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How Do I Sell My Baits In A Tackle Shop

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I have been pouring my own soft plastics for 2 years now and have been very successful on both pouring and catching fish on these items. Now I have a few other anglers interested in putting my baits in their local tackle shops. I have a brand name that I would like to trademark but was wondering what other issues I may run into or want to do. Would starting an LLC be an option?

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If you start selling them you will need to register for a tax #, pay excise tax quarterly to the gov., and if inside a city limits apply for a license probably with your city. Hopefully you will be zoned for it unless you start this from your home which you probably won't be.

If all that is a go, you will need to decide what pricing you are going to charge. Dealers will want at minimum a 40% mark up on the price they pay so price wholesale pricing accordingly.

Start thinking in terms of numbers of baits you can put out in an hour and sit down to figure how much you want to make an hour. Most people don't take their time into consideration and wind up making $1/hour or less for their labor.

Most guys on here will tell you to operate under the radar and not worry about excise taxes, sales taxes, city and state licenses etc. You will have to decide if you want to take that chance and possibly loose everything you own if you get caught or at minimum pay a hefty fine.

There will be others on shortly who will tell you I'm totally off base and give you their ultimate solution to your question....but there will also be a few who will tell you most of what I've already told you. Listen to them as they are successful in this business and have jumped through the hoops to make themselves so. Do it right the first time!

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An LLC is setup through your state. If you Google "your state LLC" and go to a page that includes your state in the URL you should find all you need. It is simple to do. You register the name, fill out the forms and send them the money. IF you want to go DBA, there is an option for that.

The down side is you are now a corporation. You have to not only pay an annual fee - $100 in my state - but you have to file an annual report and pay corporate taxes.

You also need to get a Federal Tax ID and pay quarterly excise taxes at the rate of 10% of sales. If you consider this 10% and the 40% discount the local shops will require, half of each sale is gone. Then you pay your corporate taxes and think how lucky you are to have a day job.

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Wow..... Where does one start on a subject that will get you several different oponions. Do it right and do it legal & by the books. By that I mean keep accurate records and do not try to stiff the IRS. You are always subject to an aduit. Buy a book on how to start a home based business for help or search online for help & tips.

First you need to think long and hard about what you will name your business. Using your last name is ok, example: Jones Tackle Company, Jones Lure Company, etc. Next is naming your product! The most important stap in starting your own lure making business. MY best friend told me it took him 2 years while in the planning stage to come up with a product name that stands out (He was in the Air Force and planning his business the last few years before retiring).

He decided on FishAction Lures,/ Motto - Put more action in your fishing with FishAction lures. After the name came to him, he then started on the logo which is multi colored and eye catching on store pegs. Do not -, I repeat - do not if you can avoid at all costs name your lures using your last name. ie Jones water creatures. If.... in a few years you want to sell out, It would be much hrder to sell your rights and lure manufacturing / operation to someone else with your name on it. It's better to have a distinct name.. You can name one of your top lure designs after yourself,like a jonesy bug,but under your products name brand.

I even gave him the rights on a brand name I came up with that he really liked. After 2 years I gave it to him and he now has it registered under his company name. It's called Brim' Spin/s. Named for small beetle spin type

lures that are sized for panfish.

One other thing that can sink your business before you even start up is product pricing. It isn't as easy as just slapping a tag on them and selling. You need to include your costs:plus overhead., Amount of Time to produce them, Qty per bag, amount of plastic used per unit (each bait) for plastic purchased. example/ Bought 5 gallons, - you can make 1000 baits per 5 gal.. Each 5 Gal bucket with tax,excise tax and other costs = $300.. 300 divided by 1000 gives you cost of unit per 5 gal bucket..You'll also need to figure in wasted plastic etc. This is just a short list of costs and overhead you SHOULD include when product pricing...

I hope this info helps out.

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Some suggestions from my own experiences...

To answer your questions about the LLC. An LLC stands for "Limited Liability Corporation" (you probably know this). You do not need to start an LLC, UNLESS you are producing lures which may cause you to be directly sued due to some reason or another. This is highly unlikely I am guessing. If someone were to sue you because they "ate three bags of your delicious looking worms" (not for human consumption on the bags will stop this) they can only get the assets in the LLC and not your personal assets (house, car...etc) as long as those items are separate from the LLC. Again, you probably do not need to start an LLC. There are other reasons to have an LLC, however this is one of the main ones.

You can register the name of your company through the State if you chose to do so. By doing so, you will help protect the name of your company if someone tries to use it to sell fishing lures.

A trademark protects the name of a lure, not the design. Someone can still take your lure design, however they cannot call it by your trademarked name.

In my personal experience, if you are in a small city and grew up visiting your local tackle shops, I would approach them first when trying to sell your lures. Yes, they usually want 40% markup (if reseller price is $5.00, they would buy them from you (manufacturer) for $3.00. (reseller selling price - 40% is the way to figure this.) Now sometimes bait shops will take less markup (35%) for a cool lure manufactured by a local patron. You can even offer to deliver at no charge if it is on your normal route. They won't have to pay shipping, so sometimes they will take less. Just ask them and they will work with you if they think your product will sell. IMPORTANT: Resellers like to know other resellers are selling your products at the same price. No one wants to sell your worm for $5 and then find out Franky's Bait and Tackle is selling it for $4.5. You need to think about a reseller agreement to keep everyone on the same playing field when it comes to price. Doing this will put resellers at ease.

If you are going to sell the lures strictly to resellers, you will need to get their tax exemption form. By having this, you will not have to collect sales tax from the reseller. You WILL still have to pay taxes on your profit which you will need a tax id. If you are selling baits on your own to the end user, you will need to collect sales tax unless they are out of State.

Keep your day job until you are at the point of choosing one or the other. In other words, get your baits in as many local stores as possible (that could mean 100 mile diameter). Use the experience to a.) Workout all the logistics...i.e. pricing, delivery, manufacturing, marketing...etc. b.) To accumulate enough extra capital to buy bulk, find supplier(s) which can offer the best product for the best price and have some reserve to be able to step away from your day job. Also, banks prefer you being up and running to bring actual data to the table. This will help if you are going to try for a loan to purchase a fancy automated injector, more molds...etc.

Again, this is what I know from my personal experience and working at my day job. ;)

Good Luck!

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"To answer your questions about the LLC. An LLC stands for "Limited Liability Corporation" (you probably know this). You do not need to start an LLC, UNLESS you are producing lures which may cause you to be directly sued due to some reason or another"

Solid advice. Income Taxes will flow through from LLC to personal return anyway - so no advantage there. When you start cranking it up pretty strong maybe think about a separate entity.Otherwise it's just a distraction.

As far as taxes are concerned - The 3 things I am most afraid of (in order) are 1.) My wife 2.) The IRS 3.) Electricity. I don't understand much about any of them but I know they bite HARD.

Best of luck

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If you start selling them you will need to register for a tax #, pay excise tax quarterly to the gov., and if inside a city limits apply for a license probably with your city. Hopefully you will be zoned for it unless you start this from your home which you probably won't be.

If all that is a go, you will need to decide what pricing you are going to charge. Dealers will want at minimum a 40% mark up on the price they pay so price wholesale pricing accordingly.

Start thinking in terms of numbers of baits you can put out in an hour and sit down to figure how much you want to make an hour. Most people don't take their time into consideration and wind up making $1/hour or less for their labor.

Most guys on here will tell you to operate under the radar and not worry about excise taxes, sales taxes, city and state licenses etc. You will have to decide if you want to take that chance and possibly loose everything you own if you get caught or at minimum pay a hefty fine.

There will be others on shortly who will tell you I'm totally off base and give you their ultimate solution to your question....but there will also be a few who will tell you most of what I've already told you. Listen to them as they are successful in this business and have jumped through the hoops to make themselves so. Do it right the first time!

Good,honest advice. Those who try and fly under the I.R.S. radar screen are in for one,very rude and expensisive awakening when they catch-up w/you. Penalties and interest and in severe cases-fraud charges will ruin those who play games w/ the I.R.S. I had the occassion to talk w/ the I.R.S.agent (2 months ago)who signed my form #637 5 years ago and we got into a short discussion about those small manufactureres not paying their 10% excise tax. I was asked one specific question." Do you have any names I can investigate/?" They will investigate any name they are given,no matter how small of a business they seem to be operating.

Trademarking a name w/ specific drawings and logos is not terribly expensive-UNLESS another company w/ big bucks objects. You can use your own name to save some expeses for sure.

Time is money so don't waste it trying to re-invent the wheel. Manufacture custom products that catch fish and be prepared to hand out a bunch in the beginning. Webmasters can cost a small fortune for an active,multi-product website.

I've preached about the 40% discount off of retail to tackle shops and dealers in proir threads. The 10% excise tax due on those gross sales can be the straw that breaks the camels back- so be advise, know you numbers,cost and profit margin as well as manufacturing capabilities before you jump into the fire.

It's normal to jump for joy when a tackle shop says 'I'll take 200 bags of those". Now let's look @ this senerio a bit closer. Your average profit may be $1.50 -$2.00 per bag before the 10% excise tax due and your cost to run back and forth and/or mailing expenses must go into the equation. Now .how long will it take you to make those 200 bags of products? What's you costs for manufacturing overhead and equipment replacement costs? Last but not least- never deliver product to a shop on a consignment basis. You deliver-you get paid on the spot in full

Operating a small tackle manufacturing business will keep away from the t.v. set for sure!Best of luck to you-and the advice-"Don't quit your day job" has a great deal of merit.

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