haxx5300 Posted June 16, 2011 Report Share Posted June 16, 2011 I have just started (in the past few months) making my own jigs and selling them at local tackle shops. I am now looking into getting everything "legal" and have been trying to figure out what exactly what I need to do to accomplish this. I live in Michigan, so I understand that different states have different regulations and taxes, but I need a base. I have researched everything I can possibly come up with online and a great deal of it reads Greek to me. To give some details to aid anybody attempting to help; I don't have or plan to have "employees", I dont plan to take out any loans in the businesses name, I plan to have a "business bank account", I have NO idea what taxes I need to plan on paying(with the exception of exice(sp) taxes, however, I don't know how much to plan on paying for this), it is going to be a sole proprietorship, I am planning to run said business solely out of my home, etc. If there are other factors that may make a difference let me know and I'll answer them to get the appropriate information. Anybody out there that may be able to direct me to the right information or throw me some info I would be grateful. Thanks in advance. Quote Link to comment Share on other sites More sharing options...
Jig Man Posted June 17, 2011 Report Share Posted June 17, 2011 I'd start with the state department of revenue and ask them the questions. They may want you to collect sales tax as well as pay income tax. Then there are the feds. Quote Link to comment Share on other sites More sharing options...
knifemaker3 Posted June 17, 2011 Report Share Posted June 17, 2011 also better check with your town or county to make sure it's legal to run a business out of your home. Many town zone you from having a business in your home. Like already said, state taxes, federal taxes, excise taxes, insurance which will change if you are running a business out of your home. If you accidently start a fire in you garage from making baits and the insurance company find out you were running a business out of your home without additional coverage you probably won't get anything out of your insurance company. Also, if you don't have your business set up either in a corporation or llc and keep everything seperate from you personal assets, including your home, should someone sue you for whatever reason they can get everything you own. If set up in a corp or llc they can only get the business assets. Difficult to seperate if working out of your home. Just some thoughts for you to think about. there are a lot of home based businesses running under the radar and not having problems. Just they haven't got caught yet. big Brother doesn't care if you are just trying to make a living by running a small home based business out of you home.....as long as you jump through all their hoops which incidently cost $$$$$$$$$$. Good Luck! Not trying to keep you from making baits as a business. just trying to help keep you out of trouble with the government. Quote Link to comment Share on other sites More sharing options...
smalljaw Posted June 17, 2011 Report Share Posted June 17, 2011 Check your yellow pages and look for business lawyers and give one a call, it doesn't cost much for an initial consultation but if you want to get serious that same lawyer will be able to set up your llc or corp and file the proper paper work. I would only go the lawyer doing the work if you plan on doing a reasonable amount of business, also check local laws, were I live anything like tackle that makes less than 500/year in profit or loses money for 3 consecutive years is considered a hobby, you still have to pay the taxes but you don't need a business license. Quote Link to comment Share on other sites More sharing options...
Ogajiga Posted June 17, 2011 Report Share Posted June 17, 2011 For the feds, what I had to do was contact the IRS for an EIN # (Employers Identification Number) even if you are a one man home based bizness, like myself. This is your account ID for paying FET (Federal Excise Tax), which for the specific heading of "Sports Fishing Equipment" equals 10% of gross sales. For my volume of sales, I pay quarterly. You can charge this to your accounts or absorb the cost yourself. You can apply with the IRS for a Form 637 which exempts you from the 10% excise tax that many mfg / distr pass on to you when you purchase components used for "further manufacture" of your product. To the best of my knowledge this only applies to actual hardware in your product, not incidental supplies for your bizness, but many component wholesalers will allow the exemption for anything they sell. Some suppliers will ask for your 637 as a courtesy, but some don't and you need to let them know you have one. If anything I posted is in error please correct. I did this back in '97 and things might have changed. Quote Link to comment Share on other sites More sharing options...
