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The Business of Knife Making A forum dedicated to all aspects of running, managing and legal operational issues relating to the custom knife making and custom knife selling industry.

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  #1  
Old 12-16-2005, 11:37 PM
walker walker is offline
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Join Date: Nov 2002
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Biz #######

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
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Old 12-17-2005, 02:58 AM
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SharpByCoop SharpByCoop is offline
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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


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  #3  
Old 12-17-2005, 12:05 PM
walker walker is offline
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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
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Old 12-19-2005, 07:50 PM
R. D. Finch R. D. Finch is offline
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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.


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Old 12-19-2005, 07:52 PM
R. D. Finch R. D. Finch is offline
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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.


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Old 01-07-2006, 01:00 PM
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Les Robertson Les Robertson is offline
 
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Get a CPA

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.


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  #7  
Old 01-09-2006, 01:04 AM
bcpayne bcpayne is offline
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Hi Walker

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