Those of you that are selling rods, what type of business license do you have? LLC? I have read about the FET but I am curious about the actual businees side of it.

Sole proprietorship with liability insurance coverage. It offered exemption from state corporate taxes and separate federal taxes, simply attach a couple of schedules to my personal return. My advisors preferred this approach paired WITH the full liability coverage.

FEIN on the Federal side- FREE, file Form 720 quarterly and remit collections.
State Reseller's Certificate - FREE, file sales tax report quarterly and remit collections.
State Fictitious Name Registration to operate under an assumed name - $50 every 5 years.
City Business License to operate - $52.50 per year.

$300 per year for insurance, $62.50 per year for licenses. In addition, it probably costs about $150 per year to add the necessary paperwork to my CPA for processing with my personal return. I figure just over $500 total ... the profit on my first 2.0-2.5 builds.

Jim -



Edited 1 time(s). Last edit at 09/01/2009 09:47AM by Jim Gamble.

Couple links to get you started:

[rodbuilding.org]

[rodbuilding.org]

I have an LLC and prefer it that way. I like my business not being tied to personal finances and there being a clear line between the two - but I also make sure to maintain that line.

A lot of the costs will depend on what state you live in. Outside of my upfront cost ($300) to set up a LLC, my costs are about the same as being a sole prop.

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Like Jim - Sole proprietorship but my overall costs are less. The CPA adds the forms into my overall tax computation. He does my taxes for me (electronic filing Fed and State) for $125.00 total. I also do not have to pay City taxes or for fictitious name (since I operate as my name).

I was going to form an LLC and my accountant told me to save my money. He said that building fishing rods will not get you sued for any reason so dont spend the money. I agree. Just call the feds and get your EIN and go on with it.

Kevin Knox

Hal,
I own a couple small businesses. 1 of which is a small tackle company. Both are sole proprietorships. My tax accountant figures my taxes, similar as to what is already listed.
I live in Iowa. Here we need only a couple things. (1) We register our businesses. This is also a business lisc. from the county. This is a $6.00 1 time fee. (2) We have 2 different IA State sales Tax ID numbers. 1 for each business.
We keep track of all costs. There are about 10 catagories for the lure co that we keep track of. We keep every receipt, record it on our software, in the proper catagorie. We also keep track of all sales. In State (taxable) and out of state. We keep track of lodging, and travel expenses, supplies, materials, purchases for resale, advertising, equipment purchases, shipping costs, website hosting fees, equip. repairs, a percent of the phone/fax/internet expenses. I have an employee who takes care of this, as well as record keeping for my other business. This is something you must do. Good book keeping is very important. Not hard to do. At the end of the year, I present everything to my tax person, along with my other business's info, which is the main thing, as well as our personal taxes.
We may only have a few thousand in sales in the bait company, but we keep it seperate, and operate it just like any other business.
I have a seperate business ins, plus a seperate liability ins. One more thing, if you take people fishing, showing them your rods on the water, make sure you have liability for your boat. That is a seperate liability risk, not covered by the other liability, unless it is built that way.
$1,000,000 liability ins is not that expensive. You should have it, if you are operating a business. Maybe not that much, but that is something you and your agent can decide for you.

Since I have employees, also have a federal tax ID#. We do payroll withholding, FICA, State unemp. taxes, the whole bit. But if you do not have employees, it is a lot simpler.

I also now have EFTPS for Federal Tax deposits, as well as IA State BEN for state income tax filing. There is more reasons all the time that make it important to have a tax consultant, or CPA to help with these issues. If you want to take it to the business level, there are some guidelines you need to do first. More things you will need to add later, as you grow, as your accounting/ state and federal tax/ obligations or employee regulations kick in, as needed.

Look in the library above, there is documentation on the FET. Get the form, or have your tax guy get them, and file as needed. Just another form, or thing to file quarterly.

A good tax guy in your local area will be able to help you get going. My tax guy, like a lot of them is also a business management consultant. This is also why he is my tax guy! He saves me money, and he does it right. Shows me how to do it right also.

If you ar anyone else wants, email me, I can send a simple excel spreadsheet to help you keep track of costs, by catagories that your tax person, or CPA will like. Just email me.

Good luck!

Kyle Robinson



Edited 2 time(s). Last edit at 09/01/2009 07:17PM by Kyle Robinson.

kevin knox Wrote:
-------------------------------------------------------
> I was going to form an LLC and my accountant told
> me to save my money. He said that building
> fishing rods will not get you sued for any reason
> so dont spend the money. I agree. Just call the
> feds and get your EIN and go on with it.
>
> Kevin Knox


all it takes is one yahoo impaling himself on a broken rod... it will be your fault the rod broke, which made it sharp and was able to impale him.

Regardless - it's going to cost you money if you fight it and win or settle. What happens if his lawyer is crafty and proves you damaged the blank constructing the rod?

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Alex is correct. A LLC is for other reasons than liability insurance. Part of the liability in a LLC is financial exposure. It seperates personal holdings from the corporate holdings.
Nothing to do with insurance liability. Anyone can sue anyone. Nothing to do with a corporation. The officers can be sued. Especially if you are the operator. Do not get these things confused.
I own sole proprietorships for other tax reasons.
You should start with a local business liscense, and a state tax permit. You can worry about the fedwral stuff at tax time. Talk to a tax person. Someone who does business accounting if possible.
But it is your decision. FYI. Maybe a Tax Guy could jump in...or a business consultant. I only can speak for what has worked for me over the years. Everything does it different.
Kyle Robinson

A good free resource is your local SCORE group. This is a group of retired business professionals who are there to give advice and suggestions for small businesses. It's always a place to start. They helped me get my initial business plan drafted, financing options, etc together and gave me good advice for where to go for what. Plus it was nice to be able to have someone to just sit and talk ideas with in person.

You can usually set up a meeting with them through your local chamber of commerce.
[www.score.org]

Kyle - you hit the nail on the head as to why I went LLC. Granted I started my LLC in shooting related products, so may have been more liablility, but it was a small business too and I wanted to protect my wife from the financial liability since what is mine is also hers.

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Its wasted money.

Thanks for the info. guys!

I set myself up as a sole propriotorship, as I am a very small shop with no employees. I also live outside of city limits and have no local taxes levied upon me. The laws are different in every state, and I reccomend contacting your state's department of commerce. MN provides a very complete gude that covers all businesses and how they should be set up. The book is the size of a phone book for a bigger city, but it is indexed and reasonably easy to understand. I understand that most states do publish a guide to starting a business at little or no cost.

Never take legal advice from a cpa, and never take finacial advice from a lawyer. If you are worried about your states liability laws, ask your insurance agent and follow up with an attorney. If you have questons about your buinesses ownership title, contact your cpa.