Business Side of Craft Shows
by Natalie Goyette
a craft show business when you're really an artist at heart may be a
rude awakening for you. Nevertheless, if you decide to turn your
hobby into a business, you need to switch hats from time to time. You
wear your artist hat when creating and producing your crafts, and you
put on your businessperson's hat when you're running the business
end. Begin successful on the craft show circuit doesn't just mean you
have a great product; it also means you have a decent head for business.
Planning your craft show business
It's not absolutely essential to write a craft show business
plan if you're not seeking a loan or partner, however, it can help
you focus your business goals from the start. There are numerous
books and Web sites on how to write a business plan, and most will
fit with craft shows just fine. The most crucial elements are the
financial projections-which include your estimated income and expense
for the next several years-and the marketing plan. The marketing plan
helps you identify your target audience and how you can best find and
serve them. This is essential as you develop your craft show product
and find the right shows at which to sell. If you are seeking capital
or a partner, you will probably need a complete business plan. If
doing this overwhelms you, contact your local Small Business
Administration, Small Business Development Center, Chamber of
Commerce or local universities to find help with developing a
professional business plan for your craft show company. At this
point, you may also seek the advice of an attorney to decide what
business entity yours will be-a sole proprietorship, a partnership, a
limited liability company or a corporation. You can always grow into
corporate status later on, though it's advisable to at least know
your options up front.
Licensing your craft show business
Most cities require any business, home-based or otherwise, to
register and purchase a business license. These range in cost from
$15 to $100 depending on the size of your city and are obtained from
the city clerk's office in most cases. It makes your craft show
company official and enables you to conduct business legally. Find
out if your city requires any special-use permits for operating a
home-based business. The rules may differ if you have customers,
supply trucks or employees coming to your location.
You may also need to file a fictitious name statement with your
county offices if you call yourself anything other than your name,
such as Posh Pottery. This guarantees that nobody else in your county
is using the same business name. From here your file the name with a
newspaper, and then you can open your business checking account. It's
highly advisable to keep craft show business income and expenses
separate from personal if you are serious about being in business.
Then on a regular basis, you can "pay" yourself from your
business account. You can also now file your taxes as a business
entity and take advantage of the many tax exemptions for businesses.
Car expenses or mileage, supplies, overhead costs and more are all
deductible. Find a copy of a schedule C (www.irs.gov) to see some of
the expenses you can write off.
Now you have officially moved out of the hobby status and in to the
serious craft show business. Actually the IRS considers your
enterprise a hobby if you haven't made a profit in two out of five
years that you file as a business. If that happens, it's time to
rethink taking your goods to craft shows as a business venture.
You will probably need to get a resale (sales tax) license. This
allows you to buy wholesale anything you will be reselling and not
pay taxes, however, you need to charge tax on your crafts and then
submit it to the tax board either monthly, quarterly or annually.
Check with your local state board of equalization or state office of
taxation to find out what their rules are. It doesn't cost anything
to get a resale license.
It's helpful when starting out to set aside a savings account for
your sales tax to be sure you have it when it comes due. Also check
with your sales tax office if you are required to collect tax when
you're selling in other states. Some show promoters collect tax from
you at the end of the show, so you need to keep accurate records,
which you can do by issuing a receipt with every customer purchase.
Make sure you find out the amount of tax you need to charge at the
show as it varies by city, county and state. Also, it's a good idea
to carry your sales tax permit everywhere-you may need to pick up
some supplies, and you can avoid having to pay taxes on them.
Each city, county and state has different regulations regarding
licensing, so make some phone calls to find out what's required, and
do this well before your first craft show.
Natalie Goyette shows you how to make your craft show business
profitable in her best selling ebook: Craft Show Success Secrets.
Visit her site: http://www.craftshowsuccess.com.
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