Business question

[Birddog97]

I am gearing up to start the formal business side of this great hobby. I wanted to throw this set of questions out to see how others have handles these issues. I'm in Texas, and I know there may be state specific issues to concider, so please list your State in replys.

1. What structure did you use to form your business (sole prop, LLC, S Corp or C Corp), and why?

2. Did you get your FFL under your name or the business?

3. Do you price your work "by the hour" or "by the job" (if "by the hour", do you include design time)?

Thanks for your input.

 

[Andrew Biggs]

Hi Birddog

I live in New Zealand so can't help with your questions. But business is a generic question all over the world.

My best advise is talk to an accountant about any business structure that you may be thinking of. They will know the legal and taxation implications of what you are trying to achieve and the best way to go about it. A good accountant can be a real asset and a bad one can cripple you. Beware of cheap accountants and advise in this area!!!!!

How you charge it is a tricky area and something you learn through trial and error, good record keeping and experience. I charge by the hour..............and yes, your design time is part of the charge out equation just like going to the accountant, bank and time spent talking to the customer. Basically your time is divided into two areas. Productive time (eg: engraving/designing) and non productive (eg: going to the bank, talking to customers, time on the phone and all the other multitude of things that you do that are associated with your business......................all must be accounted for and charged out somehow. Generally it is all incorporated in your hourly rate or whatever method you come up with.

Cheers
Andrew

 

[RoycroftRon]

I'm in NY.

I set up as a sole proprietor. If I planned on having others do engraving for me I would have gone LLC.

I listed myself on the ffl but it does have my DBA. Ame listed as well.

I price per job, but that is estimated using a per hour shop rate and definitely, always, and by all means charge for design time. I get a fee before I even let them look at the design in fact. Early on at a show (not a gun show but a show I sold chased metal work) I worked out a design for a sink back splash and let them have a rough sketch. They took it to my buddy, a fellow metalsmith at another table, and tried to get him to do it for less. Luckily he recognized my style.

 

[Ray Cover]

IF engraving was ALL I was doing I would stay a sole prop. Because of the school I set as an LLC only to have the liability protection that offers. Otherwise if you are a one man shop sole prop is the best way to go. Paperwork is much easier.

I got my FFL under Fine Art Engraving with Raymond Cover as the license holder. I don't see a real advantage to doing one way over the other.

I price by the square inch which works out to a per hour shop rate. You MUST charge for design time otherwise keep it a hobby.

Ray

 

[BrianPowley]

I'm in Ohio....Sole Proprietor and I work out of my home. The tax advantages are huge.
My FFL is listed as Brian Powley Engravers. Can't see why it would matter either way. The ATF inspectors are looking for ATF compliance, not tax issues.
They will inspect (and scrutinize) your acquisition/disposition log, not your checkbook or your 1040.
I price by the minute. I use a stop watch. As long as I'm working, the clock is ticking. Design time is also part of the job and I charge for it. As a matter of fact, I won't start to design the work until:
1.) I have an actual cash deposit or
2.) The actual gun that you won't get back if you change your mind and haven't paid a deposit.

 

[Fred Bowen]

My company, Stag Argent Inc, is set up as a type S Corporation on the advice of our accountant. We incorporated in 1999. It has worked well for us. I would suggest contacting an accountant, describe what you want to do, and see what he thinks would be the best business structure from a tax advantage viewpoint.
In our case having a business in our home required approval by the county(Lake County, Illinois), but may well be different in Texas. I probably would not have gotten my FFL without the county's OK. The FFL is listed as Stag Argent Inc.

I price my work like Roy.

 

[Tira]

Originally I was set up as a sole proprietorship for quite a few years. A couple years ago I formed a LLC when I opened the hand engraving gallery. Had to reapply for the FFL under the LLC name. It wasn't difficult, but it did cost more to change than if I had just kept the sole proprietorship. It depends on what you ultimately will do with your business.

 

[monk]

i was sole. i priced myself into work that ultimately led to my working for far less than i should have. fortunately, many of the custom knifemakers and gunsmiths i did work for sort of gave me a more realistic business approach. i learned slowly to count all phases of the work into the final invoice. i also was always aware that i wasn't the world class master i would like to be. i ended with a pricing system that's fair to me, and usually the client. after you've done a certain type work several times, you'll not only get better, but you learn what not to do. and working up a quote becomes second nature. one thing i avoid period ! if a client feels my quote is too high, i never lower it. doing this is good for clients, bad for you. my ffl, i can't remember which way i named it. at least then, those folks were easy to deal with. if you are home-based, be careful to write off only legitimate expenses. your tax advisor ( and you should have one), should give you all info you need to do this. too many questionable writeoffs become a red flag. an example-- if you engrave on the kitchen table, your kids' desk, next time your basement- this wont fly. you have to show that the area in which you conduct your business, is just for the conduct of business. fortunately i had an engraving room, as well as a little office. nothing but business was ever conducted in those spaces.

 

[Andrew Biggs]

i priced myself into work that ultimately led to my working for far less than i should have

Monk........that is one of the truest business quotes I have ever read and sadly, no matter how much you tell people, they keep doing it with each generation.

Cheers
Andrew

 

[warren smith]

The question of how to price is so important it really should be expanded upon .

 

[tim halloran]

BirdDog97: The Best Thing You Can Do For Yourself Is Make Sure You Can Do Saleable Quality Work, Before You Hang Out Your Shingle. If You Do Subpar Work It Will Only Come Back to Bite You In The Backside Later In Your Career. If You Do Good Quality Work, For a Fair Price, People Will Come Back To You, And the Rest will Take Care Of Itself. Gradually You Will Be Able To Raise Your Prices, But Don't Think There Won't Be A Period Of "Dues Paying" Involved.

 

[Marrinan]

There are several threads dealing with pricing your work. If interested in an in-depth on that I suggest using the search feature. With that said I would strongly suggest that you begin by pricing your work at a level that will reflect your costs-materials, layout, tool depreciation, overhead etc. plus profit. As your skills increase and you become more sought after then your pricing can reflect that but never work below cost. That will do you and all other engraves a disservice and may cause some to give up just because they are making a dollar an hour. Just my opinion-Fred

 

[Birddog97]

Thank ya'll for your feedback and input. I have several friends from Grad School that are Attorneys and CPA's. Maybe I should reconnect and buy them a beer. I'll let you know what I find out. Really good advice about getting a deposit or the piece to work on before starting any work.