Business startup

Joined
Jun 11, 2020
Messages
4
Looking for valuable input regarding the startup of a knife business.
I’m not looking to make a fortune but I was told by my accountant that before I sell a knife that I should establish an LLC to protect myself. This sounds great and I understand that it’s rather inexpensive.
Does anyone know if there are tax advantages to doing this?
I wouldn’t mind having some deductions.
I would basically like to have my hobby pay for itself
 
Are you planning to make knives or just sell them?
Plans are to build and sell complete home forged knives but I may also purchase some blanks from a reputable supplier and finish them to sell.
I may also outsource the final heat treat work in order to be able to provide records upon request.
 
How many knives have you made so far?

This is sounding a bit cart before the horses right now.

There's also a good makers sub forum here where you can talk with folks who've been making and selling knives for a long time.
 
How many knives have you made so far?

This is sounding a bit cart before the horses right now.

There's also a good makers sub forum here where you can talk with folks who've been making and selling knives for a long time.
I’ve been making knives and blacksmithing for about 10 years now but never set out to do a production run.
I’ve been a toolmaker for about 30 years and I’ve found this to be a nice stress reliever. Like I mentioned, I would like to sell a piece or two from time to time to offset some costs and justify a business that might have some tax benefits.
 
The advantages of an LLC are centered more around liability than taxes, though if knife making isn't your main job there can be some advantage to it. Establishing one is easy and inexpensive enough that I would definitely recommend doing so before you sell anything or perform any kind of service.
 
The advantages of an LLC are centered more around liability than taxes, though if knife making isn't your main job there can be some advantage to it. Establishing one is easy and inexpensive enough that I would definitely recommend doing so before you sell anything or perform any kind of service.
Thanks for your reply, as I said, I’m a toolmaker and not a businessman. I’m trying to get all of my ducks in a row before venturing too far.
 
Thanks for your reply, as I said, I’m a toolmaker and not a businessman. I’m trying to get all of my ducks in a row before venturing too far.
No problem! I'm far from an expert, but I've run an LLC company for a few years now. The big advantage as I understand is that if something happened, say you started a fire while forging and it burned a neighbor's house, they could sue the LLC for damages, but your personal assets like your house or car would be protected.
 
This has been discussed many times. For most makers having a business license is more problem than it is worth. Use the Custom Search Engine in the stickys to look up the dozens of discussions on this subject.
 
I had an FFL for 12 years as a sole proprietorship. The money made from the business and running competition matches was good but the tax benefits were really good for me. I kept my federal/state tax numbers and still filing zero revenue. I hope like you that eventually I can fund the knife making/blacksmith supplies as close to budget neutral as possible. Similar to how I funded my shooting hobby and some very nice additions to the safe

The limitation for me is getting my skill level higher before I would sell a knife (great gifts for friends and family now). Probably will sell some blacksmith crafts long before knives since I will not sell anything I would not by personally Buy
 
You need to think of the LLC as a company ... an individual entity completely separate from you. Separate financial records and accounts, separate equipment, etc. as a sole owner you can (out of your own pocket) contribute equipment and money to the LLC (this is a capitalization / investment), but you can NOT use company resources to buy something for personal use, and certainly can’t take a business deduction for said purchase. If you use company resources to, say, buy a forge or HT oven ... then use that equipment to make 100 knives ... sell one of them, and keep (or give as personal gifts) 99 of them ... that is a BAD THING. If you are audited, you will get hammered with penalties

like Stacy said, unless you are all-in as a full blown business (whether making or reselling as a middle man) it is probably not worth it.

(like Branson, I have an LLC/p-Corp), and when your income stream is reasonable, the tax / retirement account advantages can be incredible - and I had to spend Saturday mornings doing accounting... but like him, these days I just file zeroes ... which is subject to change with little notice ...). Now that I think of it ... it is time for me to file my quarterly reports with the state and feds. Thanks for the reminder...
 
Last edited:
Back
Top