Starting a small side business

[Dave Sherman]

Anybody have some tips on making a small side business? I've been successful at repairing antique radios, and not surprisingly, tube guitar amplifiers are very similar (and much simpler). I play guitar, and I have a few amps of my own. I just fixed up an amp for a friend, made a few bucks, and wouldn't mind making a little business out of fixing guitar amps. I've restored a couple of radios for other friends, and they've been very happy with the results.

I guess the two things that come to mind are how to get known, and whether any legal things come into play. My ex started her own business, but she's a vet working on horses. In her case, getting the LLC was a necessity. Yes, I plan to be honest on what I'm making, no sense having the IRS getting suspicious.

 

[The_Jeff]

I would check and make sure your town doesn't have any arcane laws. Like mercury disposal or storage of old vacuum tubes for example. Or town business license requirements; some stupid municipality tried making bloggers get licenses!

If your homeowners insurance finds you were fixing a radio for profit and made the house go kaboom they might not pay out.

But you can write your office space off your taxes somehow.

 

[MG_Guy]

Originally Posted By: Dave Sherman
Anybody have some tips on making a small side business? I've been successful at repairing antique radios, and not surprisingly, tube guitar amplifiers are very similar (and much simpler). I play guitar, and I have a few amps of my own. I just fixed up an amp for a friend, made a few bucks, and wouldn't mind making a little business out of fixing guitar amps. I've restored a couple of radios for other friends, and they've been very happy with the results.

I guess the two things that come to mind are how to get known, and whether any legal things come into play. My ex started her own business, but she's a vet working on horses. In her case, getting the LLC was a necessity. Yes, I plan to be honest on what I'm making, no sense having the IRS getting suspicious.


Establish a separate bank account for your business. LLC or incorporation is possible but not necessary, but you will need a TIN before you establish your bank account. If you can establish a building not attached to your home as your business address then all expenses associated with it will be deductible.

Do good work and the money will follow.

 

[CivicFan]

The number one question should be: Are there any liability risks - i.e. can any of your repairs cause damage? If so then an LLC will be a prudent choice so that your assets are separated from your personal assets and when someone sues, they will sue the LLC, not you personally.

 

[SuperDave456]

Albert Einstein was once asked by a reporter "What is the most complicated thing?"

Without pause Mr. Einstein replied "Tax Law"

All I know is be very careful.

Have separate checking accounts and don't double dip.

Also, just an FYI, even if it is a "Hobby" if you make a profit for 2 consecutive years the IRS considers it a Business and is taxable as such.
So even if you are doing this on the side you might want to keep a record of what you spend the money you "make" on it.

The IRS is notorious for going after little guys and letting the big fish get away, just CYA.

 

[CivicFan]

Tax law is not very complicated (well for a finance guy at least) but can be troublesome as the nature of the revenues and expenses gets sophisticated. For a small business, the main things to worry are the FICA and payroll taxes, keeping track of expenses, depreciation.

A hobby is beneficial to the IRS because they limit the expenses to the income from hobby (section 183), i.e. you cannot have a net loss for tax purposes on a hobby. It is better to function as a business if you are going to have losses.

 

[Smokefan1977]

Originally Posted By: CivicFan
The number one question should be: Are there any liability risks - i.e. can any of your repairs cause damage? If so then an LLC will be a prudent choice so that your assets are separated from your personal assets and when someone sues, they will sue the LLC, not you personally.



This is mostly true, except for debt in which you provide a personal guarantee on. I suggest a business plan, source of funding besides credit and begin build your comapanies credit ASAP. If your doing contract work or Gov't work get your DUNS number right away. lastly make sure people truely want your service. Other than that I say go for it. I did 6 years ago and make a living like I could only dream of and business continues to grow. It all started from something I love

 

[JimPghPA]

And when you stop doing the business, be sure to cancel the TIN. If you do not cancle it the IRS will come after you years later for back taxes.

Some say you should spend money on legal adds when you cancel a business, but all you have to do to cancel a business is cancel the TIN.

 

[Smokefan1977]

Another thing I learned quickly is don't do your own taxes. You need a crutch if you get audited and will also get much more back. I found it worth it. Now my CPA comes by every tues and I don't have to do anything

 

[Pop_Rivit]

By a "side business" do you mean a hobby where you make a few dollars? Or do you want to start a legitimate business?

If it's the latter, then I highly suggest attending some small business workshops, and get some mentoring from someone who's been there and knows the possible pitfalls. Once you're ready to really start make sure you have quality legal advice and guidance.

On a side note, as an antique radio collector I'd love to have someone locally to whom I could take my "barn finds" and have the chassis restored and recapped. In the right market, if you advertise in the right circles I can see that being a lucrative small business/hobby.

 

[Dave Sherman]

Hmm, all interesting points brought up. No mercury involved in tube equipment, unless you come across some amateur radio transmitter that uses mercury vapor rectifiers, but I have yet to encounter one of those. About the only hazmat would be lead-based solder, but that's no different from lead solder used in solid state stuff. I seriously doubt the city is worried about the boxes of tubes and radio parts I've accumulated.

I hadn't thought about the insurance aspect, but if somebody's amp goes up in smoke while I'm working on it, I could see how that would be an issue.

Pop Rivit, I guess that's a fair enough question. I would see it more as a hobby that makes a few bucks. I like repairing amps, and I like bringing old radios back to life, but when you've got 18 radios and 3 guitar amps in your collection you're reluctant to bring more in. I just figured if I could spread the word among musician friends, make some business cards to distribute, have some fun doing what I like to do and make a few bucks at the same time, that would be worthwhile. After talking with some musician friends, it seems that folks who can repair guitar amps are in high demand, especially if they know their way around the glow-in-the-dark technology . And if it extends into fixing antique radios, that's cool too. I just figured that's a much smaller crowd, though I have fixed a couple of those for friends, for which they offered to reimburse me for my efforts.

Thanks all for the info, certainly things to keep in mind.

 

[Papa Bear]

As a retired electronics tech let me say: "long live the 6L6" !!

I fixed up a 1965 Fender BassMan for my son. Tubes are cool.. but you'd have a hard time making an iPhone using 12AT7's