At what point is it a business?

[Polish hammer]

At what point in the firewood market to you take the plunge and become a small business or llc.. I have a young family and take days off my 40+ hour a week job to do wood.. have upgraded splitters saws equipment in general and it’s all been cash which is great but at which point do I make the “business” pay for that? Do you hit a dollar amount?

 

[Multifaceted]

Cash is king, keep the government out of it if you can.

 

[sb47]

Don't keep any written records and don't give any receipts on sales. Logs or unsplit rounds are just logs. Once you split it and stack it, it becomes a product and you can be taxed. They can't tax your logs, only after it's been split wood ready for sales. Don't brag on the internet about sales or how much you make and sell. Leave no paper trail what so ever. Don't give them any way of tracking how much you make. Down play it and swallow your pride and clam your loosing money.

 

[jrider]

I agree with the other responses. Keep it all cash as long as you can.

 

[SuperDuty04]

Not until you start claiming it as income on your taxes and give the government their cut...

 

[gary courtney]

First thing a man must have to be in business is Integrity ! Honesty is Always the best policy period! I have been self-employed since 1983 . My plumbing business is not my source? God is my source. Everything I own belongs to him. So I render unto ceasar that which is ceasar's and I have never wanted for anything. I never have to worry about hiding or wondering if I have my "books" right come April 15th. When all is right with God ,all will be right with man ! Unless you accrue comp time I would not take off from my employer that is keeping a paycheck coming in for my family. Hope my opinion helps you decide!

 

[Corncob]

First thing a man must have to be in business is Integrity ! Honesty is Always the best policy period! I have been self-employed since 1983 . My plumbing business is not my source? God is my source. Everything I own belongs to him. So I render unto ceasar that which is ceasar's and I have never wanted for anything. I never have to worry about hiding or wondering if I have my "books" right come April 15th. When all is right with God ,all will be right with man ! Unless you accrue comp time I would not take off from my employer that is keeping a paycheck coming in for my family. Hope my opinion helps you decide!

Spot-on answer fella ! Search no further @Polish hammer

 

[EagerBeaver]

First thing a man must have to be in business is Integrity ! Honesty is Always the best policy period! I have been self-employed since 1983 . My plumbing business is not my source? God is my source. Everything I own belongs to him. So I render unto ceasar that which is ceasar's and I have never wanted for anything. I never have to worry about hiding or wondering if I have my "books" right come April 15th. When all is right with God ,all will be right with man ! Unless you accrue comp time I would not take off from my employer that is keeping a paycheck coming in for my family. Hope my opinion helps you decide!

Couldn’t have said it any better!

 

[DSW]

I have a young family and take days off my 40+ hour a week job to do wood..

I personally wouldn't make that a habit.

 

[svk]

Once you get to claiming everything, any profit over your declared expenses is going to be taxed at your regular income tax rate for both state and federal levels. Also would you need to collect state sales tax? Uncle Sam will take a good chunk of your declared profits. Now granted you can write off a lot of stuff but the IRS is going to expect you to turn a profit within a couple of years of formation of the business.

 

[Philbert]

Other side of the coin: 'liability'.

Something happens, even if not reasonably 'your fault', someone sues you, and you might spend every one of your young family's last dimes on defending yourself. Even if you prevail. Form a legal entity (LLC, Subchapter S, etc.), get some basic insurance, etc.

You may well find that your homeowner's insurance excludes business activities on your property, as well as any liability coverage, or theft of your tools and equipment. Your vehicle insurance similarly, if you hit someone, or get hit, with a load of firewood. I even carry basic work comp insurance on myself (optional) which protects me if I get hurt even while traveling to and from a job site.

Keep records and you can deduct vehicle expenses, fuel, insurance costs, etc., and even operate on a 'loss'. You can sell your equipment to your business and recover some of your investment.

Helps to have a lawyer and an accountant; just the exercise can help you figure out what your time and effort are 'really worth'.

In Minnesota, we have agencies designed to help small businesses get started (worth scanning thorugh the attached), I am sure that WI does too.
https://mn.gov/deed/assets/guide-starting-business-minnesota-35th-ed-2017_tcm1045-155254.pdf

SCORE is also a good resource, with low cost 'Going into Business' seminars:
https://www.sba.gov/sites/default/files/resource_files/WI_SCORE_Offices_3.pdf
https://www.score.org/content/take-workshop

Philbert

 

[svk]

Other side of the coin: 'liability'.

Something happens, even if not reasonably 'your fault', someone sues you, and you might spend every one of your young family's last dimes on defending yourself. Even if you prevail. Form a legal entity (LLC, Subchapter S, etc.), get some basic insurance, etc.

You may well find that your homeowner's insurance excludes business activities on your property, as well as any liability coverage, or theft of your tools and equipment. Your vehicle insurance similarly, if you hit someone, or get hit, with a load of firewood. I even carry basic work comp insurance on myself (optional) which protects me if I get hurt even while traveling to and from a job site.

Keep records and you can deduct vehicle expenses, fuel, insurance costs, etc., and even operate on a 'loss'. You can sell your equipment to your business and recover some of your investment.

Helps to have a lawyer and an accountant; just the exercise can help you figure out what your time and effort are 'really worth'.

In Minnesota, we have agencies designed to help small businesses get started, I am sure that WI does too.
https://mn.gov/deed/assets/guide-starting-business-minnesota-35th-ed-2017_tcm1045-155254.pdf

SCORE is also a good resource:
https://www.sba.gov/sites/default/files/resource_files/WI_SCORE_Offices_3.pdf
https://www.score.org/content/take-workshop

Philbert

 

[sb47]

Other side of the coin: 'liability'.

Something happens, even if not reasonably 'your fault', someone sues you, and you might spend every one of your young family's last dimes on defending yourself. Even if you prevail. Form a legal entity (LLC, Subchapter S, etc.), get some basic insurance, etc.

You may well find that your homeowner's insurance excludes business activities on your property, as well as any liability coverage, or theft of your tools and equipment. Your vehicle insurance similarly, if you hit someone, or get hit, with a load of firewood. I even carry basic work comp insurance on myself (optional) which protects me if I get hurt even while traveling to and from a job site.

Keep records and you can deduct vehicle expenses, fuel, insurance costs, etc., and even operate on a 'loss'. You can sell your equipment to your business and recover some of your investment.

Helps to have a lawyer and an accountant; just the exercise can help you figure out what your time and effort are 'really worth'.

In Minnesota, we have agencies designed to help small businesses get started, I am sure that WI does too.
https://mn.gov/deed/assets/guide-starting-business-minnesota-35th-ed-2017_tcm1045-155254.pdf

SCORE is also a good resource:
https://www.sba.gov/sites/default/files/resource_files/WI_SCORE_Offices_3.pdf
https://www.score.org/content/take-workshop

Philbert

When the government goes legit. I'll go legit. Besides, you are allowed to make a given amount of money that you do not have to report as income. And just because you get sued doesn't mean you have to pay that money. I have sued and won and never received a single dime. And when I complain that I didn't get my money, the law does nothing. I have been sued and never paid a dime and nothing happens.

 

[NSMaple1]

That's a pretty fine line.

All it would take for some hurt in your world, or at least a huge PITA to have to deal with, is one person blowing the whistle to the IRS on you.

 

[sb47]

That's a pretty fine line.

All it would take for some hurt in your world, or at least a huge PITA to have to deal with, is one person blowing the whistle to the IRS on you.

They must first prove there case, and they must prove a dollar amount. No paper trail leaves no evidence of how much income you made.

 

[sb47]

Stay small and stay under the radar. Now if you go big, then yes do it right. If you feel you must report your income, make sure your expenses show you are loosing money.

 

[Philbert]

It's even stuff like his truck or log splitter getting stolen. Insurance company decides it's primarily for 'business use', and they don't cover it.

BTW, get sued by the IRS and it is a different story. I had to go through my U.S. Representative to clear up somebody else's mistake after about a year and a half.

They are choices you make.

Philbert

 

[Slick50]

Wouldn't want to knowingly do business with someone who would lie,cheat ,or try to scam their way through life. How would one know if they were not on the receiving end of the business transaction where they are being scammed or shorted ? Dad always said if a man will lie,that a man would steal.

 

[sb47]

Wouldn't want to knowingly do business with someone who would lie,cheat ,or try to scam their way through life. How would one know if they were not on the receiving end of the business transaction where they are being scammed or shorted ? Dad always said if a man will lie,that a man would steal.

You mean like the government does? If your paying the government, your are paying a lair and a thief.

 

[CentaurG2]

If it looks walks and quacks like a duck, is a duck. If you are deriving a good amount of your income, probably best to go legit. If you have employees, best go legit.

Back in the day, a sole proprietorship (simplest form of business) has a flow through tax structure. You pay personal tax (taxed once) on money you pull out of the company but all of your personal assets could be attacked if you get sued or go bankrupt. If you want to pass on the business, the new owner will be taxed. They are easy to set up and dismantle.

A corporation is its own entity. Both the company and you will pay taxes on profits (taxed twice) but only the assets owned by the corp could be attacked. This got a little sketchy after the Enron debacle. You can pass on a Corp by adding or dropping trustees. Hard to set up and dismantle.

An LLC is a relatively new structure that tries to blend both give you a flow through tax structure but also give you some protection. I have not studied them as they did not exist years ago. I think it was 1996 before they were allowed in all 50 states.



Best talk to an accountant and tax attorney to decide which is the best choice for you now or in the future.