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drof99

Home Bait business

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So lemme get this right, i make a bunch of baits,get a table at a flea market somewhere and are supposed to charge the customer tax?

Great question and I can not give you a qualified answer.

But having said that I would think that the FET would have to be paid ... the FET is all ways included in the price that you sell it for .. charge a $1 you owe the Feds .10 of it .. I dont know how state & local tax apply to Flea Markets ...

Maybe some one has the answer.

JSC

Edited by JSC
to correct error

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I know in wisconsin if you sell at a flea market,fair,any vending event you need a sellers permit issued by the state and if you sell to persons from wisconsin you must charge them state sales tax unless its a tax exempt sale of fishing items they will use in production.

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We already pay tax on Blades,skirts,plastic,hooks etc. right?

I am not 100 percent sure about this, because I am in the process of starting something myself. If you are buying stuff and paying tax, you shouldn't be.. if you have a business. You buy tax exempt, and if you "use" it, you pay a use tax on it. If you sell it, you pay a "sales" tax on it. If you use it and sell it, you pay both.

Also on the ebay deal, I sell stuff on ebay as well, after you sell something small, and pay ebay listing and then if it sells pay the selling fees, and then if someone pays with paypal, pay the paypal fees, there is not much profit left, if any. But it is GREAT advertising. Most people that I have sold flies to in the past, have emailed me later, and wanted more when those ran out. Then I just sell them straight out, and do not have to pay those ebay fees.

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Thanks for all the suggestions guys. I'm not worried on the tax side of things. We already have an accountant that does some work for us on another thing. I do have on question though. If I am buying supplies for the business, like plastic, blades, molds, color, whatever, I shouldn't have to pay taxes on that stuff should I? I thought a tax id number would get us away from that. Might be a question for the accountant. I'm looking for as many ways to promote the baits as I can get. Great info so far. I think I will pay close attention to you suggestions as far as paying as I go. I don't want to be in debt by this at all. I'm also going to stay very small and keep it fun. Keep the ideas coming, thanks for all the help.

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That is correct you do not have to pay sales tax on the items you buy weather to sell straight out, or use in your business. It could be soap for the bathroom, or blades for spinners. As long as they are sitting on the shelf, and have never been used or sold, you do not pay taxes. If you pull it down, and make a spinner out of it, you pay use tax. If you sell it just the way it is, you pay sales tax. If you use it to make something, and then sell the final product, you pay both. If you use the soap, you pay use tax as well.

I am almost 100 percent sure this is correct. Let us know if its not. I am sure it is more complicated than that when you get down to the nitty gritty, but that is the just of it.

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Fellows looks like things are getting a little muddied up on this as we are talking here about more than one tax.

If you make an item and it is listed as an Federal Excise Tax Item you must pay the 10% on what you sell it for ... (on your purchase of materials for this item ,, Example hooks, spinner blades and etc.,

and they are subject to the FET you can file an exemption form with the supplier or he is going to charge you for it)

--

Now the other tax is tax that you sell at retail or consumer which is commonly refered to as Sales Tax ... City, County and State.

---

This is it briefly in a nut shell ... check back on some of the old threads on this and you will find some very technical information on this subject....

Thought there should be a little clarification on what taxes we are speaking of.

Hope this does not confuse and maybe help a little.

JSC

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excise tax i pay on my components that i buy, say skirt material, now i can either pay my supplier the 10% or give him a signed form with my tax info and then i charge the money to the customer in the bait price. really you can just pay it to get it out of the way and then drop another $0.25 onto your product to cover everything. its not that big of a deal. some suppliers i pay it to others i dont depending on how much i use them.

sales tax now, my cousin is my accountant so i get all the info i need. if you where to ebay or flea market products, really not that big of a deal, the irs or state wont come knocking down your door unless you are doing huge business. if you are giving receipts it would be best to add it because of a paper trail and you wouldnt want some moron trying to shut you down on tax evasion. some flea markets, or swap meets say you need to charge tax, i have been selling car parts before and have seen people walking around to check tax i.d.'s but never heard of anything on the small guys side of being busted. it was more towards the vendors who actually had large companies. i hold a CT tax i.d. and had to have a MA id when i sold at shows up there. it sounds a pain but i wouldnt worry about it unless you are selling thousands in multiple states at multiple shows.

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It is true that the IRS is not out there trying to nab people selling fishing items at the flea market. But your competitors are. There's a whole lot of difference between the hobby side of plastic and the business side of plastic. If someone feels like you're doing more business than him, and you do not have a federal tax ID #, then you're putting yourself out on a limb, and leaving yourself open for a very costly lesson. That 10% federal excise tax is a big deal to the IRS, when someone turns you in for not paying it. For example, lure making competition in my local area is high. When someone was nice enough to tell me that I needed my federal ID # and I called to find out about it, I had already been turned in. The lady told me she was really glad to hear from me because she had already received my name. Also she checked another luremaker's computer and noticed that he had ordered 1000 hooks for making jigs, but reported he only made 500 jigs, she asked to see the other 500 hooks. I'll give you two guesses what he could not produce and he did pay taxes for 500 more jigs, so be very careful with your federal excise tax. Good business records are a must to keep this end of your business easy. And be careful, the business end of plastic can be very cutthroat at times, but it doesn't take long for you to figure out who's trying to take you for a ride and who's trying to help.

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I brought the subject up and I am glad I did. Lots of usefull information has been forth comming. I am glad it did not become a whinging session for people with negaive opinions.

There is always a danger of some competitor reporting you, as has been highlighted on some of the other lure making forums, SAD, but it happens. Also, and I am speculating, that a tax official could take you on as a special project. Probably paranoid, but possible.

I, my self am a limited company based in UK. I simply add my lure making functions to my company articles and I am covered, paying UK tax. I need to look into it in more depth, as I get closer to production, but my intent is to keep all the authorities happy.

Sorry if this addition to this very informative thread has been a pain, but it is very important. A line has to be drawn between the hobbyist, making a few baits for friends and those selling for business. At times a fine line indeed.

My problem is that I am a UK base business, manufacturing in Indonesia and selling in the USA, headache for sure. Not to mention patent issues. I have a lot of BS to sort out before I ever get to market.

The message is, if you don't want to be looking over your shoulder, SORT IT OUT.

Dave

Edited by Vodkaman

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Thats the one of the drawbacks of going from hobby to small buisiness. At some point there is work involved. If you dont want to do it, or are not ready to do it, then you should probably keep it as a hobby. Otherwise the fun can go away real fast.

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Not to hijack this thread, but when does it stop being a hobby and starts to be considered a small business? I always thought It was when you depended on your profits for part of your livelihood?

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You spend time on your hobby, when you have time to do that. A hobby doesn't have Purchase Orders or deadlines or taxes to be paid. A hobby is something you enjoy and allow your creative juices to flow and the reward is a sense of accomplishment.

You spend time at your business because you have to, religiously. It does have Purchase Orders, deadlines, taxes, bills and accounts receivables to worry about. But it can also be very fun and rewarding as well.

It all depends on which side of the fence you want to be on.

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So I have a question about this FET. If I sell at a flea mall/market, and I buy my items from online (worms, jigs, weights,or things already assembled so I dont have to modify it)and pay taxes then. Am I still required to pay the FET or charge sales tax? Sorry Im a little slow on understanding things.:o..........RonnieC

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So I have a question about this FET. If I sell at a flea mall/market, and I buy my items from online (worms, jigs, weights,or things already assembled so I dont have to modify it)and pay taxes then. Am I still required to pay the FET or charge sales tax? Sorry Im a little slow on understanding things.:o..........RonnieC

In this case you are "Reselling" at retail .. You are NOT the maufacturer, therefore no FET....... BUT who ever MADE IT must pay..... You will be responsible for sales tax according to the laws of where you are selling the products.

My :twocents: Hope it helps.

JSC

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Thanks JSC. I have done this before and just wanted to make sure that I was good. I did pay my state taxes at the flea market admin building on what I had made.........RonnieC

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Here is a link that has want adds and forums about fishing and fishermen ask from time to time where they can get ice fishing plastics, the real tiny ones to go on ice jigs here in Wisconsin. Go to lake-link.com and pick a state I always check out the trading post want adds ( wisconsin ), I think you have to be a member to sell on the site but anyone can go on for info on just about anything to do with the outdoors.:yes:

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A few months ago, I bought a few hundred bucks of stuff from Hagen's and if you don't provide them with a IRS Form 637 and got charged the 10% FET on most items... They excluded those charges on a few things, paints and wire shafts, if I remember correctly.

As I understand the rules, if I were to start selling my lures as a business, I could take a credit on the 10% FET I paid in for the order used to seed my company (as long as I keep the receipt with FET paid) and add it to the cost of my lures. All future orders would require me to add the FET at the time of sale and pay the IRS quarterly or annually depending on the volume of my sales.

If you have specific questions, give the IRS a call. Most of the time they are very willing to help you understand the tax code before you violate them...

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A few months ago, I bought a few hundred bucks of stuff from Hagen's and if you don't provide them with a IRS Form 637 and got charged the 10% FET on most items... They excluded those charges on a few things, paints and wire shafts, if I remember correctly.

As I understand the rules, if I were to start selling my lures as a business, I could take a credit on the 10% FET I paid in for the order used to seed my company (as long as I keep the receipt with FET paid) and add it to the cost of my lures. All future orders would require me to add the FET at the time of sale and pay the IRS quarterly or annually depending on the volume of my sales.

If you have specific questions, give the IRS a call. Most of the time they are very willing to help you understand the tax code before you violate them...

If you contact the IRS they will send you a CD on small business for free. They sent me one but I have not watched it yet due to a heavy work load.

Allen

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As to your question about the home lure building business. Myself , I build jigs. The jigs that I make have hair tied to the back of them. This tying of the hair on the back of the lures is something that one has to get use to. I could see where some individuals could never get use to it but if one will practice they will get faster and more proficient. When I first started I had visions of great profits thus I tyed many jigs. Jigs that after several years when bye were superceeded by my new jigs with better hooks and newer different jig molds. I ended up with a bunch of jigs that I probably could sell but don't for some reason. One very big advantage that I procured from tying all of these jigs was that now I have worked out all of the bugs in my tying and once I get started I can now tye a jig about every minute and a half. I began tying my own jigs because the guy that I use buy from died. My first jigs were fashioned after those that I got from him. There after I began to experiment and now the jigs that I prefer are a big difference from the original ones that I once used. So in answering your question about starting your own lure making business.. First you have to learn how to make a lure. That is the biggest thing.

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Looking to start selling myself and wondered: has any store asked you to supply your own bar code label on your lure bags/clamshells? Just wondering what to expect before I go pounding the pavement.

thx

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Goon,

Yes I had a store tell me I need my own UPC lables.

The price shocked me and I passed on it.

Big store and would have been a good location to sell , but to recoop the cost of the lables, I do not think so.

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