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Posts: 4266
| Read the "Excise Tax" thread over at the "Basement Bait Builders" forum, and you tell me.
Are you willing to see a 10% increase, probably more because we'll all have to hire accountants, or should the BBB become The Muskie Underground?
I don't make squat for making lures anyway, how can I come up with money for Uncle Sam that I don't have?
I know that I'll quit rather than face fines and penalties.
Beav |
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| I think that is part of running a business. If you cannot turn a profit, then it is not the business to be in. If you do it and just want to break even, then with all your write offs and taking a loss if you did not make money will eliminate much of your taxes owed. Once you make it a business, it is a business...just like the rest of them...Ben |
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Location: The Yahara Chain | The excise tax is not new... You could just keep hiding in the basement. |
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| Beaver,
I made a lot of baits a few years back and always paid excise tax. It sucks, but it's important that you do, too. Others have been caught and it ain't pretty. Remeber that you owe 10% on all the baits you've already made.
I don't mean to imply that this applies to you, Beaver, but I always get a kick out of how peoples' attitudes about "rich business owners" change when they have some real exposure to the risk and demands businness owners take on.
John |
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Posts: 734
| Are baits the only thing that this applies to, I have never heard of this before. |
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Posts: 169
| No. If you read Publication 510, you'll see there are many things taxed!!! |
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Posts: 4266
| Most lures that I made was less than 100, and that was last year. Year before it was about 70, that's because I did around 40 Nemos at Christmas.
I'm going to wait to talk to people who know about this "Business not for Profit" heading, like the guys who make lawn ornaments. More than 75% of what I make goes right back into making new lures.
If not, cost will go up, baits won't sell, but I'll have a hell of a lure collection. But you can sell all that you want on e-bay. They don't charge you an excise tax, but they hit you with fees that are about equal to it.
I don't have to pay if all I do is paint.
Anbody taking applications for a lure painter? |
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Posts: 696
Location: Northern Illinois | Hey Beaver, I think you should change your name and stay in the basement! Once they start catching on change it again! I can see it now...the Elusive Beaver...Wanted by the F.B.I. LOL He's armed with a 7'6 Heavy Duty Musky rod and many Perkettes! |
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Posts: 1504
Location: Oregon | Perhaps John or someone else can answer this question. After figuring in all my expenses for each year, I end up paying taxes on what's left which isn't much. I have always assumed that the excise tax is figured "no matter what" on every bait that's sold "before" all other expenses are deducted, correct?
Jed V. |
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| John
ARE U INSANE??
500or 5000 in excise tax "that i get a kick out of" to a dude on workers compensation pulling down maybe a grand a month is WAY #*^@ different than some porsche driving yuppie that "takes risks" with other peoples millions.
what does it matter if u'r a multi millionaire, that you just burned 500k on a "blah blah" or whatever, or have to pay some in taxes to the gvmt
it won't keep mr millionaire from paying for all his toys, cars , women, and houses
500 could make or break a dude like me...i can't speak for beav, but i can assume if his "big business risks" were paying off...he'd be sending me baits for free huh??
if i were u beav, i'd quit advertising, dissappear for a while..the "give" them to the people that request them.
basically, any way u can avoid paying the gvmt more than they deserve anyway, i would support.
if that meant less perkas, less chrome...so be it...
my big business attitude and I already have ours.
Edited by The Yeti 5/3/2006 11:29 AM
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| Jed: correct. Exise tax is paid on the gross sales price. It's usually built in so when you buy something you don't see the addt'l 10%, rather than being a separate line item. I took the time to review the IRS pub to refresh my memory on these things. It has been a few years.
As for the rest, I agree that taxes suck. Part of being a business owner was my only point. It's tough out there, even for big businesses. Everyone starts somewhere. |
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| Also, check my last response on the other thread. It is a manufacturer's tax, so the taxable event is the sale at final manufacture and not necessarily the sale to the consumer. For a "basement bait co." that only sells direct to consumers the final manufacture point is the sale, though, so they're one and the same. |
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Posts: 1207
Location: Pigeon Forge TN. | Hey Beav,
Now you know why I don't make baits.
I pay enough taxes as it is
If you are just painting than there is no excise taxe.
When I buy blanks the excise is held by the manufacturer or should be. I only add paint and am not manufacturing anything.
But on the other hand, I wouldn't be to loud about it cause if the eyes and ears of the Gov. sees a chance to rip you some more than they will add more to the list that have to pay it.
Their eyes and ears are everywhere even lurking around the corner. Free Country, Yeah. |
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Posts: 1207
Location: Pigeon Forge TN. | Oh, By the way.
From what I understand, you can come here from another Country, start a business and pay NO TAXES for seven years. After that you do. However, Sell it before the time is up, make a great profit, move back to where you came for a year, than come back and start all over again.
Free for them anyway, Yeah.
Edited by Stan Durst 1 5/3/2006 4:57 PM
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| Stan,
I'd follow your accountant's advice, but it seems to me that painting is a step in the manufacturing process ... no different than any other stage of the manufacturing process from raw materials to finished product. In that case, you should be paying the excise tax on it for new baits at least.
I've gotta say that despite all the creative schemes offered here muskihntr's advice at the end of the other post seems wise to me: Do you best to withhold the tax properly, pay it, and get on with life.
John |
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Posts: 1504
Location: Oregon | Both John and Stan bring up some good points. I buy some of my blanks but to claim that since you are just painting and finishing them you are not actually "manufacturing" is a stretch.
However, at what point are you "manufacturing"? Since we buy our paint, the wood, the eyes, the clear, the lead, hooks, etc., and assemble the pieces are we really manufacturing?
jed v. |
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Posts: 4266
| IRS told me that painting is "performing a service", not manufacturing anything.
Excise tax says "fishing lures", nothing about painting. That is a job that he is getting paid wages for.
Tha's what they told me when I asked the the same question.
Beav |
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| I don't know the answer for sure, but I'd bet there is a difference between panting new and used lures first and foremost. I'd be amazed if the tax applied to used lures.
But maybe there would even be a difference between an individual who sends you a few blanks for their personal use and a company sending you hundreds of blanks to paint. I think arguing against the tax in the latter situation would be pretty difficult ... in that case the manufacturing company would probably be paying the excise tax based on the price after they put rings and hooks on the baits and packaged them up -- the painter would never have to worry about it.
In the case of a painter working with an individual, I bet the true tax liability would technically lie with the individual who "manufactures" the lure and not with the painter. The individual would have paid excise tax when he bought the blanks (or gotten an exemption) or produced the blanks themselves. The individual completes the manufacture after you paint it by adding rings and hooks. So theoretically the tax liability should fall on the individual. Since the painter never actally owns the lure and is only a stop along the way in the manufacturing process, he shouldn't be liabile for the excise tax ... but the individual should be! Ha! |
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Posts: 1504
Location: Oregon | After reading all the posts it seems to make more sense to me all the time to sell the baits at wholesale to musky shops....let them collect the taxes. Or, deal in cash only like so many other small business' do in America.
Jed V. |
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| Jed,
It's a manufacturer's tax, so liability would be with you since you're the last point in the mfg. process. Wholesaler is just reselling, so no excise tax at his stage of the game.
I likely caused some confusion because I described the tax incorrectly in one of my earlier posts. I posted a correction, but can't edit because I'm not registered.
John |
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Posts: 1504
Location: Oregon | Maybe I misunderstood, I thought the tax was imposed at the sale with the consumer...that's the way I read it.
jed v |
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Posts: 1207
Location: Pigeon Forge TN. | To paint for a tackle company, You are selling a service.
They send you the blanks, a color order, and you paint and return the lures. One can call it what ever they may but it still a service that you are providing for a set fee. I don;t know for sure at what point the excise tax is paid, but I would think that it is paid by the consumer at the store and like John said, it is built into the final retail price.
I have painted for several major tackle companies in my time and the excise tax was their chore. I recieved a 1099 at the end of the year. I was, in a way, cheaper labor than an employee for them as there were no insurance, benefits, and other things an employer would have to pay out as part of wages for having employees.
Buy a tire for your car, The excise tax is paid along with the sales tax upon the final purchase.
99 % of my painting is re-painting for people., and that is a service.
I pay what taxes I have to pay but the entity of what I do is not the same as a manufacturer.
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| Tax is 10% of sale at the point of final manufacture. If you made (maufactured) it, it's taxed when you sell it whether it's to a consumer or a reseller.
Reseller doesn't have to withhold the tax unless they are taking additional manufacturing steps prior to sale (of course, then they're a manufacturer), in which case they should get an exemption from you. Example: sell the finished bodies to somone who puts rings and hooks on them, and you don't have to withhold the tax so long as have an exemption form on file from them. Reason being that you aren't the point of final manufacture, they are. |
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Posts: 1207
Location: Pigeon Forge TN. | This is a dicussion that could go on forever. However, the best thing to do to make sure you are completely legal is to contact the Governing bodies involved and check into it lenghtly. If you follow the IRS agents advise along with your CPA and it doesn't hurt to contact a small business incubator also and they will give you all the info you need to get you going and keep you out of trouble.
If any questions with the forms need answered, the very best place to get them would be with the IRS and they will take the time to work with you tomake sure you know the law and when it applies.
That is exactly how I first started out and have followed law accordingly since.
That's the best advice one could get at this point in time to lower the confusion.
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Posts: 32886
Location: Rhinelander, Wisconsin | beav,
Pay the tax, sell the baits. you have a loyal following, and no one will care about an extra 5 bucks. Don't worry about 'forums' or anyone who might be worried about you or any other builder. I'd pay anything you ask for a Perka, even $50 or more. Profit isn't a dirty word, MAKE your mark and sell them at the price that is set by profit margin. If you start letting anyone bother you, especially anonymous folks, you most certainly won't be a happy camper ever. Ignore them and all other detractors, keep your chin up, and keep building the finest gliders available. Taxes are reality in a democracy, that's how we pay our way. The alternative didn't work so well, though this system isn't perfect either.
Look at where that excise tax goes. |
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Posts: 1438
| Beav-
I second what Steve says. Do what you gotta do to make yourself happy and screw the rest. No matter how much to try to be decent about stuff, someone somewhere will find a reason to bitch about it.
When my wife gets worked up about stuff going on at work I ask her a couple simple questions. "Does worrying about it change anything? Do you have any control over it?" If the answers to both questions are no then let it roll off you back and move on. Taxes are one of those things that you have no control over and worrying about won't change.
Now get out on the water and start pitchin' baits...
Scott |
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Posts: 4266
| I must have been the only guy in this forum that got an e-mail that told me " all you BBB's that have been dodging taxes for years are going to get it now."
All I did was build lures for 3 years and sell them almost exclusively on this board at rock bottom prices. I've donated to every auction and to every cause that needed help. Then I get "If you can't make money at it, then quit. Stay in the basement"
Do you feel the love?
I guess that I am just amazed at the number of small business experts out there who offer their advice and criticism so freely, yet offer nothing that is constructive or helpful.
Steve, I'm going to disappear. I have meetings scheduled with DVR and small business experts. Because I'm disabled, the gov't will help me, even set up a website. But at least I'll be talking to people that know what they are talking about.
I was warned by a manufacturer at a muskie show that I better watch my ass. I guess though it's physically imposible, he meant what he said.
Thanks to those who tried to offer real advise. I didn't think that I owed anything other than income tax since I pay tax on bodies, paint, hardware, hooks, clearcoat, and even the lumber etc to build a place to paint in the winter. From what I read, I think that I have a few years to claim what I used for start-up money, so I have a lot to write off and not much income. I can't wait for the meeting. I'm going to wear a suit and tie, drink Starbucks and pull muskie lures out of every one of my pockets.
Edited by Beaver 5/5/2006 9:37 AM
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Posts: 32886
Location: Rhinelander, Wisconsin | Ignore that email, Beav. Some folks just plain have too much time on their hands and feel the need to be mean spirited, but that aint you, my friend, and I sure hope it aint me. Keep on building those baits, and just charge the extra 10%, sir! As you know life is not always full of pleasant folks; heck, I'm a jerk some days. |
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Posts: 4266
| I thought that was Slamrs job  |
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Posts: 32886
Location: Rhinelander, Wisconsin | Naaaah, he moderates me most days. I am an Old Bull, but Zach taught me a thing or two about anon and not-very-nice emails:
1) Don't let them get to you, that's the goal and why give 'em the satisfaction
2) NEVER react out loud to one for at least 48 hours, think about it and look at why it's bothering you, then forget it.
3) Try not to answer an obvious attack email. That's what the sender wants, a fight, sort of like a Bar fight if you will. Argue, even if you are right as rain, and you still lose.
4) If 90% of the folks out there approve of your lures, business ethics, and attitude, you would get elected President of about anything in about 3 seconds with that approval rating. Those folks won't send you an email like that, in fact most won't send one ever, but they WILL fish your lures and enjoy the experience, and that, buddy, is what this is all about. Detractors will always be there, it's the human race's seemingly unending desire to be contrary for no reason other than we can. |
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Posts: 1207
Location: Pigeon Forge TN. | Beav,
Listen to what Steve is telling you. he is very right.
You make a He## of a good bait and the good people like them. |
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| i don't think twice about paying $30 for one of your baits, Beav.
i'll pay $33 just as easily.
life is not about bringing everyone else down to the lowest common level; it's about striving to do great things and succeed.
mean people suck. |
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Posts: 367
Location: Chicago | Beav,
What if you were a not for profit and asked for a $30 "donation"? Another angle to consider.... |
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| I'll wait and see what treanspires at my meeting with the professionals this week.
I just came back from a meeting with Captain Koeppe at The Pewaukee Lake Boat Landing, and learned a valuable lesson.
I took him a box full of gliders to hand out to his posse, so they could see tha Perkette and the paintjobs in person, instead of on the site.
I heard "Wows", OOOH"s...it was like the 4th of July. Even people who were only at the launch for lunch were impressed and couldn't believe it when I told them that I made those lures myself.
We took some time trhowing each lure and everybody took turns checking them out.
What surprised me was some of the comments......."I'd pay $25 for one of these anytime." "How much are these? I'd buy a couple." Then a guy in a $30,000 rig motored by working the weedline, and Mike fired one over his bow and worked it right past his face. It was a Hyper Gill. It worked like a million bucks and stopped dead on the pause and just sat there with the sun reflecting off of the finish. "How much?" Mike said, "I think these are $30". "Well that's twice out of my price range."
I found it almost amusing how some minds work. But, then again, it made sense. He'd rather use 10-15 dollar lures and use the rest of his cah on gas, rods, reels....whatever. But $30 for a lure? No way. Even though that lure is built like a tank and will kast him and his kids, he didn't think that is was worth it, and that's OK. Right now my lure price range is $27.50- $40. That includes delivery and excise tax and when my business is a business there will be state and local taxes too.....so make friends in MN to order lures for you. But I look through BassProShaop catalogs and snicker when I see bass lures that are $20. I'd never pay that....primarily because a northern would eat it for lunch......but primarily because I don't see bass lures as investments like I do muskie lures.
From what I heard, fishing was slow. Lookers but no takers. 40 degrees last night. Low 50 degree water temps. Sunny with barely a breeze. Anybody catching a fish today will be a lucky angler.
Beav |
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Ready for 10% price hike across the board?