How do I start my rod building business from home? It seems to make sense for tax purposes and the markup on the parts that I buy at the store are very high. I dont make much on building the rods.

Talk to a lawyer and a GOOD accountant who understands excise tax, etc.

Determine what corporate structure you want (LLC, INC, Sole Proprietor).

Do the paperwork as appropriate (Tax ID, Business licenses, etc) and open a business bank account.

I recommend buying QuickBooks for keeping track of money, invoicing, sales receipts, inventory, etc.

Get some business cards, start drumming up business and get going.

This is the simple version, but it's a start. I know more folks will add to the details.

Alex Dziengielewski Wrote:
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> Talk to a lawyer and a GOOD accountant who
> understands excise tax, etc.
>
> Determine what corporate structure you want (LLC,
> INC, Sole Proprietor).
>
> Do the paperwork as appropriate (Tax ID, Business
> licenses, etc) and open a business bank account.
>
> I recommend buying QuickBooks for keeping track of
> money, invoicing, sales receipts, inventory, etc.
>
> Get some business cards, start drumming up


What would be the estimated cost to have all the proper documentation? tax id, business lic ect..Do you guys that have a business at home keep a small in ventory of parts of buy once you have a rod to make?
business and get going.



Edited 1 time(s). Last edit at 06/13/2008 11:00AM by Al Sanders.

It really depends on where you are and what type of structure. I have a LLC (set up before I was building rods, now just use it for my rod business) and those fees were about $300, but it varies by state. A sole proprietorship is much cheaper usually. Just look at the pros and cons of each. QuickBooks can be found online for varying prices. Shop around for the best price. Business cards you can order for $15 for 250 or more. I get mine through VistaPrint and they have a promotion going right now for free cards.

I don't keep a lot in stock (mainly a space issue for me) and my customers know up front that it takes about a week to get things in before I can start. I'm small, only building a couple rods a month right now though. I do keep guides, handles, etc in stock of the ones I use most. I should have room by the end of the summer to expand, so I will start building more inventory.

Do a search on here and some of the business end has been discussed before. Guys had some really good information.

How much are blanks usueally marked up? Is it worth it to get the discounts on blanks?

Al Sanders Wrote:
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> How much are blanks usueally marked up?

a lot

blank mark up depends on where you buy them. Same with guides, cork, etc.

Alex Dziengielewski Wrote:
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> blank mark up depends on where you buy them. Same
> with guides, cork, etc.



Of course, But is it 10-20% or more like 40-50%? The average

25-35% is the traditional difference between retail and wholesale. HOWEVER, if you are thinking of starting a business as a way to save money ... that is a VERY poor plan IMO.

There is quite a bit involved in being legit - it isn't cheap and it isn't necessarily easy.

You asked about inventory and general expenses. I spent about $1,000 on legal, accounting, licenses and insurance to start - annually it is now about $700-800. My general inventory is almost always over $10,000 and I only build inshore spinning rods. Equipment costs $$$ as well. Just this year I have spent over $1,000 on new/replacement items. In addition, I expensed another $750 to travel to High Point for the ICRBE.

I gotta weigh in here.

If you are going to build rods full time for a living, then you would have a larger initial start-up cost. I build rods part-time and my annual costs are no where near $800-and I'm 100% compliant. As far as insurance, what would you insure? Inventory maybe. But your home insurrance would cover most of the inventory.

But if you build rods part time and occasionally and you have $10,000 in inventory, then your inventory tax will weigh in on the profits.

Also, you can do all the book keeping you will ever need in either Quicken or similar programs. Or even better yet, Microsoft Excel. You can make forms, and all the needed/required in this program or even MS Word.

I don't mean any disrespect for Jim's opnion, and I respect it greatly. But like I said, if you are only building a 10-50 rods a year, you can do soooooooooooo much on your own and eliminate so much initial cost.

Paul

I wasnt looking to make a living just some extra cash. But buying wholesale kills my profits. Im already just doing it for friends, I dont always charge top dollar. I may build about 25-50 rods a year.

I haven't started a rod business but I have had other small home based businesses. In Maryland as a Sole Proprietor, all you need is a business license (usually a peddlers lic) which is less than $50/year and an EIN #( tax number) which is usually your Social Security #. You can do the accounting yourself or use Quickbooks if you want. I found it was quicker and easier without quick books because I would put my receipts in 1 place and keep records of my sales in another. Just needed the books at tax time. You will also need business cards that you can print on your own inkjet of have them made. It's also better if you have a seperate checking account. Also make sure you are zoned for what you are doing. I've started a business for less than $100 plus inventory.

If you're already selling rods, whether it be 1 or 50, you're already operating a business and are already liable for Rederal excise and State sales tax, both of which are retroactive to the date of the first rod sold, plus interest and penalties.

I have no idea if you've been paying these taxes or not, this is just a reminder in case you haven't been.

...............

Paul, you are right on. I do rodbuilding part time, generally only on the weekends, and every now and then a night when I am not out of town. I generally sell about 60-70 rods a year, and have for the past few years.
I too am 100% legit, and have paid very little in expenses. I did my own website, so easy these days with the content management systems many companies have. I made my own business cards, flyers, invoices, fax forms, etc, in Word or Publisher, and print them myself.
It costs me $75 a year for a business license for the little city I live in. I do all my own taxes, and the rodbuilding adds no real complexity at all to it.
And, I do my accounting on some custom made spreadsheets in Excel. I would have to get much bigger to outgrow this. I guess the point is that, if you want to do a lot of the grunt work yourself, you can.

Similar Here,
I just recently got all of my ducks in a row. The most expensive part for my was listing my DBA announcement in the local paper for the required amount of time. Otherwise most of it was free.

Scott Sheets
www.smsrods.com