Business questions help needed

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  • #49905
    joe austin
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    • Topics Started: 3
    • Total Posts: 10

    I am thinking about opening a sideline business doing mainly watch repair, with some jewelry and clock repair as well. In doing so I have a few questions that some of you might be able to help with judging from your other posts.

    1. After forming a LLC, would I be able to deduct all tools as expenses? Have you done this, and what was the result? Do materials count as well, how do you account for these?

    2. I am thinking of taking some NAWCC classes to supplement my learning. Are these deductible expenses as well?

    3. This is a very small enterprise using some jewelry stores to feed repairs in to my hands. If you have operated a business such as this did you carry general liability insurance ?

    If you can help please do, I am in a launch phase, and this all has to make sense before I do anything further.

    Thanks,

    Joe

    #64281
    bernie weishapl
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    • Topics Started: 58
    • Total Posts: 1218

    Not sure about a LLC but I am a sole proprietorship. I will try and answer your questions. I have H & R Block do my taxes because with depreciation I just want someone who knows what is going on and the tax laws. I would suggest you get someone who knows the tax laws in your state or area to help. I also use QuickBooks which can be deducted for my business to make invoices, collect payments, etc and keep track of my profit and loss. Just make sure you keep good and accurate records in case the State or the IRS comes a calling.

    1) Yes you can deduct tools on your taxes. The big expensive tools I use depreciation. As for parts at the end of the year I have what my beginning inventory was at the beginning of the year and my ending inventory which is used for tax purposes. I also deduct part of the gas bill for heat, part of my electric bill, my cellphone which I use for business, any supplies you use to do shop repairs, computers and software you use for business, insurance for the business, sales tax you paid, advertising, mileage for your vehicle used for business, etc. Since this business is at my home I can only deduct part of the electric, gas, etc which is all on one bill for the house. You will have to keep records of mileage if you use your vehicle for business. I use mine for service calls for grandfather clocks. I keep a book in my pickup which I write the date, beginning mileage and ending mileage.

    2) I believe you can deduct classes and professional fees such as belonging to NAWCC, etc. Check with a tax expert for sure.

    3) Yes I do carry liability insurance. I carry it no matter if I do farmed out work or just work that comes in my shop from customers. I have it in case anything happens such as fire or if something gets broke in my shop. Since I do this work at my house where I have a shop I also have it in case a customer falls or get injured on my property.

    4) You will need a sales tax license if you take in customers items for repair. Also you will need it even if you do work farmed to you by jewelry stores or other clock/watch shops most times they will collect the sales tax but you still have to report it on you quarterly sales tax report. If they collect the sales tax you will report that they were tax free on your end. It is something you should check into.

    Just some of the things off the top of my head this morning. Hope it helps.

    #64282
    joe austin
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    • Topics Started: 3
    • Total Posts: 10

    Thanks for the reply, I am still feeling all of this out, and I have the luxury of taking my time to get it right. I feel confident making most repairs now to wristwatches, but some complications are still too much for me. I also struggle sometimes with getting hairsprings right, replacing balances etc.. However I want to start the business now, so I can expense tools, even if the bulk of my repairs are battery swaps and CLAs. Eventually I hope to be able to be a one man shop, but that might be 5-10 years away. For now I am fine starting small. If by this time next year I have only had one or two paying jobs, but have outfitted my shop, and attended several classes I would call it startup expenses.

    #64283
    bernie weishapl
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    • Topics Started: 58
    • Total Posts: 1218

    Sounds like you have a plan in place. Let us know how things are going. Good luck.

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joe austinBusiness questions help needed