Patch Posted February 26, 2007 Report Share Posted February 26, 2007 Hi, I'm just not sure how to register my quilt-making busines, as I don't just want to quilt others' tops, but I want to create my own and sell them too. I have a name, which you all helped me choose. But now it's still not clear whether I should go ahead and register, or just make quilty things and sell them until I have enough money to buy a LA so I can make them very fast, OR - go ahead and register as a Sole Proprietorship, which everybody says is the easiest, OR register as an LLC which everybody says is the safest way. Thoughts and your experiences? Would appreciate input greatly. Link to comment Share on other sites More sharing options...
TishMarshall Posted February 26, 2007 Report Share Posted February 26, 2007 Have you checked into the cost of an LLC, it's pretty expensive to start this way if your not bringing in much $$. Register your name first and then you can always change later. Best of luck Tish Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 26, 2007 Report Share Posted February 26, 2007 Hi, Patty (Patch) This is what I did: I took a class on starting a small business through my local Small Business Development Center. Almost every city or town has one of these organizations. It was a 1-day class for about $45. Lots of great info - I learned a bunch! I recommend it -- well worth the time and $$ spent to attend. After that class, I made a colsultation appointment and met with a local CPA to discuss my business ideas. I already did my homework by taking that class, reading up on how start a small business, and I brought in a draft business plan with me for the CPA to review. The consultation was free, and again, I learned a lot talking with the CPA, too. I have found a bunch of stuff by Googling the words "starting a small business" - lots of links and information is out there. Check it out. I love the Internet's wealth of information. Check out the IRS web site - tons of info located there on starting a small business; also check the state of Oregon's web site, too. Bottom line is: If you're just starting out to see if this is a viable business for you, you don't need to go all out and get a business license right away -- but you must separate, identify and claim all business income on your personal taxes. If your "potential business venture" starts turning into something bigger, it is to your benefit to file the paperwork as a small business and start writing business expenses off on your taxes, but you need to file your business entity as either a sole proprietor, LLC, S corp or C corp. There is no "perfect" business entity; each has advantages and disadvantages -- it all depends on your unique business situation. I decided to start out as a business so I can depreciate my longarm machine and write off expenses. For the first two years (2007-2008) I do not expect to have any profit -- mainly expenses. My plan is to start business out real slow, make my little "Alaska-theme" styled quilts for tourists, and do a lot of PPP on the longarm, taking classes in the Lower 48 states, followed by doing more PPP so I can get really good on my longarm skills before I start taking in customer bed quilts. I want to create a reputation as a good quilter that does quality work before I take that step to quilt for customers. That's my plan, anyway. I'm in no hurry to make the big bucks as I have a full time job; this quilting biz is part time for me. I opened up a separate bank account, checks and got a credit card strictly for business purchases. The tricky thing with this whole quilting business thing is to show an honest business intent because if I show a loss over a span of a few years, I might get audited and if I don't have all my duckies in a row, I could get penalized by the "hobby loss" tax---don't wanna go there! That would be a drag. For me, I am starting out as a sole proprietor and in a couple of years, if business gets bigger/busier, I will file as an S-Corp. My CPA recommended that route, rather than an LLC. Every CPA has their own opinion on this. If you have a federal tax ID or business license, you can purchase supplies at the wholesale price, rather than retail. The CPA can explain this to you. One benefit to being officially in business is you can write off your expenses and you get a tax break. If you choose not to go that route right now, that's OK but you need to claim the income on your personal tax return as you normally would in any situation. My plan is to some time in the next 10 years or so, when I retire from my "real" job, perhaps my quilting business will be established enough that I can jump right in head first and do it full time...hit the ground running, so to speak. Hope this helps answer your questions. (I'm still learning!) Link to comment Share on other sites More sharing options...
BarbWetzel Posted February 27, 2007 Report Share Posted February 27, 2007 Hey Shana... A good friend of mine and I are heading your way on a Cruise in July. It is a Quilting Cruise, with a lot of fun on board. WE will be cruising to Alaska and stopping in on a few stops...Can't wait to see the quilt shops in that area. I don't think we will be going as far as the North Pole... but we will be in Alaska.... Can't wait... Barb Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 27, 2007 Report Share Posted February 27, 2007 Hi, Barb! Wonderful news. I am sure you will enjoy your quilting cruise. I've never been on a cruise before...maybe some day... I'm sure your cruise ship won't make it up to North Pole as we are smack dab right in the middle of the state and heck..we're about 350 miles away from the ocean, so we don't see any cruise ships docking up near my neck of the woods! LOL!! But, there are quilt shops you can enjoy along the way while you are docked. Quilting is big in Alaska and we have some lovely shops. In fact, we just had our first "annual quilt shop hop" where each of the 13 shops that participated (we have more than 13) these shops each created a packet of fabric and a different star pattern to make the individual quilt block. Because the quilt shops are spread all over this huge state, it's impossible to physically go to each one, so we had to order via phone and mail delivery. All of the fabrics from each shop were in blues and yellows (colors our state flag) and most of them were batik - just beautiful! I finished my quilt top and I put gold sashing in between each block to separate each star. I turned out very pretty (if I do say so myself....) but I haven't gotten it quilted, yet. The shop hop was a huge success -- they were running out of fabric and couldn't keep up with the orders. LOL!! I'm sure they'll do it again this year. OK, I've rambled on and on again (sorry). Enjoy a nice day! Link to comment Share on other sites More sharing options...
Mary Beth Posted February 27, 2007 Report Share Posted February 27, 2007 I work for the University of Missouri Extension office where the Small Business Development is for our area. There is a wealth of information there. You can also look up your state on the internet to find out the rules and regulations. For the state of Missouri, I think if you are in business of any kind, you must be registered.There are also city regulations, you might want to check with your city to see if you need a license to operate a business in your home. Hope that helps. Link to comment Share on other sites More sharing options...
Patch Posted February 27, 2007 Author Report Share Posted February 27, 2007 In Oregon, when I register my business name it asks for what kind, that's why I'm still hesitating to register the name. It looks like it's no more expensive to register an LLC than it is to be a Sole Proprietor. My DH is sure if I register as SP I will be sued by somebody and we'll lose our home, and a man on this website (can't remember who, sorry!) also recommended that route for the same reason. Maybe it's just a guy thing, but maybe not. Shana, thank you SO MUCH for all that information. I will look again and see if there isn't some class given here in Tualatin. If not, I will find it elsewhere around here. Thanks, Mary Beth. Oregon does have everything online, it seems, but it's kind of confusing to such a newbie as me. Never wanted to make a business before, so never paid any attention to the information floating around, ya know. Silly me.... :mad: Link to comment Share on other sites More sharing options...
Patsydee Posted February 27, 2007 Report Share Posted February 27, 2007 Last week I attended an 8-hour workshop hosted by S.C.O.R.E. and the Small Business Admin. It was so informative and I brought home a wealth of info. Reps from Insurance, a CPA, a Lawyer and the SBA and NY State tax people were there to help. (Insurance fellow said there is a rider for about $50 that can be added to your homeowner's policy for "conducting occasional business at home.) LLC can be quite expensive in the beginning, especially if you aren't making any money. Talk, talk , talk and ask questions. There is so much help here in this forum. Link to comment Share on other sites More sharing options...
mrsbishwit Posted February 27, 2007 Report Share Posted February 27, 2007 LLC is good if you have multiple investors, this way if you get sued no investors would loose any personal assests, every investor would be able to file the business on their own taxes etc... (did this route for several years in a different business venture non-quilt related). However when we started my quilt business we asked our CPA if it would be a good route to take and he advised us that a sole porprietorship was better for the following reasons. 1)no other investors were involved 2)easier to do taxes 3)and you don't have to justify all withdrawls out of your business account as business related as the profits aren't controled by multiple parties/investors. 4)also is easier to dissolve the business if you want to. You should contact a local CPA and discuss your options if you are serious about starting your own business that way nothing will come back to bite you later Joann Kabat Link to comment Share on other sites More sharing options...
juliagraves Posted February 27, 2007 Report Share Posted February 27, 2007 You can have a single member LLC and the IRS will treat you as a sole propriertorship for tax purposes - you fill out the Schedule C just like a sole propriertorship. The main reason to do LLC is to manage your risk. I went that way because I have income from another job and assets etc that I didn't want at risk. If you have anyone come to your house you really need liability insurance. My home owners policy didn't do it. I paid about $300/year for mine from another insurance agent. You'll need this regardless of how you form your business. Your other option is to always meet elsewhere - local QS, quilt meeting, etc. Your business miles are deductible. As far as the advice about SP not having to justify withdrawals - no matter what your business form, the IRS will want to see separation of business and personnel finances. You should have a separate checking account and charge card for your business and clearly identify deposits and withdrawals that transfer money between you and your business. There are many advantages to having a business because you can deduct a lot of expenses that you probably would have incurred anyway. The IRS wants to see you make a profit 3 out of 5 years, but this is not absolutely required, as long as you are trying to make a profit (have business cards, marketing your services, etc). They will not let you deduct a hobby. email me at juliagraves@verizon.net or call me at 301 476-8186 if you want more details. Julia Link to comment Share on other sites More sharing options...
Patch Posted February 28, 2007 Author Report Share Posted February 28, 2007 Thanks everybody. This is SO helpful. Julia, great website! What my husband is worried about is if somebody somewhere for some unknown reason should want to sue me, would we lose the house and all? I guess I'd better see a CPA, as you all suggest. I just hate spending top dollar for half hour of talk when people rarely pay me to do hours of what it took me a lifetime to learn expertly. But the fact is, if I want people to pay for my service I have to be willing to pay for theirs, right? So off I go to look for an affordable expert. Link to comment Share on other sites More sharing options...
fabric007 Posted February 28, 2007 Report Share Posted February 28, 2007 For sure you need a tax i.d. you know the state wants their sales tax..I have done this in my home for many years now...I do have extra insurance in case someone falls or something like that. Link to comment Share on other sites More sharing options...
QuiltFaerie Posted February 28, 2007 Report Share Posted February 28, 2007 Shana, you sure are doing your homework. I am so impressed with what you have done and you haven't even ordered a machine yet. I should have had so much foresight and preparation. I just did the jump in and swim thing. Haven't figured out if I am drowning or not. Thanks so much for the helpful information. How is that poor foot? Gail Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 28, 2007 Report Share Posted February 28, 2007 Hi, Gail. Thanks for asking about the foot... just last week I was able to ditch the crutches and I'm walking again. YIPEEE! I go to physical therapy twice a week, and I'm in a regular shoe. I am limping, and have pain, and the foot is slightly swollen, but I am getting a little bit better every day. Regarding this whole quilting business thingy: I had absolutely no clue about how to do this until a few months ago when I started doing more Internet research on starting a small business, what was needed. I read a couple of books, took a class, met with professionals, asked a gazillion questions. It actually has been a very interesting (and exciting) experience for me. I'm still learning--every day something new! Oh and I put a down payment on my Millennium last fall (before I broke my foot), but since the accident, I've put the shipment on hold until I recover from my injury and my quilting studio remodel is complete. Now that I'm up and walking about, hubby and I hope to get the remodel done within a couple of months so I can get that longarm up here ASAP!! Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 28, 2007 Report Share Posted February 28, 2007 Originally posted by Patch Thanks everybody. This is SO helpful. Julia, great website! What my husband is worried about is if somebody somewhere for some unknown reason should want to sue me, would we lose the house and all? I guess I'd better see a CPA, as you all suggest. I just hate spending top dollar for half hour of talk when people rarely pay me to do hours of what it took me a lifetime to learn expertly. But the fact is, if I want people to pay for my service I have to be willing to pay for theirs, right? So off I go to look for an affordable expert. Patty (Patch) Normally, initial consultation meetings with a CPA are no charge. I did not have to pay anything when I met with the CPA. However, if you are concerned about the money part, you can contact your local non-profit SBDC office and they can assist you with free consultation and information. Just know that people (professionals) are out there to help you and want to help you. Regarding LLCs and the possibilty of getting sued and losing everything, I think you might be putting the cart way before the horse and getting spun up unnecessarily about law suits. Take a deep breath. You just need to ask for advice before making assumptions like that before you lay out all of the risks. Call your SBDC office and they will help you with free of charge advice or will point you in the right direction for help you want or need. Just take it slow and easy; there's no rush here. Gather info from many sources and take your time to make a completely informed decision. Starting up a small business is expensive. It takes money to make money; it takes guts and a "risk-taking-Entrepreneur spirit" to start something like a new business. It's very scary and very exciting at the same time. Good luck, Patty! Link to comment Share on other sites More sharing options...
Patch Posted March 1, 2007 Author Report Share Posted March 1, 2007 Thanks everybody. I sent out a request to my church choir for anybody with information leading to a reliable CPA, and they came back with two (2) hubbies in the biz, so I've put in a call to one and will get some answers soon. I will certainly look up the local SBDC. Thanks for the cheers, Shana, and I hope that foot is totally better soon and you sewing up a blizzard in the North Pole real soon. Just keep it up there, I've had enough winter down here by now, thanks, LOL! Link to comment Share on other sites More sharing options...
quiltmonkey Posted March 1, 2007 Report Share Posted March 1, 2007 Patty, Hey...LOL!! No blizzards going on up here in North Pole (believe it or not!) Where I live we barely get a breeze or wind whatsoever (very rare we get winds)...it's just cold and clear and bright and sunny! :cool: :cool: :cool: Over the past few weeks we have experienced nothing but bright blue sunny skies (no clouds) but very very cold temperatures (no wind). The majestic Alaska Range mountains are all sticking out. It's been just gorgeous! I am so ready for spring time, though! Best wishes to you with your visit with the CPA from church. You will gain a lot of insight. I am still learning! It's fun, I think. Have fun! Link to comment Share on other sites More sharing options...
Bekah Posted March 2, 2007 Report Share Posted March 2, 2007 Shana, so glad you are on the road to full recovery. You are always such a breath of fresh air here on this forum. Can hardly wait until you get your Millie and start to produce those fantastic quilts that are stored in your head. Patty, have you talked to Beth about all of this? Iknow she would be a wealth of information Link to comment Share on other sites More sharing options...
quiltmonkey Posted March 2, 2007 Report Share Posted March 2, 2007 Bekah, you are so sweet. I just love you!! I have to admit to all of you here on this chat board that if it weren't for you all here on this chat, I think I would have gone completely nuts (I'm not kidding - I am very serious!) Throughout the many months recovering from my broken foot, especially because it was during these dark, cold winter months, I really do think I would have gone crazy if it weren't for you all. You all really helped me through this -- more than you will ever know! I've had some really lonely, low times these past months, but you all here on this chat have been my saving grace. I have struggled sometimes and had my moments trying very hard to keep my spirits up. It's been the hardest thing I've ever gone through in my life!! I am grateful to my family, husband and coworkers, and especially YOU!! Thanks again for being here for me. My sincerest heartfelt grattitude and much love to all of you. (((hugs))) Shana Link to comment Share on other sites More sharing options...
Patch Posted March 3, 2007 Author Report Share Posted March 3, 2007 Shana, we're here for you. I very much hear you on the going nuts in winter thing. I, too, have had my very, very, VERY low times, and this is one of the saving graces for me too. Blessings to you, and if you have to, come on down to rainy Portland and I'll put you up for as long as you like. What fun!! (If you can stand me for a while, LOL!) Bekah, Beth seems to be out of town or something. I can't remember if she told me she was going somewhere when I saw her, but somewhere echoing in my brain it seems she did. I hope she gets back soon, I miss her! Link to comment Share on other sites More sharing options...
catsigler Posted March 3, 2007 Report Share Posted March 3, 2007 Boy, Shana, I can relate. We lived in Minnesota for four years and by the fourth winter, I had nearly lost my mind. I am not a fan of cold, dark winter days. I need LIGHT! In Minnesota I got to know the meaning of cabin fever firsthand, and I didn't even have a broken foot! But you have survived, and that is a testament to your strength of character. Aren't you glad? You have soooo much to look forward to with quilting. Minnesota is where I began quilting and it probably saved my life. Alaska winters may be worse, but you have survived. What are you making now? And when do you get your Millennium? Link to comment Share on other sites More sharing options...
quiltmonkey Posted March 3, 2007 Report Share Posted March 3, 2007 Thanks, Cathey & Patch. I have two sisters that live in the Portland area and I try to get down there every year or so. I just visited this past October. My projects I am currently working on: This coming weekend, our guild is having their annual Spring Fling retreat and I have cut all of my fabrics in preparation. I'm also making some blocks to donate to our guild's quilt auction for the local library (we do it each year). I look forward to seeing my "guild family" again as it has been months since I've been down their way to visit and sew. They are the warmest most wonderful group of women, and I miss them very much. If all goes well, I hope to get the quilting studio remodel finished and the longarm up here in a couple of months (May/June) at the very latest. Enjoy a wonderful weekend, everyone!! Link to comment Share on other sites More sharing options...
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