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The Newbies Arena Are you new to knife making? Here is all the help you will need.

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  #1  
Old 12-15-2012, 01:32 PM
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Anthony Chaney Anthony Chaney is offline
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Business Questions

I realize there is a dedicated forum for business, but there doesn't appear to be much traffic. Can I ask my questions here?


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Old 12-15-2012, 02:17 PM
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Any question, any time ......


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Old 12-15-2012, 03:46 PM
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Anthony Chaney Anthony Chaney is offline
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Thanks Ray.

I'll be retiring in a few years and I'll need something to do. As far as hobbies go, over the last 20 years I've had quite a few, but I always come back to this. I like farming too, but my back has made that impossible.

I would like to launch my company on Jan. 1st
Yes, I plan on consulting a lawyer, but I know there are several makers here and I would like you opinions.

1. I've read that an LLC is a good thing to do to protect yourself. Anyone care to elaborate?

2. I was thinking of making a personal loan to my company in the amount of 5K to get it off the ground. I want to keep the business totally separate from me. I plan to open a business account at the bank and deposit the money in the account. How would you draw that up as a loan to the company?

3. Should I pay myself a salary or funnel everything back into the company until all debt is paid in full. What I'd like to do is pay myself a salary, but have it go straight into a 401 for my retirement.

4. I bought a new 10x16 building this month to use as my clean room. I already have my Grinding/forging area set up. I paid for this building out my personal account. How do I list this as a debt to the company? Can I use this as an expense for next year since I'm not starting my company till Jan?

5. What about websites? I don't do Facebook either, but I realize that it would be good means of traffic.

Am I going about this correctly or am I way off track? Any advice would be appreciated.


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Last edited by Anthony Chaney; 12-15-2012 at 03:51 PM.
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Old 12-15-2012, 04:18 PM
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I can't answer a lot of that directly since I am neither an attorney nor an accountant. I did none of those things. I've owned small corporations before and from that I'd say if you plan to do anything other than a sole proprietorship then you need to acquire the services of an attorney and an accountant. The LLC or incorporation questions would mostly go to the attorney, all the rest of your questions would go to the accountant.

I can tell you that if you start writing off buildings or parts of buildings, setting up 401's, and worrying about salaries then proceed carefully. The IRS looks closely at certain types of things that tiny companies do that are technically legal but might be borderline for you and me to try. I'd rather steer clear of all that stuff, take a slightly larger tax hit, and move on. I think of it as paying 'insurance' against 'accidents' that might happen to me as if the IRS was actually the mafia and I'm paying protection money. Not that the IRS is anything like that because I'm certainly NOT saying that it is (is this Orwellian or what?). So, if you want to go that way then pay the lawyer and the accountant and follow what they say. Oh, and don't overlook that many small businesses are starting to panic over the coming Affordable Care Act which we start paying for next year. Nobody knows what that means yet - they still haven't read the darned thing apparently - but it appears that small business may bear a burden even if that burden just comes from paying the accountant for the extra reporting and paying the IRS extortion....uh, I mean, insurance fees for insurance you won't even be able to think about using until 2014.

On the website, however, I may be of some use. These days, everyone who has a small business needs one.
My strongest suggestion would be to learn to build and maintain your own website. If you go about it the right way it really is quite easy. Most people, however, don't take my advice and try to do things the way Microsoft would have them do it or follow some other local guru's advice. Good luck with that, I hope you don't suffer much before you go into a coma from trying to learn Framework.

Facebook, eh, maybe, maybe not. Right now it can't hurt (I suppose) but will it be here tomorrow? I don't know. So, I'd concentrate on getting a working website. Once that is completely up and running and you have some extra time - and if FB is still in existence - then go for it if you want to. Facebook, LinkedIn and a score of other such things have never sold a single knife for me as far as I can tell. My website is responsible for more than 95% of my sales for the whole 12 years I depended on knives as my sole source of income....


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Last edited by Ray Rogers; 12-15-2012 at 04:21 PM.
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Old 12-15-2012, 08:11 PM
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What proggy do you recommend for the website?


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Old 12-16-2012, 08:43 AM
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Notepad. Chat tonight, will you be there? We can discuss your website then....


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Old 12-16-2012, 09:20 AM
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My advice is to keep it simple.
I do not sell knives but have been self employed (small biz) for the last ten years.
You don't need a lawyer, you need a smart accountant.
If you are a Sole Proprietor and have no employees then I suggest you start your business as a DBA which is an acronym for "doing business as". Say your company name is: "Acme Blades"... your IRS filing (annually or quarterly) would still be filed under your personal name. You would be Anthony Chaney DBA Acme Blades for banking and legal purposes. Open a checking account under the name of Acme Blades. Cash your checks into this account and for God's sake save ALL of your receipts... keep them filed.
You can file individually each time and I choose to have an accountant sort through my deductions. If an accountant prepares your taxes each filing... you are far less likely to get audited by the State or IRS. In your first year of business your accountant should ask a series of questions pertaining to the equipment, overhead, and tools you already own or have recently purchased for the purpose of this venture. Existing equipment and tools can be written as deductions toward your venture. Your accountant will know these details as well as other valuable deductions such as internet, phone, rent/mortgage, fuel, etc. Many of these expenses can be written as annual deductions based on a percentage of how much was used in the operation of your self-employment.
If you keep it simple (as a DBA) you absolutely do not need a lawyer to get started. A good accountant will walk you through it quickly and have you rolling. Definitely seek accountant's advice before your boots hit the ground. You both need to be on the same page from the git-go. I was surprised at how easy it was to get started way back when I initially started my DBA. Up and running in one day. There are also other compliance issues that may come into play from a State level. Colorado is very business friendly but other states make people jump through hoops. You can file a Trade Name with the state for about $20 if necessary or desired and renew for $1 each year here in CO. You may or may not be required to carry limited liability business insurance as well. I have to carry it since I'm in the building trades but you are likely exempt.
My advice is to begin with a good accountant. Arrange a consultation before you do anything. They should consult for free if they want your business.


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Last edited by rockhound; 12-16-2012 at 09:33 AM.
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Old 12-16-2012, 12:37 PM
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Thanks Rockhound. That gave me some good ideas. I don't have an accountant, so I guess that would be the first thing I need to check on.


Ray, I still don't have Internet. I come here on my iphone. I'm in the process of packing and moving back to my farm, but everything should be straightened out by the first of the year.


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Old 12-17-2012, 08:45 AM
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Anthony, I had my own company for more than fifteen years, and although I'm in Canada and our laws are a little different, i agree with Rockhound. Get a good accountant before you waste your money on a lawyer. - Nothing against lawyers, but they are wired to over-think and cover all the "what-if" angles (just try to read a contract some time). yes, keep it simple, stay small, save your receipts and learn what you can write off against the business. I think in the US you can actually write off part of your mortgage payments on your house if you work from home. Same for hydro, gas, phone, etc. Yes, you can make loans to your company and make it pay them back to you if you actually make a profit one day. My accountant used to tell me that even when the company made money the tax payable on it was still less than personal income tax rates, so I kept my salary to a minimum and took paybacks of shareholders' loans whenever possible


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Old 12-17-2012, 09:44 AM
jdale jdale is offline
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Im not too computer savvy but i was able to make a website through http://www.weebly.com/weebly/userHome.php
Its a free website hosting site, they have a very simple drag and drop format for pictures and text. If you go through them to purchase a ".com" it is under $40 a year with discounts for multiple years.

I'm in Michigan and im looking into an LLC. I spoke to my account/ tax guy one of the bigger advantages of having an LLC is the liability protection. If I get sued because some schmuck guts himself with one of my knives the only thing that is up for grabs in the lawsuit are items controlled by the LLC
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