business license

[butcher_block]

ok so ive been talked into getting one now who here can help me get the ball rolling btw i live/ work in PA dont know if that matters
can i do it online?
thanks
butch

 

[fitzo]

You should speak with someone locally regarding state regulations, etc. Registering as a business can include ramifications like visits from code enforcement showing up and telling you your home shop is not zoned for light manufacturing. Look what happened to Steve Licata. There are upsides like cost/tax savings, but downsides like the taxation rate on profits. It is not something to jump into without substantial research and reg's vary a lot from state to state. Do your homework carefully.

 

[Chiro75]

You can certainly get a sole proprietorship pn your own without any trouble, but take it from me, it pays to talk to a lawyer with this stuff. Trying to understand the pros and cons is just too complicated. I spent around $1,000 with my attorney getting my PLC (professional limited liability company) set up for my chiropractic office, which is obviously a lot different from making knives, but spending a couple hundred for a lawyer to advise you which direction to go is a smart idea.

 

[jiminy]

Generally speaking, the business license laws pertain to municipalities rather than states, as each municipality (city or county) is usually charged with setting the rules/laws for their particular jurisdiction.

With that said, as long as you are not generating foot trafic or vehicle traffic at your home or shop, or dealing with hazardous chemicals, etc., the procedure is more of a formality than anything else, and the majority of municipalities are happy to grant a license, as that means they generate a source of revenue. The actual costs are cheap ...you generally pay a small one time application fee, and then a flat fee per year of something akin to $20 per year on gross profits under $20,000, and a percentage per $1000 of everything above that ...generally around that same rate of 1/10th of 1 percent or so. That may vary by location, however.

When submitting the application, I would make it as innocuous sounding as possible ...say, 'arts and crafts' (which knife making certainly falls under). I sure wouldn't flat out tell them you wanted to grind knives 24/7 and operate a forge ...as that would be rather foolish IMHO.

Go down to your local city or county hall and ask for information on obtaining a business license ...they should be happy to help you, as that's what they're there for. As I said, stick with the vague sundry 'arts and crafts' type description of your business, and the road should be a virtual cakewalk. No sense making it hard on yourself from the get go. If at some point in time there is an 'inspection' (not very likely unless there are complaints) then at that time you can deal with any hurdles they may or may not decide to implement. In which case you are in a better position anyways, because they have already issued the license. It's all a 'game' ...you've just got to learn how to play it.

(And a few hundred bucks to speak with an attorney beforehand is always a sound investment.)

 

[kingfisher studio]

Hello
What you have to do, is go to www.state.pa.us
once there go to the link called business in Pa. its under the heading "info & services", on the left side of the page.
This will tell you everything you need to know about a license.
You can do the whole thing on line for $150.You have to register and i think, do a fictitious name search.
I would reccomend looking into an LLC.(Limited Liability Corporation) It puts an extra barrier between your business and your personal assets if you ever get sued.
Let me know if you need more help.
Pat
P.S. if you do any selling at public events you should have one. The tax people are out there lurking, and they want their sales tax. Ive seen people get busted at the same events i was at.

 

[Stacy E. Apelt - Bladesmith]

Good advise. The simple statement that ,"I make handmade knives as a hobby and want to sell them at knife shows." is all you need to say.You will most likely need a post office box,also.As long as you don't have people coming to your house to do business (at least don't say you do),there is usually no problem with getting a license. You will have to get a state tax ID number and file sales tax ,too.
Remember to keep all records and receipts.With a business license,you can deduct travel,nuts and bolts,all supplies,show fees,magazine subscriptions,air filtration devises,etc. You do a schedule C each year on your taxes as other income.You have to have a profit in one out of three years to keep it as a business.

 

[Gossman Knives]

jiminy and bladsmith pretty much sumed it up. I've had a business license and tax ID since 1997. I started out selling factory knives at gunshows and got a traders license (exhibitors only) because I didn't have a store front. I'm now considered the manufacturer but still operate under the same license. I talked to my taxman and he told me what was required. The only difference for me now is I won't have to deal with an inventory. I still have to pay sales tax on what I sell.
Scott

 

[Don Hanson III]

Sounds like trouble to me BUT I'm may be wrong. I've been fulltime for 15 years and never had one and no body bothers me either. But hey, I live out in the middle of nowhere also Why do you want one?

Don Hanson lll

 

[kingfisher studio]

Good advise. The simple statement that ,"I make handmade knives as a hobby and want to sell them at knife shows." is all you need to say.You will most likely need a post office box,also.As long as you don't have people coming to your house to do business (at least don't say you do),there is usually no problem with getting a license. You will have to get a state tax ID number and file sales tax ,too.
Remember to keep all records and receipts.With a business license,you can deduct travel,nuts and bolts,all supplies,show fees,magazine subscriptions,air filtration devises,etc. You do a schedule C each year on your taxes as other income.You have to have a profit in one out of three years to keep it as a business.

Pa has specific categories that businesses must fall under. This more than likely would be considered "manufacturing".
Also the business lic. basically is your tax id #. Depending on income level you might want to go for semi-annual reporting. Once you get above a certain amount I think they automatically switch you to quarterly.
They also have switched to either phone or internet only, reporting of tax income.
Good advice on the record keeping.Its all beyond me now. I just pile it up and hand it to my accountant.
Pat

 

[Gossman Knives]

Sounds like trouble to me BUT I'm may be wrong. I've been fulltime for 15 years and never had one and no body bothers me either. But hey, I live out in the middle of nowhere also Why do you want one?

Don Hanson lll

If you set up and sell at gunshows, knifeshows or any other trade shows you're required to pay sales tax to the state you're selling in. The promoter has to send in a list of venders to the state he is having the show in. There are guys that I know that do not have any license and take a chance. If you can get away without getting one great. I got one because I was buying factory knives from wholesalers and needed a license and tax ID to get the wholesale pricing. If I had to do it over as a knifemaker, I won't bother with it. I haven't found a knife making supplier yet that sells wholesale and I've asked them all. The one place it benefits me is the Tandy Leather store where I get sheath making supplies.
Scott

 

[Dan Gray]

Sounds like trouble to me BUT I'm may be wrong. I've been fulltime for 15 years and never had one and no body bothers me either. But hey, I live out in the middle of nowhere also Why do you want one?

Don Hanson lll

because the IRS wants your money..

it's nice to fly out to the Blade show and deduct it
of cours it comes off the top but it's still costs you. but not as much
and to add..
here it's not bad
we get a Sale tax certificate number to pay the sales taxes collected.

and now we have to have a resale certificate. :grumpy:
with this if we don't buy at least 10K worth of stuff for resale we have to
pay the sales tax up front then claim it at tax time.
I'm over the limit so I'm issued the certificate

here in this town I can have business on the same property as my home.
but your homeowners insurance will go up.
mainly if you have a biz sign out.. or someone tells them
or you get much foot traffic
my tax guy does the deprecation and stuff like that,,
a good CPA would know a lot and should lead you in the right direction.

 

[Gossman Knives]

You're right about that Dan. The trip to Atlanta is a business trip for me and a tax right off. I'll be able deduct part of my house this year and all my equipment and materials. So having a biz license does have it's perks.
Scott

 

[Dan Gray]

You're right about that Dan. The trip to Atlanta is a business trip for me and a tax right off. I'll be able deduct part of my house this year and all my equipment and materials. So having a biz license does have it's perks.
Scott

I believe if you use say one room for business and you have say 5 rooms
you can deduct 1/5th of all the house hold expenses IE; ele, water, heat...

big stuff should would be deprecated like the new shop.
the big nee mill you want so on

make sure everywhere you go has KNIFE biz written on it , and take mileage too... I had the drive way paved. my tax guy said, if you don't try to deduct it you can't

 

[Gossman Knives]

Yep that's what my tax man said. I'm thinking of an addition on the back of the house as an office and a place for customers to come. Bad idea to have them come into your work area. My shop is my domain, so no customers. To much clutter.
Scott

 

[Chiro75]

If you want to screw with the Man, hire an accountant. I can't stress enough how much it pays off to have an attorney and an accountant figure this stuff out right. After the fact problems are too little too late! In most areas you can devote 20% of your square footage of your home to home business, but you also have to have approval from the city for that, so you can run into zoning and local problems. My chiropractor practices out of his house, but he had to beat some people up in the city government to make it happen (helps that his dad is a billionaire, though, I'm sure). Anyway, again, I tend to be ultra-conservative, but there is a reason there and business attorneys and accountants, so I would take advantage of their services. Heck, maybe you can find some that you can pay in knives (or scare enough to make them think twice before padding your bill!).

 

[Gossman Knives]

I'm covered. My house and property is zoned commercial. Since I don't have foot traffic for now nobody knows any better.
Scott

 

[Chiro75]

My house and property is zoned commercial.

So, do you grind in your slippers and robe? You may want to put something over your coffee cup, too, between sips!

 

[Gossman Knives]

Also anything I add to my house that's considered part of my knife business is deductable. That would mean an addition to the house. If I buy new computer equipment, it's deductable. I deducted my KMG belt grinder last year. The furnace I just got is deductable and so on. Anything business related is deductable.
Scott

 

[Gossman Knives]

So, do you grind in your slippers and robe? You may want to put something over your coffee cup, too, between sips!

LOL, I've actually been grinding in my longjohns and slippers.
Scott

 

[Dan Gray]

zoning

what's that never heard of it..