Starting Part Time Business Question?

[bcnc]

Not sure if this is the right place to post this but here it is. I have some metal working equipment in my garage and do some playing around as a hobbie. My question is: Is it worth starting a small part time business,or is it not worth the hassal of dealng with the taxes, Etc? I have a few people interested in having some work done and I want it to be all legal like if I were to do work for them.
Thank You

[jmsrbrt]

We have a part time metal art business since I'll be fully employed for the next two years. All of my business has been 'word of mouth', although recently we have attended one motorcycle rally, and one craft show, got an Internet presence and even set on the side of the road two times. Business was slow to start, but since I was working anyway, that was fine with me (did my cutting on the weekends).

Well it's grown to the point where I'm either referring business to my competitors, or refusing work. Once I retire, I'll rethink that, but ultimately, my goal is to make just enough money to supplement my other earnings...and take trips. Husband/wife business with no desire to hire help.

As far as taxes and the government goes, it's not all that complicated, or time consuming, and there is even the advantage of having a small side business, with your available tax write-offs.

Bottom line...I'm happy and glad I got into this line of work.

[raynjer]

I agree with jmrsbrt that there are some definite benefits to starting a part time business. One of the biggest advantages is the additional tax benefits that you will be able to write off. You already have equipment, so if you can make a few dollars from something that you enjoy doing, that much better. Yes it is additional work regarding paperwork, but that can be manageable. For myself, I made up an Excel spreadsheet that totals all associated costs for business and home which separates the actual numbers that you can use for tax purposes. It's perfect for a home based business and saves the cost of an accountant and bookkeeper (sorry bookkeeprs!)

[orizaba]

Its working out great for me. I bought the equipment to use for my own engine work. Lately I've had to put my projects aside to fill the orders and all the equipment is now a tax deduction.

[raynjer]

Glad to hear that this is working out for you - another small business success story?

Engine work eh? A good friend of mine does custom engine work also.
I did his website - check it out.
http://www.LeitchPerformanceEngines.com

Best of luck to you & Merry Christmas to all!

[orizaba]

Thanks
I started out to build a better cylinder head for a briggs OHV race engine. Who knew it would turn into a part time job.
www.mikeclementsracing.com/

Merry Christmas
Matt

[harryn]

Part time is a good way to have a hobby / small business get going. My only suggestion is to work your way toward having a somewhat special product or service as opposed to being entirely general purpose.

It takes a lot of setups and tooling to do ANYTHING, while a more targeted approach will eventually help your efficiency and simplifiy your life.

[orizaba]

Originally Posted by harryn Part time is a good way to have a hobbie / small business get going. My only suggestion is to work your way toward having a somewhat special product or service as opposed to being entirely general purpose. It takes a lot of setups and tooling to do ANYTHING, while a more targeted approach will eventually help your efficiency and simplifiy your life.

Tell me about it. I have built more tools than parts.....so far...

[harryn]

I didn't notice if you mentioned if your equipment is automated or mostly manual. I don't claim any great machinery skills, but my brother was trained as a machinist and has a manual bridgeport at home, along with some other related items and lots of tooling. (he does not work as a machinist for many years)

The thing I noticed watching him work is that while his results are very good, it seems to take about 4 hours of goofing around to do anything useful.

In his case, this includes digging his way back to the mill in his shed, doing all the testing he likes to do, etc, but the point is the same.

The first 4 hours are largely lost to "getting ready" and perhaps making "the first one". At that point, making 10 is only another 1 hour of work.

The items I am interested in are pretty simple, but it seems to take a lot more tooling for him to do the same job on his manual system as an automatic / cnc system.

I guess the point is, if your metal working tools are not cnc driven, then converting them should be high on your list if you are at all serious about this as a business.

[orizaba]

Both are cnc...sort of.
The mill I use everyday is 1998 HH Roberts bed mill with a retrofit Anilam 3300mk, with auto oil and coolent. It can handle about a 1MB program.

The other mill is a YCM supermax-40 knee mill with a Bandit 2 controller. I typically only use it for facing and drilling operations. I have to write the Gcode by hand so I only do the simple things with this one.

I know what you mean about the set up time. It takes all day to set up and build one part, but I can build 4 in 2 days.

[High Seas]

Here's a quick question (maybe)
I've been a small (hobby) business for a few years. Small money - but pays most of its bills. We are near to launching a single product line that will keep us on a "focused" business - as suggested earlier. Tooling and set up will be consistent.

Now the question(s): We want to migrate from DBA (doing business as) under my name to a LLC. Sure there are simple ways to do it Legal Zoom etc - any favorites? Any to stay away from?
Any idea how tax liability changes from one year to next when you change the name?
Thanks in advance Guys!
Cheers Jim

[Geof]

Originally Posted by High Seas ....Any idea how tax liability changes from one year to next when you change the name?....

It depends on what jurisdiction you fall under; your ID suggests you are mobile.

Very likely what you will find it that when you transfer business assets from a Sole Proprietorship to a Limited Liability Company the tax people take the view that you have 'sold' them to the LLC. This means that you, the Sole Proprietor, have to include this theoretical income in your personal income for tax purposes in the year of the transition.

You have to be careful how you value the proprietorship because of course if you value it high you finish up paying more tax, but if you value it low the tax people may come back and give it an imputed value which is way higher than is realistic.

If you own some valuable machines or have designs that have a future value you may need to consult with a tax advisor to make sure you do things correctly. Sometimes it is best for you personally to retain ownership of these things and lease or license them to the LLC.

At the very least do the transition at the beginning of a tax year so the transfer value does not add onto a full year's income from the proprietorship.