Salty's Posted February 2, 2015 Report Share Posted February 2, 2015 Flash...people don't care. I could name you 100 names right now of people in this business and out who don't pay excise tax or even go so far as to COUNSEL people not to pay it. MAGAZINE WRITERS EVEN. It's disgusting. Several months ago I took offence at a editors comments on people in this business enough that I penned an email to him even naming names to back up what I said. He took out the stuff he didn't want to print and printed my email without my consent. nice. 13 years I been fighting against people doing this stuff illegitimate. Never once have I dropped a dime. If I did the irs doesn't seem to care. They've never ONCE gone after a single person I've seen doing it under the table. NOT ONCE. There's entire websites devoted to this stuff. Even advertisers here! The owner of stripersonline.com takes 25% off the top of every illegal lure sold, knows it and flaunts it. He encourages guys on there to sell their stuff! As guilty of tax evasion as every guy doing it. I'll even go so far as to say this 16 year old kid ISN'T registered as a legit fishing lure business. Why? Cuz another one doesn't care. They just want to make the money without regard for anyone else. I sleep at night I pay my taxes on time every quarter. If more people did the face of this industry would be totally different. You are selling sport fishing tackle. 1-You will need an E.I.N. number from the government( federal identification number) 2-You will need to file and pay the quarterly -10% excise tax on gross sales If you get caught ,the penalties and interest are not pleasant.The I.R. S. will and does investigate small tackle manufacturers and sellers.. You stated you're on Facebook/Instagram so you are already on their radar screen Thank you for wanting to do business properly and pay your taxes. That said, the net profit will really hit home after you legally operate your business and pay your necessary taxes. Do it right and sleep @ night Quote Link to comment Share on other sites More sharing options...
Fishhead15 Posted February 2, 2015 Report Share Posted February 2, 2015 thanks smallmouthaholic! I am going to crunch numbers and see where I end up. just looking at it roughly, had $1203 in gross sales last year, of which about $890 was materials(blanks, hooks, rings), not including "stuff" for the shop (have not itemized paint, epoxy, brushes, other materials)...so take $120 off for excise tax and that leaves $193 that goes in my pocket? Im thinking most of that $193 went to shop materials....and im "working" for free! good thing I enjoy it! guess Im going to have to charge more.... it does make it clear as to why so many do business under the table though. Eric Quote Link to comment Share on other sites More sharing options...
sonoman Posted February 2, 2015 Report Share Posted February 2, 2015 Interesting topic, lure biz is definitely challenging when you read all the posts, so it seems one must seriously control their costs, figure out to make a better fishtrap and get it out there which is the real challenge esp. before someone can copy it and produce it quicker and cheaper and just beat ya to the punch in general, personally it seems the way to succeed at this is just to produce the best quality you can, take care of the customers you have and stay small....otherwise it looks like a monster migraine and I'd be willing to bet that nothings changed down through the years Quote Link to comment Share on other sites More sharing options...
smallmouthaholic Posted February 2, 2015 Report Share Posted February 2, 2015 thanks smallmouthaholic! I am going to crunch numbers and see where I end up. just looking at it roughly, had $1203 in gross sales last year, of which about $890 was materials(blanks, hooks, rings), not including "stuff" for the shop (have not itemized paint, epoxy, brushes, other materials)...so take $120 off for excise tax and that leaves $193 that goes in my pocket? Im thinking most of that $193 went to shop materials....and im "working" for free! good thing I enjoy it! guess Im going to have to charge more.... it does make it clear as to why so many do business under the table though. Eric Bingo! You hit the nail squarely on the head. It amounts to some extra spending money and personal satisfaction vs. sitting on your butt watching T.V. I'm not the sharpest knife in the drawer but was a successful contractor w/ 3-5 employees for 30 years. I've been making baits for 11 years-sold to stores and clubs in the past.Now I only do one Expo a year and the rest internet sales. 240 +CNC custom molds-mega bucks there),Components,Shop/Office (including utility and stationary supplies), internet fees and computer expenses,Web-master fees,Domain name protection,video productions,real estate taxes and Pay Pal cost take a major slice out of the pie.Then you pay the quarterly 10% excise tax on gross sales. I have created a small business for custom lures of which there is a limited market place that is willing to pay and appreciates these products. I was always taught to do either quality or quantity since you can't mix both. I have "O" outstanding invoices w/ any of the suppliers I deal with. Quote Link to comment Share on other sites More sharing options...
Cougarftd Posted February 2, 2015 Report Share Posted February 2, 2015 (edited) I went through a lot to try to uncover the secret of the excise tax. Went to 2 CPA's and they did not have a clue. I tried the IRS website..very confusing. I tried to call the IRS (ever try to call the IRS? (don't). I went to my local IRS office...sat for an hour went in...asked to have the tax explained she looked at me like I had something crawling out of my eyes. She suggested I speak to a CPA...told her I had been that route. She said she was not sure she could help me...I said "with all due respect...it's your tax code. If you can't figure it out how can I?" She muttered something about ...why would you want to paint lures anyway as she handed me another phone number to try. You have to write a letter with what you want researched, fax it in, wait for the call. 2 days later this is what I was told. just a paint job on someone's bait...no excise tax buy a bait from a manufacturer and paint that bait ...no excise tax (it should have already been paid) import a bait, build a bait and then paint it...excise tax on the final sales price (including components) @ 10% have to have EIN, and pay quarterly must maintain proper sales records in case audited that show purchase receipts to prove purchase of other baits I really want to be compliant but they make it very difficult. I know many selling on ebay and such think they are immune but that's not the way it is. Hope that helps. Comes right from the IRS so I hope it is correct! Edited February 2, 2015 by Cougarftd Quote Link to comment Share on other sites More sharing options...
Salty's Posted February 2, 2015 Report Share Posted February 2, 2015 And don't forget the constructive price rule. You don't pay excise on the total amount. Quote Link to comment Share on other sites More sharing options...
Salty's Posted February 2, 2015 Report Share Posted February 2, 2015 Cougar I went through the same thing years ago. I finally got hooked up with the guy (Roger I think was his name?) out in upstate Michigan who is the guy who wrote the tax book for the examiners. He spent over 2 hours with me on the phone one day and educated me on how it works. You pay excise tax differently if you're are a retailer vs a wholesaler also. You pay 10% on a wholesale sale, You pay excise on the constructive sales price of the items but if your wholesale price is lower then you pay excise on that. (the lower price of the two) I'm not giving advice on this, will leave that up to yourself to figure it out and get the straight ninny. I see alot of people who think they pay $2 excise on a $20 bait and this is not the case unless you are selling it to a shop for $20. If you retail it to someone then you pay $1.20 excise on it because the 06% constructive price which they calculate cost at is actually $12., if your wholesale price is $11 then you pay excise on that. I digress here this topic is about making money on fishing lures. You might think you do but it's really a money loser business. Quote Link to comment Share on other sites More sharing options...
Jdeee Posted February 2, 2015 Report Share Posted February 2, 2015 (edited) The only benefits to running a small business at this level are the tax write offs, car, gas, equipment, rent for home warehouse/ basement, rent for office/ spare room, occasional meal/ business meeting ,work clothes, bookkeeping service charge/wife's bill, heating AC bills by percentage of space used for business and on and on. Then if you are lucky you make a profit, but certain people might not want to make a profit, but just break even depending on your situation (retired on a pension) were you can just lower some of your living expenses When you are making big profits $75000.00 above expenses that is another story, but I would guess that 99.9 % of bait builders are not and never will. Nothing wrong with a business not making money indefinitely : ))) Edited February 2, 2015 by Jdeee Quote Link to comment Share on other sites More sharing options...
Jdeee Posted February 2, 2015 Report Share Posted February 2, 2015 (edited) Oooops forgot to mention computers and internet access as an expense so you can get onto TackleUnderground for the best support anywhere ; ) Edited February 2, 2015 by Jdeee Quote Link to comment Share on other sites More sharing options...
spoonpluggergino Posted February 2, 2015 Report Share Posted February 2, 2015 (edited) I could not resist this post, You are competing with China and all the third countries in the world. I hate to burst your bubble but there is no magic bait, when it comes to fishing you could whittle a stick and catch fish, it's all about structure. Check up on Buck Perry fishing article you will understand then, Buck taught many fisherman including Roland Martin Now I am not discouraging for you to your own business. I started a Refrigeration company in 1982 and I have been successful, but I never got rich , I do love the business, I feel that if I had college educating and some kind of business major I would have been more successful. I am retired now and the my daughter took over and doing well. I know you love and have a passion for bait making and there may be a slight chance that you could became a hit, but it will be a tough road, you want to do wood baits and that is really nice, good luck competing with plastic I would go to college, get a good education and look at other option and by all means start your own business, beats working hard for somebody else. Sounds like you have a passion so if you work hard and not be afraid of failure you will definitely make it. I love the idea you want to own your own business entrepreneur made this country the greatest in the world, we need more young man like you I wish you the best of luck Gino Edited February 2, 2015 by spoonpluggergino Quote Link to comment Share on other sites More sharing options...
CustomBaits4You Posted February 3, 2015 Author Report Share Posted February 3, 2015 Saltshaker, I appoligise that you are mad and did not intend for this to happen. Your last listings were entirely differrent from mine and if your customers think I stole your identity Quote Link to comment Share on other sites More sharing options...
CustomBaits4You Posted February 3, 2015 Author Report Share Posted February 3, 2015 Saltshaker, I appoligise that you are mad and did not intend for this to happen. Your last listings were entirely differrent from mine and had no intent to "copy" you. No hard feelings. Quote Link to comment Share on other sites More sharing options...
CustomBaits4You Posted February 3, 2015 Author Report Share Posted February 3, 2015 I am going to stop reponding soon because this is rediculious. Quote Link to comment Share on other sites More sharing options...
Rowhunter Posted February 3, 2015 Report Share Posted February 3, 2015 Well, now this is getting interesting. So the business plan here is to assume someone else's plan and copy their pattern's? That's kind of awesome! If there are quality issues or tax evasion problems you can easily say it wasn't your idea!!! And not be lying. WOW! Hey Salty, I can understand your frustration. You really put out a ton of quality product and have a huge investment in equipment. You have way too much to loose not to be legit. I see all kinds of BS make a quick buck sales on chinese repaints offered everywhere. Good luck to you sir. Douglas Quote Link to comment Share on other sites More sharing options...
saltshaker Posted February 3, 2015 Report Share Posted February 3, 2015 CopiedBaits4You, Dude, you can spin this however you want to try and justify what you've done, but, the simple fact is that you sought out my patterns and (basically) copied them. From your comments here on TU, I could tell that you were somewhat fascinated with my lures, but, I guess I didn't realize just how fascinated. I'm not real sure that this applies to "If you can't beat 'em...join 'em", however. 1 Quote Link to comment Share on other sites More sharing options...
Fishhead15 Posted February 3, 2015 Report Share Posted February 3, 2015 And don't forget the constructive price rule. You don't pay excise on the total amount. so, does that mean i pay excise tax on the amount it cost me in materials to put a bait together instead of the actual sale price? that is different than (and much lower than) gross quarterly sales... I often sell baits at auction so the final sale price can vary. thanks Eric Quote Link to comment Share on other sites More sharing options...
Fishhead15 Posted February 3, 2015 Report Share Posted February 3, 2015 I went through a lot to try to uncover the secret of the excise tax. Went to 2 CPA's and they did not have a clue. I tried the IRS website..very confusing. I tried to call the IRS (ever try to call the IRS? (don't). I went to my local IRS office...sat for an hour went in...asked to have the tax explained she looked at me like I had something crawling out of my eyes. She suggested I speak to a CPA...told her I had been that route. She said she was not sure she could help me...I said "with all due respect...it's your tax code. If you can't figure it out how can I?" She muttered something about ...why would you want to paint lures anyway as she handed me another phone number to try. You have to write a letter with what you want researched, fax it in, wait for the call. 2 days later this is what I was told. just a paint job on someone's bait...no excise tax buy a bait from a manufacturer and paint that bait ...no excise tax (it should have already been paid) import a bait, build a bait and then paint it...excise tax on the final sales price (including components) @ 10% have to have EIN, and pay quarterly must maintain proper sales records in case audited that show purchase receipts to prove purchase of other baits I really want to be compliant but they make it very difficult. I know many selling on ebay and such think they are immune but that's not the way it is. Hope that helps. Comes right from the IRS so I hope it is correct! what if i am not importing blanks? they are all purchased from US vendors. is the excise tax already paid? and the hooks I buy from jaggedtoothtackle.com or tacklewarehouse, haven't they already paid excise tax? sorry, just raises more questions as more are answered... Eric Quote Link to comment Share on other sites More sharing options...
Salty's Posted February 3, 2015 Report Share Posted February 3, 2015 I make fishing lures. I don't give tax advice. I save that for the cpa and the irs. I pay what I'm told. Please don't send me private messages asking questions. I make even less money answering questions than I do making fishing lures LOL If you're importing lures and you don't know the answer to this question then you're not a legit business and would advise you to fix this asap before you get caught.. And it doesn't matter if you've already paid the excise on hooks or any parts. It's illegal to deduct the excise paid off the top or use that in your calculations. so, does that mean i pay excise tax on the amount it cost me in materials to put a bait together instead of the actual sale price? that is different than (and much lower than) gross quarterly sales... I often sell baits at auction so the final sale price can vary. thanks Eric Quote Link to comment Share on other sites More sharing options...
dlaery Posted February 3, 2015 Report Share Posted February 3, 2015 If someone wants to know more about Federal Excise Tax, do a search on this forum for "excise" and you will find lots of info. Oh Salty you make me laugh. I did a search on Free Good Advice and found a link to a book at Amazon titled "Good Advice from Bad People: Selected Wisdom from Murderers, Stock Swindlers, and Lance Armstrong" Your just not bad or crooked enough to give good advice. unless you ride a bicycle. 2 Quote Link to comment Share on other sites More sharing options...
ravenlures Posted February 3, 2015 Report Share Posted February 3, 2015 W hy don't we just drop this it's going knowwhere...........lets cool off !! ...or as the younger ones say chill Quote Link to comment Share on other sites More sharing options...
Cougarftd Posted February 3, 2015 Report Share Posted February 3, 2015 That is what I was told Quote Link to comment Share on other sites More sharing options...
mark poulson Posted February 3, 2015 Report Share Posted February 3, 2015 Free advice is generally only worth what you pay for it, but this is mine: Go to a CPA. Pay him/her to tell you what it will cost to operate a legitimate lure making business, and what the risks are. It is their job to know this stuff, and their advice actually means something. 1 Quote Link to comment Share on other sites More sharing options...
biggun Posted February 3, 2015 Report Share Posted February 3, 2015 A lot of good information here. I believe the question that started all this was could it be done. Short answer is yes, if you are willing to do all that is needed to be done to make it work. The only thing I don't understand is why is it that every time somebody ask about buying in bulk, producing in bulk, or selling lures it all goes to a tax debate? I understand this is information that would be needed if the person moved forward with there business plans, but dang. Some of you all make it sound like the first time he makes a lure the helicopters are going to start circling, or if he sells a $2.00 lure to his best friend the guys in the black suburban's are going to roll up and slam him on the ground. If you choose to make it a business then yes you will need to do all the same things any other business does. accountants, marketing, employees, payroll, overhead. 3 Quote Link to comment Share on other sites More sharing options...
DingerBaits Posted February 3, 2015 Report Share Posted February 3, 2015 After only being in business 7 months I can tell that it is a rough industry. Even after the ridiculous amount of sales through my company and a great start to the year in sales the tackle industry is harsh. I love doing it, for me it's not really about the money, it is more about the relationships and people you meet along the way. I work a full time job and run my business officially as an LLC putting in almost 80 hours a week. I just look at my company as my "possible" retirement fund Quote Link to comment Share on other sites More sharing options...
Fishhead15 Posted February 4, 2015 Report Share Posted February 4, 2015 wow, salty just asked a question, didn't mean to strike a nerve. only wanted clarification on a statement you originally made. I haven't messaged you for tax advice, so I am not sure who that is directed at. I will do my own research, just thought I would get help from fellow builders who have been through it which is what the forums are about...my bad... I am not importing lures, that was the point of my question...and asking questions to make sure I continue to run a legitimate business. but it's all good, I will contact an accountant and see what they know Eric 1 Quote Link to comment Share on other sites More sharing options...
