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Author Topic: Should I take the plunge?  (Read 2261 times)

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Offline ohsoloco

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Should I take the plunge?
« on: April 18, 2003, 02:06:41 PM »
Okay, my sawing is still just a hobby, even though I do make money on it from time to time.  I'm just wondering if I should start to operate this as a business.  How exactly should I get started doing this?  It will still be part time (at least for now)....can someone point me in the right direction?  Do's, don'ts, whatever's  :)

Offline Tom

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Re: Should I take the plunge?
« Reply #1 on: April 18, 2003, 02:47:20 PM »
Do:
start a business
keep records and receipts
get a license if your county/city/state requires (The simpler the better, sometimes a peddler's license is all you need)

You wouldn't believe the benefits from being a business. Things like insurance, clothing, some meals, trips, fuel, parts, vehicle, all can be discounted from your taxes.  It doesn't hurt to get some help from a CPA either to make sure that you stay on the right side of the tracks, especially with taxes.

Question whether you want to be in the "sales" part of the business or just the "service".  If you get involved in retail sales then there is a pile of paper work and tax reporting to be done to the state.  If you want to be in the sales part, don't do it without being legal.  

Be sure to keep good books and give receipts.

Stay away from partnerships.
Keep your business in your truck.  Claiming your home as an office can get to be tricky at sale time.
Try to keep your business "one man" and stay away from employees.
Don't let someone else tell you how to run your business.

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Offline Jason_WI

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Re: Should I take the plunge?
« Reply #2 on: April 18, 2003, 02:49:12 PM »
My middle name is CASH....... ;D

Jason
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biziedizie

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Re: Should I take the plunge?
« Reply #3 on: April 18, 2003, 05:44:03 PM »
Tom ya made it sound so easy. ;D
Ohsoloco if your gonna do it be prepared to be broke for the first few years.
 Never make a projected business plan as you will be throwing it out the window in the first 6 months.
 Work your ass off and never turn down work and always make sure that the customer is happy as I have found that they will tell five friends.
 If you think you're doing ok in the money department your not as money soon goes to all the little bills.
 Don't hire anyone as you won't be able to afford it.
 After about 3 or 4 years you might be able to take a few days off from working what seems like 24 hr days.
 
 Starting this sawmill business brings back alot of memories of when I started my construction company. All the little things that pop up in the first few months cost money and I never knew that this was going to happen but I atleast expected it to happen. ;D

    Steve

Offline ohsoloco

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Re: Should I take the plunge?
« Reply #4 on: April 18, 2003, 05:44:40 PM »
Ya, cash is good  ;D   But I thought about starting this as a business while I'm doing it part time so I'll learn a lot of the ropes in case I do ever want it to grow into something more.  Wouldn't it be easier to get loans (or grants, possibly) if I ran this as a business?  

Tom, all of the benefits of running this as a business are what confuse me.   Should I just make an appointment with a CPA to talk about some of this stuff?   I just don't know where to even start.

Offline Tom

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Re: Should I take the plunge?
« Reply #5 on: April 18, 2003, 06:18:43 PM »
That would certainly be a good option.
A night class in small business could be handy too.  Do you have a community college around that offers adult education courses?  Your Chamber of Commerce may be of help locating a course also.

I don't know what your home life is like, but a mind set like yours should make you look for a mate that has something going besides looks.  The closest thing to a partnership without actually being one is a marriage.  It's a lot better to have someone help pull the load than have to drag them behind you.  

Now, that being said, you can still do it by yourself.

Having a business isn't too difficult.  The most important thing is the record keeping.  you have to keep track of every penny and every mile, and every customer, and every job.  If you've got the paper work and the receipts, a good CPA can put it all together at the end of the year and then offer suggestions about what you should do the next year.
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Offline ohsoloco

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Re: Should I take the plunge?
« Reply #6 on: April 18, 2003, 07:26:10 PM »
Bizie, I love to work, but I need my days off  :D

I don't know if I can see this becoming full time or not.  I guess I'm just stuck in a rut right now, because a have a job that pays me a good wage, and I have excellent benefits (health, dental, vision, life, state retirement)...it's so easy and safe to stay where I'm at, and I really like the people I work with, but the actual work that I do just doesn't satisfy me.  Doing what I love part time gives me some peace of mind, but I don't get enough of it  :-/

Tom, there's a VoTech (although it's not called that any more) right up the road from me.  I don't know if they offer any business classes, but I have looked at other classes they offer.  I'd like to take one on welding, masonry, cabinetmaking (mainly to meet people that want to buy lumber  ;) ), but all of these classes are held in the evening, and I work 2:30pm-11:00pm, execpt for the summer months.  

I also want to find a mate that has everything including the looks  :D ::)    I need to find me one of those farm girls from the other valley....maybe my yooper chick will be at the bar tonight, I'm going there with some friends in a little while  ;D

Thanks for all the advice so far, I can never have enough  :)

Offline Neil_B

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Re: Should I take the plunge?
« Reply #7 on: April 18, 2003, 08:44:54 PM »
Take the plunge. Even if you don't bother to make it full time, you can still make deductions that help knock down your income from the full time job. Fill up your truck to go to a job and still be able to drive it to work during the week, claim the fuel. Although you may have to log the milage and only claim a portion of the fuel, but there's ways :o.
I think you're allowed to claim a loss as well for up to 5 years but then after that the gov wants to see some income or else!
You can also write off any other tools that you would say you use for the business as well as maintenance, parts and repairs.
All it would take is to register you're business, online, and apply for a vendors permit if you sell. If just a service, you don;'t need a permit.

By the way these are Ontario's rules but can't see it being too different over the boarder.
Timberwolf / TimberPro sawmill, Woodmizer edger, both with Kubota diesels. '92 Massey Ferguson 50H backhoe, '92 Ford F450 with 14' dump/ flatbed and of course an '88 GMC 3500 pickup.

Offline Haytrader

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Re: Should I take the plunge?
« Reply #8 on: April 18, 2003, 08:48:45 PM »
ohso,

   When I read your last post and specifically the part about the security and benefits of your present job but that it wasn't leaving you fulfilled I thought to myself.....bet he is a young guy. Checked your profile and sure enough, you're still wet behind the ears..... :D
   I, and I'll bet several others here, had some of those same feelings at the younger age. But as the years start to add up, the importance of that steady paycheck and especially the benefits, will become more important to you. Then, if you latch onto the gal from across the "holler", she will let you know that she likes a sure thing also.
  Why not do the wood thing on the side and keep the other job to finance the trial period. If things start to happen and you get a customer base and more comes in than goes out, you can decide what is best then.
   Good luck to you in whatever you do.

P.S.  They say the harder you work the more luck you will have. I beleive that to be true.   ;)
Haytrader

Offline Tom

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Re: Should I take the plunge?
« Reply #9 on: April 18, 2003, 08:50:04 PM »
If you're a sole proprietership in Florida, you don't even have to register your company.  The county just uses your name and asks what you want to call the company.  It's really your name that is the name of the company.
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Offline ohsoloco

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Re: Should I take the plunge?
« Reply #10 on: April 19, 2003, 11:38:23 AM »
Haytrader, you're right, it's nice to have this job as my security blanket  ;)  especially with the way things are around here.  My father is retired from Cerro metal, a local brass plant that used to employ at least 500-600 employees...now they're down to not much over 100, and losing contracts b/c they can't make descent brass anymore.  Another local producer to tv picture tubes is laying off employees on Monday, and the remaining (there's about 1000 there now) will be out of a job when the plant closes this summer  :'(    Years ago, getting into a place like these meant job security.

Some more things that I'm worried about:
If I operate as a business, I don't think I will be able to mill where I'm at.  Before I bought my mill I asked the local zoning officer if I could operate a sawmill where I'm at...he said sure as long as it isn't a business, since I'm in a residential area.  So far, I've taken many trailer loads (my 16 footer) of cants and lumber out of here with no problems.   Commercial land is outa sight around here....but then again I think a sawmill is considered agriculture around here (no sure though)....but again, farms are outa sight as well.  


Offline Mark M

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Re: Should I take the plunge?
« Reply #11 on: April 19, 2003, 12:05:47 PM »
Hi Ohso,

You may be OK as long as you don't advertise the fact that it is a business. Even if it is strictly a hobby you can still deduct expenses from any amount you make (don't forget to deprecate your mill - etc.), you just can't show a loss. If you show a loss then you must somehow be able to demonstrate that your intention is to make money, that is - you are doing it as a business. An easy way to do this to show a profit (after your business deductions). It used to be that you had to show a profit after 3 years of operation (I am not sure on this so don't hold me to it).

I am doing something similar to what you want to do. I am starting out slowly and trying to build up my custom sawing/woodworking business. My intention is to make money therefore I am treating it as a business and have registered with the state. Hopefully I can quite my day job someday and do this instead. I have about 15 years until I retire so by then maybe I will know something and have a few people who need logs sawed.

Good luck

Mark

Offline ohsoloco

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Re: Should I take the plunge?
« Reply #12 on: April 19, 2003, 12:15:49 PM »
Let's see, I have about 27 years until I retire, so I have some time to line up a few customers  ;D

Haytrader, shortly after I started at this job I remember complaining to my father that I hated the fact that I knew exactly what I would be doing every day at work.  He just looked at me and said he knew what he'd be doing every day at work for over 30 years.

Offline OneWithWood

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Re: Should I take the plunge?
« Reply #13 on: April 21, 2003, 08:56:36 AM »
Like Mark and others on this list I intend to operate my business part-time and grow it slowly until I either retire or the biz can take care of me.  The three year rule for showing a profit is simply that showing a profit in any three of five years prevents the IRS from labeling the business as a hobby.  The tax laws for hobby income are far less advantageous for the taxpayer than operating as a business.  As long as you can prove intent to make a profit you may operate as a business and claim the deductions.  I believe strongly in creating a business plan and following it as much as possible.  I have a tree farm I operate as a business, in addition to my main job, and the mill operation is a direct outgrowth for adding value to the product.  I purchased my mill and kiln in November of 2002 to take advantage of the depreciation rules in place at the time.  I have yet to mill a log other than at the WM plant when I trained on my mill.  My plan calls for building a sawbarn complete with kiln.  I am going to saw the lumber for the barn with the mill.  I have not let too many folks know I have the mill because I do not want to turn away business but I will until I feel I am set up and ready.  I have talked with a number of sawyers who told me to build my building first and lay it out the way I want it before I start sawing for others if I do not need the income immediately.  They said they started sawing right away and still have not got the set up they want or need.  Of course there is the risk that anyone I turn away now will be lost to me forever.
The plans for the sawbarn are complete, the site is staked, I have contacted a concrete contractor to start the foundation.  I still have some cleanup to do from the harvest that financed this venture and I will do that and perhaps saw some timbers for stream crossings until the foundation is finished.,  Once the foundation is done I will commence with building the building.  I hope to be sawing for profit by this fall.
Ohso, check with the zoning board, you may be able to get a variance to operate a small business from your property.  One other thing-there are a number of inexpensive computer programs available for tracking income and expenses.  Pick one up and begin entering your expenses associated with establishing the business.  The start up costs may be amortized once the business is officially created.
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Offline Tim

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Re: Should I take the plunge?
« Reply #14 on: April 21, 2003, 08:09:00 PM »
it was 12 years ago when I couldn't stand the thought of spending 45 years busting my hump for someone else. While the road has been heady times, I still don't like the idea of spending 33 years busting my hump for someone else. I don't regret making the choice of taking the plunge.

Wise words from the folks that state keep it part time for the first while. Another thing, treat your customers as you want to be treated and they will come back BUT!!! know when to draw the line with a pushy one, odds are you don't want to deal with his friends either. Not too many irons in the fire either, that's burned my ass once or twice in the past.

Best of luck ohsoloco, remember there is wisdom in the baby steps.
Eastern White Cedar Shingles


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