# Business licensing questions.



## GeorgeS (Dec 31, 2015)

So I have started to sell some of my things through an antique shop and I think I would like to get a license to make things legitimate. I would also like to hit some craft shows throughout the year as well. I know that there are some benifits to obtaining a license in the way of no tax buying, write offs etc.. I'm interested in what type of license you guys have aquired and which type might benifits me the best. This is not a full time thing for me right now but I would love for it to be some day, so I would rather do what's best for the long run in hopes that it works out that way.

Just some facts:
-Shop is in my garage, 20'x20'. Not using the space for anything else.
-Tools are already purchased, only shop supplies and wood being purchased at this point for the most part. Still could use a few nice lathe tools .
-Did I mention still buying wood?


Thanks in advance for any input you guys may have.

Reactions: Like 1


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## robert flynt (Dec 31, 2015)

Check with your tax collector. In some states you loose your homestead exemption if you operate a buss. out of your home.

Reactions: Agree 1


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## GeorgeS (Dec 31, 2015)

robert flynt said:


> Check with your tax collector. In some states you loose your homestead exemption if you operate a buss. out of your home.



@robert flynt , are you suggesting to meet with a tax accountant? That's on my list of to do's.


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## robert flynt (Dec 31, 2015)

GeorgeS said:


> @robert flynt , are you suggesting to meet with a tax accountant? That's on my list of to do's.


No, call the tax collectors office for your county and ask if it will affect the property tax you pay every year. In MS. if you operate a business from your home, you loose what is called homestead exemption, causing a big increase in your property tax.

Reactions: Informative 2


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## DKMD (Dec 31, 2015)

The home business scenario may also have implications on your homeowners insurance and carries some potential liability for your estate unless you establish it as a corporation with its own insurance. @MikeMD just went through this process, so he may have some pearls.

Reactions: Thank You! 1 | Agree 1


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## robert flynt (Dec 31, 2015)

DKMD said:


> The home business scenario may also have implications on your homeowners insurance and carries some potential liability for your estate unless you establish it as a corporation with its own insurance. @MikeMD just went through this process, so he may have some pearls.


Insurance might not cover an accident in your shop or your home if there is a fire if they find out after the fact your operating a buss. there.

Reactions: Thank You! 1 | Agree 3


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## GeorgeS (Dec 31, 2015)

So for you guys that are small business pen, bowl turners, knife makers etc... How are you doing it? How are you set up?


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## Schroedc (Dec 31, 2015)

It does vary from state to state, in Minnesota as a hobbyist you can just get a tax number personally and submit sales tax annually. If you want to do business under a business name you need to register the business as an LLC or a sole proprietor. I'd check with your state department of commerce or Secretary of state for your state requirements. Most all of it should be online. Also, if you are near a larger city check for a small business mentor program, might be able to find through chamber of commerce or your state employment offices.

Reactions: Agree 2 | Informative 1


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## GeorgeS (Dec 31, 2015)

@Schroedc Thank you sir!


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## Mike1950 (Jan 1, 2016)

You have to look and seen what your volume will be and profit. The IRS wants their money but on the flip side frowns on "hobby" business that creates a loss for more then a couple years. I think you run into insurance problems because the insurance company wants their share so you could get business insurance on you shop. Be ready for sticker shock on this one.....

Reactions: Agree 3 | Informative 1


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## barry richardson (Jan 1, 2016)

Schroedc said:


> It does vary from state to state, in Minnesota as a hobbyist you can just get a tax number personally and submit sales tax annually. If you want to do business under a business name you need to register the business as an LLC or a sole proprietor. I'd check with your state department of commerce or Secretary of state for your state requirements. Most all of it should be online. Also, if you are near a larger city check for a small business mentor program, might be able to find through chamber of commerce or your state employment offices.


Sounds like AZ is pretty much the same, you just need a tax ID number so they can collect taxes from you. But here you have to report monthly, whether you sold anything or not.... pain in the butt...

Reactions: Agree 1


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## GeorgeS (Jan 1, 2016)

Thanks guys, looks like a business license, tax ID and some research are in order for insurance etc... I don't think we are talking a ton of money flowing through the door so I think the hobbiest vs LLC is what I really need to look at.


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## Mike Mills (Jan 1, 2016)

You may be able to form a simple DBA with your county. I would talk with some similar local folks to find out what they do as well as an accountant. Sounds like you will not have capital expenditures to justify an LLC or some other business forms. I have an LLC because it was fairly investment intensive vs my son who has a DBA for photography.

Your local and state rules may be more important than federal guidelines.

Reactions: Informative 1


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## Kevin (Jan 1, 2016)

In Texas they totally screw you on the personal property taxes for your tools if you run a business out of your home. But there are tools available to legally minimize and even avoid them altogether. You need to make enough to justify it though. 

Remember tax evasion will get you in the pokey but tax avoidance is 100% lawful.

Reactions: Like 2 | Agree 1


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## Schroedc (Jan 1, 2016)

On the insurance side- I have a policy for my business that covers my building and liability for the business since I bought commercial property instead of just working out of my garage, for a hobbyist doing a few shows and selling things here and there there are other affordable options.

Check with your homeowners agent, they might have a rider that works for you (Also depending on your homeowners limits you might want a rider for tools and materials) There are also companies out there that provide product liability policies with differing degrees of coverage (Some are liability only, some also cover your inventory while at shows in case you get flattened by a storm, etc.) Here is one example a few artists I know have used-

https://www.actinsurance.com/

Big thing is to check that the policy does cover what you want it to cover.

Another thing to think about, depending on your local laws, you may need a home based business variance from your city council if you have any significant sales taking place at your home unless your home is in a dual zoned area. A lot of that depends on your local laws and whether or not your neighbors are potentially a problem....

Reactions: Agree 2


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## Nature Man (Jan 1, 2016)

Might check with members from your local woodworking club, if there is one near you. Chuck


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## barry richardson (Jan 1, 2016)

If you find any cheap insurance deal for hobbyist, please let us know. From what I have found, you can get insurance on a daily basis for shows, but it's not cheap. For a small woodworking business, (me being the only employee) I have to pay $1300 a year, and that's the cheapest I could find. I have to get it cause I work on the Air Force base as a contractor, a big waste of money in my opinion...


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## GeorgeS (Jan 1, 2016)

Thanks everyone for your input. I'll do some more research and get back to you on what I end up doing.

Reactions: Like 2


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## GeorgeS (Jan 3, 2016)

@erik s Thanks for all the great info! I will certainly look into those ideas for sure.

Reactions: Like 1


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