Customs Pricing – Opinions and Views?

The money I pay my CPA is made up by his expertise at tax time. Any serious maker is foolish to not have one. As far as bookkeeping the maker should do that. He should know where his money goes. I have a bookkeeper lady help me with quarterlies just so I know I'm paying the right taxes at the right times. They will help you with Social Security taxes as well. I just worry too much to do it myself and end up in a bind at the end of the year.

There's no reason a professional knife maker shouldn't do the things every other business does. A business is a business.
 
My wife takes care of the books and our web site. Tina built our web site from scratch and with no background in web design. She receives a salary. We have a lady in town that does our taxes ($175 per year) and she is good. No profit/loss statements here, I'm not set up as a business but as self-employed.

This works good for us and we pay little taxes but I may need to look into the different corp. entities
 
HI Don,

A piece of bad news. The IRS considers self-employed people to be a business.

If you aren't set up as any kind of business entity an Audit could be very very expensive.

WWG
 
Don Hanson III said:
My wife takes care of the books and our web site. Tina built our web site from scratch and with no background in web design. She receives a salary. We have a lady in town that does our taxes ($175 per year) and she is good. No profit/loss statements here, I'm not set up as a business but as self-employed.

This works good for us and we pay little taxes but I may need to look into the different corp. entities
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Don, that's impressive as you have a very good website.

That was the point in mentioning accountant/bookkeeper in my previous post as some bookkeepers (educated but not CPAs) are pretty savvy at taxes and the rest and are much more affordable.

Josh, after seeing photos of your shop and reading your post here, you are no doubt headed down the right road. More makers could follow.
 
Just a note for what it is worth. The IRS is less likely to audit you if they see a CPA's name on the "Return Prepared By" line on the tax return.

Additionally, if you are audited the CPA will receive a questionnaire with regards to the return(s) in question. If the CPA answers the return to the satisfaction of the IRS...no audit.

Also, the IRS stated this year that they planned on increasing their audits again (after that period of the Kinder, Gentler IRS).

WWG
 
WoodWorkGhost said:
HI Don,

A piece of bad news. The IRS considers self-employed people to be a business.

If you aren't set up as any kind of business entity an Audit could be very very expensive.

WWG
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I should have said, I'm not a corporation. My wife just said, we are a business. I used to file as 'self-employed' but we now file as a business. I need to look into the details.

Sorry about that,

Thanks for all the info WWG :)
 
WoodWorkGhost said:
Just a note for what it is worth. The IRS is less likely to audit you if they see a CPA's name on the "Return Prepared By" line on the tax return.

Additionally, if you are audited the CPA will receive a questionnaire with regards to the return(s) in question. If the CPA answers the return to the satisfaction of the IRS...no audit.

Also, the IRS stated this year that they planned on increasing their audits again (after that period of the Kinder, Gentler IRS).

WWG
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If you're right an audit shouldn't be a problem...... just a pain in the ass :eek: ;)
 
Hi Don,

I figured you knew what you were talking about. I was just trying to eliminate confusion that could come from what you wrote.

Hi Keith,

If you were working with a CPA, they would save you more money then they would cost. Also, remember, their fees are deductible!

I do my personal taxes, my LLC taxes and my Corporate taxes.

The difference between the Corporate and the other taxes....My CPA goes over those and fills out the paper work before it goes to the IRS. Even with my experience and over 200 Hours of Tax training with H&R Block...I still use a CPA.

WWG
 
Keith Montgomery said:
I agree that a good CGA (Canada's equivalent of a CPA) is definitely worth the investment.
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Some makers don't have the $$ to make the investment, so in that case a good bookkeeper trained in tax and the principles would be better than nothing. One should not do without because they can't afford the certification.
 
Kevin Jones said:
Some makers don't have the $$ to make the investment, so in that case a good bookkeeper trained in tax and the principles would be better than nothing. One should not do without because they can't afford the certification.
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For a new business person, taking the first step toward an understanding of the tax issues is usually the hardest part. It takes additional effort that seems better spent on other business concerns.

But it ultimately has to be addressed, and as others have indicated here, it has substantial legal benefits. For some of the tax benefits to be realized, the proper activities and expenditures need to be in place before the actual tax filing.

Much better to pay the modest fees and get assistance on the way up the learning curve. How do I know this? Because, of course, I didn't follow this advice and did it the hard way!
 
WoodWorkGhost said:
Hi Don,

I figured you knew what you were talking about. I was just trying to eliminate confusion that could come from what you wrote.

WWG
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This is why my wife and our tax lady (she may be a CPA) handle the books and tax returns :D

Makers, if you spend all your time making knives, make sure you have someone to take care of the books and returns. This is very important.
 
Another reason to be set up as a business entity is to reduce the amount that you can be sued for.

A LLC (Limited Liability Company) does a great job of that.

If you are not a business and someone hurts themselves with one of your knives. YOU can be sued. If you are a business and someone sues you, they can only go after BUSINESS ASSETS.

WWG
 
rnrossi said:
For a new business person, taking the first step toward an understanding of the tax issues is usually the hardest part. It takes additional effort that seems better spent on other business concerns.

But it ultimately has to be addressed, and as others have indicated here, it has substantial legal benefits. For some of the tax benefits to be realized, the proper activities and expenditures need to be in place before the actual tax filing.

Much better to pay the modest fees and get assistance on the way up the learning curve. How do I know this? Because, of course, I didn't follow this advice and did it the hard way!
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I totally agree. When I owned my businesses I was fully "invested" in legal and accounting.
My point is just not all Bookkeepers are just adders/subtracters.
Some are very skilled, just don't have the certification and provide a good alternitive for the new business just starting out.
 
Kevin Jones said:
My point is just not all Bookkeepers are just adders/subtracters.
Some are very skilled, just don't have the certification and provide a good alternitive for the new business just starting out.
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This is true. It is also true that not all CPAs are a good investment. (Same with any field, nothing against CPAs.)

More importantly, what I was implying is that the business owner really needs to understand the tax issues to maximize potential for profit, and perhaps, even survival. The CPA and/or Bookkeeper who is worth their fee makes the learning process much easier.

The benefits should easily offset the fees.
 
Question for Les on pricing. There are a number of makers that you would be hard pressed to get your money back on the secondary market-even in pristine condition. Good maker's, who's prices are reasonable where they are. I know that you offer a trade-up program, but short of this, it's possible to buy an appropriately priced knife and not get your money back on the resale. Does that mean that they aren't value-priced or that the buyer didn't do their homework?

It seems that if a particular maker isn't up-and-coming or white hot, you will end up loosing money if you want to sell on the aftermarket. It isn't good enough for the maker to simply do great work and be consistently desirable (as opposed to rock-star status). I think this is why you find a good number of people who just "buy what they like". You can do the homework and buy pieces that are going to net you a profit on resale, but those won't necessarily be ones that you enjoy collecting. People seem to have come to expect that if it isn't a hot maker, the aftermarket shouldn't even demand the maker's original price. I can understand this about some in the middle of the heap or completely unknown, but what about the guy who is #10 or #15?

Any rationale for this phenomena? Did these makers saturate the market? Are too many sellers settling for too low of a price in order to turn a quick buck for their next purchase?

Thanks,
Nick
 
Nick,

Do you know of anything - anything - that a random individual can buy and sell without loosing money? What about a great car, say a Toyota Camry? Or a nice piece of NIB electronics? Or maybe a piece of furniture? What about a dozen roses? Or a bottle of fine whisky? A computer? Some jewelry? A nice watch?

There's a good reason why retail is a full time job. It takes hard work to find the people willing to pay for, well, anything.

(That's why I have a longstanding disagreement with Les on whether knives can be an investment. You can certainly make money buying and selling knives, but it's a job - part time or full time.)
 
Joss,
I agree with your comment, but none of the items you mentioned are collectibles. They are all items that are expected to be used and expected to depreciate. Custom knives on the other hand are considered by many to be art, so it isn't as improbably to expect that it wouldn't depreciate. So, to answer your question about what the random person can expect to buy without lossing money--pick a collectible item. If the buyer does their homework and watches trends, they can probably at least break even with smart buys.

That being said, the reason I asked it of Les was because he seems to be one of the few that believe that you can consider knives an investment. And because it seems that he has indicated that while homework is necessary, the average buyer has a lot to choose from in the way of what he/she can expect to not loose money on. I think it's a much more limited, but perhaps I'm just selling to the wrong group.

Nick
 
Nick,

What I say is true whether used or not - the fact that it could be expected to be used has nothing to do with it, as long as it is not effectively used.

Certainly this is true of other collectibles too (I included jewelry and the fine watch to cover for this, as those are two areas I have some limited experience in.)
 
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