Startup Questions

B

Blackcatt

Active Member
Hey Dawgs,
I have a goal to go pro this year an am gathering information prior to making it official. I want to put a dedicated shop on my property and purchase some equipment.

I would like any advice you guys have and specifically on tax situations on the new building/equipment and how you formed your business. Like LLC or what?

I've got a ton of questions but maybe we can start here.

Thanks!
 
Les asks a very good question. If your not already producing knives, and are planning to go full time right out of the gate, to be brutally honest, you're making a terrible mistake.

If you have a good full time job, my advice is to keep your job, and make knives part time to establish yourself, and get a taste of just what it's all about. All too often people have a serious misconception that they are going to jump right into knifemaking, and make a great living. 99% of the time it just isn't that way. In fact, it's a very tough if it's your sole source of income. My advice is to consider your situation very carefully, and have a fall back position built into your plan, Remember, as a knifemaker. you're going to be responsible for your own insurance, retirement, there are no "sick days", and if you don't produce AND sell knives, you don't get paid. Doing knife show is a must if you are full time, and just about any of the major knife shows involve travel, table fee, lodging, and meals. When I do the Blade Show in Atlanta, it's a given that doing that show alone will cost $2,000. If I don't sell at least $2,000 worth of knives at the show, I don't break even. So again I say, think long and hard about it, and educate yourself on the realities before making a decision.
 
I'm sorry I must have stated my situation in the wrong terms. I currently make knives as an amateur. I make them for myself and give them to friends/family to use and test.

I work as an engineer and have no illusions that I could make the same living making knives...at least at the pace I make them now. More or less I'd like to quit paying to make knives and legally make some money to help with the expense of putting up a shop.
 
Blackcatt said:
More or less I'd like to quit paying to make knives and legally make some money to help with the expense of putting up a shop.
Click to expand...

That's a reasonable approach. Tax and insurance issues and so forth will depend a lot on where you are. Make friends with an accountant and talk it over with them.
 
That sounds reasonable enough.

These issues that you ask about, have been covered pretty well in this very sub forum. Do a little reading and I think that most of your questions will be answered. That answer is, "it depends..."

Figure out what kinda knives you want to make (you probably already have)

then you will be able to figure out what kinda tools you need. I use different tools than Ed does, sure there are some over laps but difference enough....

The kinda tools you have will dictate what kinda building you want, in a perfect world. Usually we have a space and have to figure out how to make it work for what we want to do.

then all you have to do is make and sell the knives. Sounds easy, hu? ;)

Good luck!
 
Thanks for the replies. After some reading and for general information I found that if my building will be used exclusively for the business I will be able to deduct the expense of putting it up as well as utilities.

Most equipment would be classified as capital and can be depreciated over time.

I'm sure most of you guys know all about this stuff but I just included for anybody in a similar situation as myself.

At my skill level I expect to have a couple standard model offerings and offer some upgrade options if the customer wishes....rather than one-off models that may be more suited to a very experienced craftsman.
 
As my memory serves you're right about the expenses related to the shop with respect to your business. Costs of a dedicated business facility are business expenses, which is pretty straightforward. You're also right that most equipment is capital and can be depreciated, but you could also deduct it as an expense in the year of purchase up to a certain limit. The limit changes from time to time, but I think it was $750K last time I checked, which is well above what you'd be doing with a knife shop. It just a question of when you want to recognize the cost--now or over time--and there are advantages to both.
 
A number of years ago when I was trying to build a business totally unrelated to knife making, a wise man told me to set my 'real job' income aside and live off my side business income for a year. If you can make it that way, you stand a better chance of making it after becoming full time at whatever you are attempting to do.

Just a thought,
Carey
 
You must log in or register to reply here.
Back
Top