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Old 06-13-2014, 09:04 AM   #11
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Wow! wildwatcher...you are a wealth of information.

It sounds as though you are speaking from experience.
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Old 06-13-2014, 02:34 PM   #12
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pawprint everyone ought to build a small business

...if nothing else for the fun of it!

I started, built, & closed a lawnmower repair shop, 13 years same location. Here in AR the basic tax authority rules are about the same as VT.

I learned a few things along the way, of which, learning from my own mistakes, I am only too happy to at least try to warn of the serious stuff.

Costliest mistake I ever made, was believing what the Certified Public Accountant told me. The CPA got paid for his professional service, I wrongly thought 'heyyyyyy if he is a CPA, he will be looking out after my business interests', but the reality was I was unnecessarily put on a rather sharp hook for a great sum of taxes, this was at the IRS level. My problem at the time was... that I was very good at repairing equipment, I loved doing that for a living, but I didn't want to spend the time reading and understanding 'the big tax picture' and subsequently my CPA easily maneuvered me & my new business into an 'legal' but totally unrealistic realm. I was scared by what the CPA told me, there was penalties & interest dropped in my lap, all because I didn't understand inventory and how to account it properly at the time, and I thought being audited by the IRS was daunting indeed!

The CPA would explain stuff wayyyyyy over my head, which would do nothing but infuriate myself, and leave me utterly confused and I would dutifully pay his fee while leaving the office. My visits with the CPA were somewhat like going to the doctors office, and you expect he will get the splinter out of your eye. But because I couldn't understand, and the CPA couldn't communicate on my level, the splinter remained, no attempt to remove it, rather he was absolutely NOT going to give me a crash course in small business management, with just a few hours of professional consultation. That is the small business owners responsibility, to understand any and all aspects of the business, document everything, account for everything clearly, and absolutely have a sound working knowledge of the taxing authority rules. And most importantly never believe a CPA that claims that they (IRS) will simply compare your business to a similar business and tax your business accordingly to some other similar business! Example: if your working out of a shoebox and you are lead to believe that your accounts should somehow be compared to the 'well established, but similar business across town'...there is no validity to compare a new business to that established one! Just look at where the established business is buying his inventory, (from established vendors) and a new business is scrounging up whatever he can find at yard sales & auctions...the numbers/accounts do not compare in reality. No matter what the CPA says!

So ya dapjwy, I have some experience as how NOT to start a small business! But I also have had some good experiences come from the venture as well.

I hope that disuhan can see that you not only have to be good at your trade, but because of the taxing authorities-rules of accounting, you must be careful on how you buy things! And how you sell things. How you document & file everything. How you book-keep (not just on the computer...even if you have a back-up) have paper ledger books! The computer 'quickbooks' do generate some fantastic reports, that will help you see your business on the whole in graphic detail. {hahaha just wait till you make a wrong entry into your program...then spend a good amount of time trying to fix it, lots of fun right there!)

I used a 6 column ledger for nothing but sales...on the front of it, I had in bold print "CASH IN". And I used another ledger, a 13 column ledger for nothing but expenses, on the front of it, I had in bold print "CASH OUT". The hard part at the beginning is to know when and where to put every transaction you make, but it is a daily requirement. There is also a checking account ledger. In this way the taxing authority may audit your business, by first looking at your ledgers. They will see from your ledgers, daily transactions...whether your buying or selling, it should be in the books. They will inspect your checking account to verify if you deposited your daily $ total...that came from your sales receipt book & verified in your 6 column ledger. They will inspect if your purchases came from the same checking account, the $ amounts and the vendor you purchased from...these are found/verified in the 13 column ledger. Throw in credit card statements and becomes slightly more complicated. The main thing about a credit card, check book, just like a work vehicle, or a home office, is that... it is much, much simpler to account for, if you have no personal use items involved in those business accounts. This is why you have file cabinet with folders to hold all the documentation (receipts) that are logged daily in the ledgers. I also used a computer to generate sales receipts and inventory accounting, which becomes even more fun!

It is when you buy fuel for the family car, and you buy fuel for the business on the same receipt...don't do that. Stop & pay for your fuel for the family car (one receipt) and then get out your 'business only gas can' and fill it up and get another receipt...specifically for the business fuel only.---simple no? hahhaha

ww
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Old 06-13-2014, 04:37 PM   #13
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Well, you are providing valuable information. Thank you.

...and that pipe dream of my opening a business is all but gone now! Hopefully, disuhan will fair better.
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Old 06-13-2014, 06:31 PM   #14
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pawprint Heyyyyyy dapjwy...

...ya that is good that you curbed your direction toward opening a business. That was kind of my intention, to show that there is a lot of accounting required to run a business, you either take it up, or you don't.

But always take everything I say with a huge dose of salt, I am not a tax adviser, nor CPA and I don't really know that much. I'm just sharing some things I have found, be they right or wrong.

Considering the way the economy is now wrecked beyond all recognition, and I don't see it getting any better anytime soon...(I got out in 2003) I would be reluctant to signed up for all that red tape again, but that's just my rather cynical way I see it, besides I'm old & worn out.

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Old 06-13-2014, 06:36 PM   #15
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I was no where near implementing the idea that has just been floating around in the back of my mind. It is still back there...but, now more than ever, I doubt I'll ever do more than propagate for myself...and then see where that leads me...I can always barter with others, donate to native plant sales, that kind of thing...who knows.
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Old 06-13-2014, 07:36 PM   #16
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pawprint That's right...

Quote:
Originally Posted by dapjwy View Post
I can always barter with others, donate to native plant sales, that kind of thing...who knows.
That is the way I would do it, no red tape, in your own time, your own way, just depends how hard you want to work at it.

Yanno a guy could if he had the plants, just take a load down to the local auction, and for maybe as much as 20% auction commission, move a great deal of plants and get paid on the same day. No office, no phone, no credit. hahahaha

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Old 06-14-2014, 08:58 AM   #17
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I like the idea of no red tape.

Hmmm...auction idea sounds interesting. How do the legal entities you described above process/deal with people who sell at auctions?
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Old 06-14-2014, 09:00 AM   #18
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Are things just as complicated (red tape and all) as you describe if one were to be a wholesale supplier to a nursery instead of a retail operation?
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Old 06-14-2014, 09:36 AM   #19
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Oh I don't know about what the regulations are for auctioneers, I'm sure they have some rules they have to deal with. I was just thinking there is at least one or two local auctions every weekend in my county. Yanno various estates usually. But if you request to include your items in the auction, it is up to the auctioneer to collect taxes or whatever, albeit auctions don't always bring the highest prices, but generally they bring fair prices.

I mean if I were to compare the time & energy involved with chasing red-tape and the 30% that is ordinarily involved with it, 20% to an auction is by far easier to deal with. There probably is legal regulations for those that regularly commission product at auction, but if you only submitted commission a very few lots per year, I think it would be more of a 'one-off' type sale and therefore not strictly regulated.

As far as wholesale distribution, this again would involve probably just as much red-tape as a retailer would be involved in...only a different aspect of it. The wholesale distribution would still be responsible for 'business personal property', Federal IRS, State Income tax, real-estate, and the resale & use permitting/license...etc.

If your going to be in business, expect red-tape, but if your under the wire, because you don't have enough volume to become interesting to the government, then I wouldn't worry about it. I would think the tax man could be visiting occasionally, from time to time, at the local farmers market for example...have your answers already figured out, especially if your there selling often.

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Old 06-14-2014, 09:57 AM   #20
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You can file for a self-employment if you just do contract work. Contacting a local nursery that you can grow plug starts for and they can contract you for a number of plants. Programmers do this all the time and just have to file for taxes at the end of the year. If you keep track of your expenses and keep outside inputs to a minimum, its pretty simple to file. (Soil, seeds, fertilizer, labor, containers).

The nitty gritty: Small Businesses & Self Employed
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