texasfisherman1 Posted August 8, 2013 Report Share Posted August 8, 2013 Hi, this is my first post and I was curious on legal matters on starting a small hand pour business.I'm 15 years old and probably won't even start a business for a while until I get good experience. I was wondering what legal complications go into a small business while a minor.If ya'll could give me any tips and info it would be appreciated. Thanks Link to comment Share on other sites More sharing options...
bluetickhound Posted August 8, 2013 Report Share Posted August 8, 2013 First off, wrlcome to TU!! Secondly, the search function should turn up a gold mine of info on this subject... All that being said... Resist the temptation to sell baits "under the table".... Selling tackle involves collecting and reporting taxes to the IRS. Even at 15, you should know that the IRS isn't an organization to be trifled with.... 1 Link to comment Share on other sites More sharing options...
bluetickhound Posted August 8, 2013 Report Share Posted August 8, 2013 Go to the 7th post in this thread and memorize it. Take it to heart. Live it. It's the beat asvice you'll ever get about going pro, so to speak.... http://www.tackleunderground.com/community/index.php?/topic/26527-should-i-get-a-tax-id-number/?fromsearch=1 Link to comment Share on other sites More sharing options...
texasfisherman1 Posted August 8, 2013 Author Report Share Posted August 8, 2013 Thanks. Link to comment Share on other sites More sharing options...
bluetickhound Posted August 8, 2013 Report Share Posted August 8, 2013 That should have read "best advice".... Not sure what "beat asvice" is but it sounds painful!! Link to comment Share on other sites More sharing options...
mark poulson Posted August 8, 2013 Report Share Posted August 8, 2013 The legal implications for a minor fall back on the parents, so whoever your folks use as an accountant would be the one to ask. The law holds parents financially responsible for their children until they are 18. Link to comment Share on other sites More sharing options...
Ed_White Posted August 9, 2013 Report Share Posted August 9, 2013 Anyone know anything about being a "hobby" business? How much can I earn from a hobby like lure building before I run afoul of the IRS regs? I am definitely not looking to start a business, I already have a job, and I don't like it all that much, sure don't need 2 jobs. Sounds like a great way to ruin a cool hobby. But I wouldn't mind selling a few plugs or softbaits here and there to recoup some supply costs, but I really want to avoid any hassle from The Man. Any ideas? Link to comment Share on other sites More sharing options...
DaBehr Posted August 9, 2013 Report Share Posted August 9, 2013 There really isn't such a thing as a hobby business...the IRS is pretty firm on your business has to make profit after a few years or you start getting audits. A completely separate issue is the Excise tax. The Excise tax (DJ tax) applies to any manufacturer of fishing tackle...period. There are specifics items which are...and are not taxed....but baits are taxed without exception. If u sell....u pay! Don't try to get around it...many have tried....and most get caught. not worth it! Link to comment Share on other sites More sharing options...
Guest Gangel Posted August 10, 2013 Report Share Posted August 10, 2013 Man, nothing like scaring people to death. I've looked into all this, and people who get "nailed" aren't doing a couple bucks here and there... If you make a couple hundred jigs, and have 150 in your tackle box yet that you made, you're not getting hassled. It's the guys that make 100 of something and have 2 left in their personal tackle box they go after. As far as hobby/business... not all businesses have to make money. This issue took me years to figure out. Just make enough money to cover what you sell to a person, and claim it at the end of the year. Not a big deal. When I was in High School, I took a starting a small business class. One of the things the teacher said that stuck with me is "You have to be almost stupid to start a business". The basis for this statement is the fact that so many fail, so many people end up working 120 hours a week, and the risk to reward is so huge. That statement alone has kept me from opening a business. Take it for what it's worth, it's free advice. And you get what you pay for. That being said, it would be nice if there was a listing of accountants/tax preparers who specialize in small fishing businesses. Would be handy. Link to comment Share on other sites More sharing options...
smallmouthaholic Posted August 10, 2013 Report Share Posted August 10, 2013 "Man, nothing like scaring people to death. I've looked into all this, and people who get "nailed" aren't doing a couple bucks here and there... If you make a couple hundred jigs, and have 150 in your tackle box yet that you made, you're not getting hassled. It's the guys that make 100 of something and have 2 left in their personal tackle box they go after. " 1- Operating your own business is not a 40 hr. a week job. You must be willing to continually re-invest the profits back into the business for many years- sometimes 99% of the profits Don't quit your day job for the 1st 5 years and then have retirement $ to live off of. The gimme-gimme ,el cheapo,free hand out crowd will drain your small profits with their false promises. 2- You are incorrect- the I.R.S. will check-out the the small manufacturere that has not paid excise tax. Just advertise your website and you may be investigated. A jealous competitor and/or a disgruntled customer can also tip-off the I.R.S. that you're operating an under -the table business. Then comes the knock on your door to which you better be nice and receptive. "When I was in High School, I took a starting a small business class. One of the things the teacher said that stuck with me is "You have to bealmost stupid to start a business". The basis for this statement is the fact that so many fail, so many people end up working 120 hours aweek, and the risk to reward is so huge. That statement alone has keptme from opening a business. Take it for what it's worth, it's freeadvice. And you get what you pay for." Your teacher was inncorrect I.M.O. You need the inner desire to succeed, start -up capital of 15-20K plus the intestinal fortitude to overcome the caveats through experience. The tackle business- for the small manufacturer( who wants to produce custom products) has very high costs compared to the profits for the 1st 5-7 years. Then ,the profit/cost equation should reverse itself.Most cannot stay the course simply because they refuse to spend the continued investment necessary. Setting up a complete shop and office can be expensive but no where near the cost of custom,multi-cavity CNC molds.Website construction/updates,credit card /Paypal expenses, and accounting fees must all be taken into consideration. The 10% excise tax on gross sales takes the icing off of the cake but it's a necessary expense to be in the tackle manufacturing business. Many hobbyist don't realize the long-term cost of their tackle manufacturing dreams so they attempt to write off their expenses by declaring it a business. This usually results in failure and a fire sale to sell all their equipment @ 50-70% discounts. Basic hobby expenses can easily reach $2-3 K and that amount buys a life-time of baits w/out the hassels and frustrations of trying to make your own baits. Talk to someone w/years of business experience, determed the amount of start-up capital ($) you are willing to spend/borrow) then ask yourself- do i really want to take this financial chance? Good luck and success to you! Let no man ridicule you if you try honestly to suceed and fail 1 Link to comment Share on other sites More sharing options...
bluetickhound Posted August 10, 2013 Report Share Posted August 10, 2013 ] Good luck and success to you! Let no man ridicule you if you try honestly to suceed and fail I'd listen to smallmouthaholic ANY day before I'd take the advise of some lousy teacher who sounds like they never spent a day in their lives running a business.... This is still America (despite what the doom and gloom crowd would have you believe...) and in spite of all the obstacles, people can an do still start and maintain successful businesses every day. Get your head right, get ready to work like you have never worked before, invest not only your $$$ but the proverbial blood, sweat and tears and let the chips fall where they may. Some things will be beyond your control but if you play by the rules and give it your honest BEST, no matter what happens you can be proud that you had the stones to do what 90+% of people never even try... Even if your business fails, you should learn enough to try again armed with a better understanding of what it takes.... You hear it said a lot but most businesses survive because the owner flat refuses to let it die. Perseverance isn't the answer to EVERY difficulty you'll face but it will get you through a lot... Link to comment Share on other sites More sharing options...
JSC Posted August 10, 2013 Report Share Posted August 10, 2013 (edited) X2 What SMA said ... Just to add a little ... going to the point of a full time Mfg to make money in this biz the cost of advertising and promotion is one heck of a big part of it ... Distribution involves a GOOD Rep and he will cost you 10% of what he sells it for .... the discounts to the distributors has to be competitive and I want even go into that maze of discounts .... better have a big cash roll and ready to work it out with out taking any out ...... Small time is the same only on a much smaller scale ... and once you get out of the "Hobby" Stage it gets to be work .... Have watched a lot of guys over these many years try to do it and in this biz only a very small % make it. ... Regardless of how small you are some one is watching ... DON'T BELIVE WHAT THAT TEACHER SAID !!! All though more fail than succeed .. fact of life Good Luck either way Edited August 10, 2013 by JSC Link to comment Share on other sites More sharing options...
Guest Gangel Posted August 10, 2013 Report Share Posted August 10, 2013 (edited) I'm not going to get in a pissing match, but before you guys get too wound up, slow down and read. Seems like you guys like to drag out the soap box waaaaaaaaaaaaaay faster than you need to. Just the fact that the "15-20k" in capital to start a business was thrown out there means you didn't read the whole thing. You only need a dollar to start any business. Plain and simple. That's the American way. P.S. A hobby can be a business, and a business can be a hobby. Yes, there is a difference, but only one small difference. You guys get too hung up on that, and that's what stopped me for so long. You can be one or the other, not a big deal. Let the numbers take it there, not you. Edited August 10, 2013 by Gangel Link to comment Share on other sites More sharing options...
smallmouthaholic Posted August 10, 2013 Report Share Posted August 10, 2013 I'm not going to get in a pissing match, but before you guys get too wound up, slow down and read. Seems like you guys like to drag out the soap box waaaaaaaaaaaaaay faster than you need to. Just the fact that the "15-20k" in capital to start a business was thrown out there means you didn't read the whole thing. You only need a dollar to start any business. Plain and simple. That's the American way. P.S. A hobby can be a business, and a business can be a hobby. Yes, there is a difference, but only one small difference. You guys get too hung up on that, and that's what stopped me for so long. You can be one or the other, not a big deal. Let the numbers take it there, not you. Gangel, Pardon me for being terse but this is not a pissing match or getting all wound up. It's the business world-hard ,cold and cruel The successful business world does not subscibe to the philosphy- If you can't baffle them w/ your brilliance, then blind 'em w/ your B.S, I speak from 30 years as a self-employed contractor-and 10 years in the lure manufacturing business. I stated facts not fiction-if you can't handle the truth then button up or butt out. You profess to know a great deal ,yet by your own admission,don't operate your own tackle business.Heresay,Dock talk and Cowflop walks-money talks! BTW- there are plenty of accountants and CPA's who handle small businesses- you just have to be willing to spend the money to obtain their services.Quit making excuses and berating those that have paid the price to be in their own business. You have to walk the walk before you talk the talk. JSC- you're accurate w/ the promotional costs-thanks for posting. Link to comment Share on other sites More sharing options...
Guest Gangel Posted August 10, 2013 Report Share Posted August 10, 2013 *throws hands up* Totally entitled to your opinion. The End. Link to comment Share on other sites More sharing options...
Baitjunkys Posted August 10, 2013 Report Share Posted August 10, 2013 IMO, anyone can start a business, even with one dollar as said, I think the key to most failures, is to many people try to start small business and live on them. If I didn't have a regular job, Id already be done. I reinvest about 120% of the gross sales, Just because I want to grow. 2 Link to comment Share on other sites More sharing options...
Driftwood Posted August 10, 2013 Report Share Posted August 10, 2013 Just remember, when you own your own business, you only have to work part of the day.( Pick what 12+ hours you want to work.) It's not easy but a lot of fun. We have been doing this for 8 years and it has been a headach at times but we meet a lot of great people and learn new things all the time. You won't make any money starting out but it takes sacrifice to get where you want to be. Keep very detailed records as the tax man will come knocking...... 1 Link to comment Share on other sites More sharing options...
Guest Gangel Posted August 10, 2013 Report Share Posted August 10, 2013 I would like to say again that it would be nice to find accountants/tax preparers who are experienced in the Fishing/Hunting businesses, that also deal with small time businesses. Not all who do accounting and taxes know all the laws about everything. I'm willing to bet if you asked 100 people in these professions, only a quarter would know about the excise taxes. Just saying. Link to comment Share on other sites More sharing options...
smallmouthaholic Posted August 10, 2013 Report Share Posted August 10, 2013 (edited) I would like to say again that it would be nice to find accountants/tax preparers who are experienced in the Fishing/Hunting businesses, that also deal with small time businesses. Not all who do accounting and taxes know all the laws about everything. I'm willing to bet if you asked 100 people in these professions, only a quarter would know about the excise taxes. Just saying. You are correct.The quarterly excise tax is the manufacturers responsibility- not the accountants.The I.R.S. does not mail the quarterly forms- again the responsibikluty of the manufacturer to download them and mail them quarterly.They can get you your Federal E.I.N.# , any State tax requirement number documentation and Form #637 from the I.R.S. The I.R.S. will call you when you file for form #637 Accounts usually deal with- 1- gross income 2- supplies and materials deductions 3-Depreciation of molds and other equipment 4- mileage for business if you have a log book 5-Real estate and property tax deuctions 6- Capital gains/losses 7- Business related utility deductions They determine you net,taxable income on your Schedule C- profits and losses from business.Then they complete your form 1040 @ which time your accountant wants a check and so does the I.R.S.and state. It's so much fun being in your own business- especially the low profit tackle manufacturing business. The more you expect your accountant/C.P.A. to do,the more you will pay them. Remember we're talking about a small tackle business here. Now if you wish to become a Zoom or Gary Yamaoto( w/ mega bucks @ your disposal), then you'll need a payroll service that drops off payroll checks every Thursday . They also file returns and debit your account for quarterly F.IC.A. & Federal witholding taxes,un-employment and annual federal un-emploment forms and taxes. Baitjunkys mentioned re-investing 120% of your profits and Driftwood mentioned 12 hr. +days. They speak the truth for sure. i can remember moving during the summer of 2008,and setting up a temporary shop in the garage full of boxes and the boat in the driveway.I put in long days of 12-14 hrs. w/ 1 large floor fan,two small fans and a roof fan that brought the inside temperature down to 108 degrees when the outside temps. reached 97-99 mdegrees.- w/ the garage door open. I worked my butt off to a be able to make the $ necessary to have the shop partitioned w/ a door,a large exhaust booth plus heating and air-conditioning. I'm sure others in this business have made many sacrifices to be able to hopefully see the end of the continuos inancial expenses required during the 1st 5-7 years in this business. You have to love it to stay w/ it.My excuse- I'm retired-(or so i thought) and hate day time TV. I still work 50-60 hrs. per week during the busy season. It will be 4 weeks since I've been out in the boat. Hopefully Carolina Mike will participate in this decussion. He has most certainly paid his dues. Edited August 10, 2013 by smallmouthaholic 1 Link to comment Share on other sites More sharing options...
carolinamike Posted August 11, 2013 Report Share Posted August 11, 2013 Here I is! What no one has bothered to mention is how competitive the fishing and hunting industry is. If you are small potatoes and someone feels like you have invaded their space, they will gladly turn you in to the IRS. Competition in the plastic business is brutal, I have learned this the hard way, most injectors have a separate 10% charge for the excise tax. I have it included in my pricing. I quoted a fellow a price per bait and he informed a larger injection company that I was not charging federal excise tax, and yes they turned me in. It done them no good but they still did it, believe it or not this type of thing happens often in this industry. So it is a must to follow the rules and laws exact, you can fool yourself by believing you won't get caught but this train of thought has cost people alot of money and shut down alot of small businesses. Truthfully, why would you not want to pay the excise tax? You include it in your pricing and you don't have to pay unless you sell. You've charged separate for the tax, so pay it! You do have to file whether you sell or not but thats just the price you pay for being a legitimate business. To advise someone not to pay the tax or to say that you are to small to get caught is totally irresponsible. Take this advice from someone who has been turned in more than once but smart enough to do things the right way. 1 Link to comment Share on other sites More sharing options...
Baitjunkys Posted August 11, 2013 Report Share Posted August 11, 2013 Dont forget. There is always someone around the corner trying to degrade you or promote someone else. Just get use to that and go about your own thing. Cream always rises to the top 2 Link to comment Share on other sites More sharing options...
carolinamike Posted August 11, 2013 Report Share Posted August 11, 2013 Texasfisherman, first let me apologize I got caught up in reading all the other posts and forgot one thing that your are a 15 year old enthusiastic young person who apparently loves to fish. I think some of the others forgot this too. So right now let me advise you, to make baits purely for the pleasure of catching fish with something you made. As I advise in another thread share with your freinds and if there is a demand then think about starting your business and if people start advising you not to give things away don't pay them any attention because I don't think there is anyone here who did not start out by giving a few baits away and even today as product promotions several companies give free samples. Just be sure and know what you can afford to do and like baitjunky said do your own thing and I mean your own thing. Take your time don't ride the backs of others and learn to love bait making first if you don't have a love for it then its definatly not the business for you. take it from someone who makes baits for a living. Remember good customer service is a must and you have plenty of time to do your homework word of mouth will take you far but don't let something that you enjoy turn into the type of job that takes that enjoyment away from you in other words don't sweat the legal stuff right now have fun especially while you are young and if I can ever help you in anyway don't hesitate to ask. your freind mike 1 Link to comment Share on other sites More sharing options...
JSC Posted August 11, 2013 Report Share Posted August 11, 2013 (edited) "Texasfisherman, first let me apologize I got caught up in reading all the other posts and forgot one thing that your are a 15 year old enthusiastic young person who apparently loves to fish. I think some of the others forgot this too." Well said Mike .. Ditto. JSC Edited August 11, 2013 by JSC Link to comment Share on other sites More sharing options...
EdL Posted August 11, 2013 Report Share Posted August 11, 2013 Besides legal matters to owning a business there will be the other stuff like sales marketing people skills. So while making lures and fishing them is the fun part try to learn all you can in school. Pay attention to math, science and if offered electives like public speaking, finance, and anything that will help you learn skills that will make you a preference over someone else. Like some of what the professional fisherman say - it's more than catching fish. Even if you find out that making lures does not turn out to be where you end up, you could work in the industry and having a well rounded background will provide dividends. Maybe you could start out working in the industry, develop connections, have some money saved and then start your own business. 1 Link to comment Share on other sites More sharing options...
Kasilofchrisn Posted August 11, 2013 Report Share Posted August 11, 2013 I don't make soft plastics but mainly focus on jigs and sinkers. I never intended to sell what I make I really just enjoy making jigs and all that goes with it. I made the mistake(?) of posting pics on a outdoors forum for my home state. While I did have plans to give a few away I certainly couldn't give away a ton of stuff. I did give a few away at first to some diehard saltwater jiggers. I had so many requests for my stuff I did sell a small amount of jigs to some guys over there. Now I have guys asking me all the time to buy what I make. I keep telling them I need to become legal first. If not for a summer filled with family health issues I would already have it done. I just don't feel comfortable skirting the law and the IRS is one agency that I dont want to pizzz off, One very promising source of jig sales for me is a coworker and friend who runs a successfull charter business. We both work in a remote camp and work two weeks on and two weeks off. This gives him time to charter and he has a co-captain for when he is at work. This schedule also gives me plenty of time to make jigs yet a steady dependable income from my regular job that allows me to pay all my bills and living expenses. Anyway my charter buddy recently had his jig maker retire. He can go through $100 a day in the summer season in lost tackle fishing the saltwater rockpiles where the big fish are. Especially with a boat load of inexperienced clients on board. He wants to order jigs 100 at a time. Considering these are larger and more expensive jigs(4oz is a small one and 20+oz is common). I got him hooked giving him free samples. Rather than sell retail I plan to sell them myself. It doesn't take many full time charter guys buying my stuff to make it worthwhile. A great source of advertising for me was the free giveaways. Once those guys posted up some reports on how much success they had using my stuff the requests for stuff started rolling in.Especially when those guys outfished other brands of jigs caught 2 fish on 1 (double hooked)jig more than once etc. One guy even made a really cool video naming me in the credits. So keep it reasonable but handing out free samples can really pay off.I always ask the guys who get free stuff to post a report somewhere of how they work good or bad as a condition of their recieving the free stuff. That is great free advertising especially when your stuff works great and the fish really like it. Also look for those people in your area who run charters or otherwise use/loose a lot of tackle. But like others have said keep it legal and pay your taxes. I have seen people who thought they could skirt the IRS in other businesses and it wasn't pretty. I can't wait to set up myself legally in the next month or so as I have a waiting list of clients that I turned away who will buy a bunch of stuff this winter I am sure. Especially since I make and sell a lot of stuff not available in stores made from CNC custom or semi-custom molds. Link to comment Share on other sites More sharing options...
