asset if your selling them. But I said samples so they become...? So you have the car, OK, gas, actually it is the mileage we get. .I believe it is 34 cents a mile. But I also said I made samples so the cost of the transfer paper and the ink.. And Binki.. your the man right on!! So guys.. isn't making money fun.. it is even better if you only give the government what they are due and no more. OK poker game starting.
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