Hello everyone ! I finally got my profile printed in the February BLADE knifemaker's showcase section. This is a very exciting thing for me and my family, however something strange started happening: ORDERS!!! Somehow I wasn't expecting that to happen so soon. I know now that I will be very busy for a while. I have a question though; at what point should I seek a business #######? This was only a hobby until now, and I'm quite sure I'll not be able to quit my regular job any time soon. Any advise would be greatly appreciated. Thanks, WALKER

When? As soon as your expenditures become larger enough for you to wish to claim them as a business expense. That's probably right now.

As you will earn income from your work, you will have legitimate expenses, all of which are covered by your business--if you have a legitimate one. That's where the business ####### comes in.

All of a sudden you have a tax write-off for things that were simply fun to have and part of your hobby. From what I remember, you get no benefit whatsoever by declaring your knifemaking as a legitimate 'hobby', even though there is an area to claim such on your long 1040.

The downside will be obvious: The need for documentation and going through the required start-up paperwork and tax work at year end. It may involve an accountant. I don't do my own taxes, but spend the money on a pro to help guide me.

Coop

Coop, I did have some initial expense for equipment, materials, tools, and consumables. However that was a few years back. My current expenses are generally for materials and consumables like buffs or sand paper (materials too- but still not a major financial burden). I already pay to have our taxes done. Is there a minimum dollar amount that you would consider 'not worth the effort'? If the larger expenses I incurred in the past will apply now then it's a no-brainer. Thanks, WALKER

Walker

I have a tax number and turn in everything i sell, also it keeps you from paying taxes on supplies for your business. I kept recipts and group them catorigys. Your "materials for resale" will count as inventory. And you can depreciate your equipment and shop.

Walker

I have a tax number and turn in everything i sell, also it keeps you from paying taxes on supplies for your business. I kept recipts and group them catorigys. Your "materials for resale" will count as inventory. And you can depreciate your equipment and shop. I do this as a part-time business.

Hi Walker,

First, as far as the IRS is concerned there is no such thing as a "Part Time" business. You either have a business or you don't.

Second, never call something a hobby if you can call it a business.

Third, get a CPA. Like Coop I do my own taxes and then give them to the CPA for the once over and his signature on the tax return. Having a CPA signature on the tax return provides an additional benefit of your CPA being the first person the IRS contacts should they find a problem.

For 2005 you should declare yourself as a "Sole Proprietorship", you need not show any profit but you can take all the expenses and depreciation.

For 2006 look at becoming a Limited Liability Corporation (LLC). This is very similar to a sole proprietorship but provides additional legal protection from frivilious law suits. As well it can shelter you personal assets.

Hi Walker

A Little off subject but how did you go about getting your profile published