Product liability insurance? Taxes? Costs of doing business.

[benniesam]

Happy Thanksgiving to everyone.
When it comes to starting a business in these terrible days of taxes, government regulations and legal action, the joy and passion can be blurred by the daunting task of becoming legitimate.
I can't speak to the experiences of anyone outside of the US, but for us of the red, white and blue, starting and maintaining a business can be so challenging that the thought of it discourages many people from being self made men.
Most, if not everyone here is a pipe maker. Some of us enjoy it as a hobby, some as a supplement to our income and a few of us are fortunate enough to have it as a profession. Whichever category you belong you will soon find that you have a big pile of pipes on your workbench that need to have homes. Lets face it, we are addicted to the craft of pipe making and every addiction has it's cost. From weekend pipe maker to professional we all want to sell our pipes so we can pay bills or maybe just have enough money to make another pipe.
Here is the meat of the topic. The moment you make and sell anything you are in business, legitimate or illegitimate it is the truth. These are a few other things that happen in that moment:
1. You owe sales tax to your state government? (if your state requires them)
2. You owe income tax?
3. You are liable for injury that your product may cause. Liability insurance? Umbrella policy? (You are risking your home, your property, your business)
4. Business licences?
We all want to do what we love but at what cost?
The point of the discussion is not to scare anyone here but to discuss becoming legitimate and responsible. I really want to hear some advice form the professionals, the doctors of the pipe craft.
Please fire away!

[pipedreamer]

This is why you incorporate and have city, state, and county licenses.Pay your taxes to the Fed. It is the cost of doing business. They, figured out how to ride our backs a long time ago. When all of you are ready to rebel, let me know. Most of us don't grin and bear it.Lets face it some of it is necessary, but most of the taxes are plain extortion to pay for Bullshit and bullshit people.

[Charl]

What? You don't barter your pipes for stuff like, hmm, money?

[pipedreamer]

Mostly Gold!!!!!!

[benniesam]

Yeah. I have done one barter. It was for a hand made hand forged knife. But knifes don't buy more briar.

[mcgregorpipes]

Happy Thanksgiving to everyone.
When it comes to starting a business in these terrible days of taxes, government regulations and legal action, the joy and passion can be blurred by the daunting task of becoming legitimate.
I can't speak to the experiences of anyone outside of the US, but for us of the red, white and blue, starting and maintaining a business can be so challenging that the thought of it discourages many people from being self made men.
Most, if not everyone here is a pipe maker. Some of us enjoy it as a hobby, some as a supplement to our income and a few of us are fortunate enough to have it as a profession. Whichever category you belong you will soon find that you have a big pile of pipes on your workbench that need to have homes. Lets face it, we are addicted to the craft of pipe making and every addiction has it's cost. From weekend pipe maker to professional we all want to sell our pipes so we can pay bills or maybe just have enough money to make another pipe.
Here is the meat of the topic. The moment you make and sell anything you are in business, legitimate or illegitimate it is the truth. These are a few other things that happen in that moment:
1. You owe sales tax to your state government? (if your state requires them)
2. You owe income tax?
3. You are liable for injury that your product may cause. Liability insurance? Umbrella policy? (You are risking your home, your property, your business)
4. Business licences?
We all want to do what we love but at what cost?
The point of the discussion is not to scare anyone here but to discuss becoming legitimate and responsible. I really want to hear some advice form the professionals, the doctors of the pipe craft.
Please fire away!

I'm guessing you're asking about experiences operating a pipe making shop? I'm building a new shop right now. one of more interesting things that came up was a conversation with my insurance company, if I had just built the shop and called the building a garage or a shed then the building is completely covered by existing home insurance. but because its a workshop where things are manufactured, now its completely different requiring a whole separate policy for the structure and a load of liability insurance. it struck me as a deterrent to businesses that actually continue to make things, would sure be easier just to import cheap pipes and accessories from factories off alibaba and resell the same made in india and china junk that floods the store shelves. and here's some of the new carpentry shop regulations to follow, still waiting to find out if I'll be asked to get an engineer to ok the dust collector hoses. http://www.winnipeg.ca/ppd/pdf_files/woodwrking.pdf btw i'm not really that worked up about it, the red tape won't stop me but I'm sure it could turn off the next guy from growing his hobby business.

[benniesam]

Thanks for the comments mcgregorpipes, I read a little of that pdf and it looks like insanity spilled over paper. Im not sure about the regulations here but I cant imagine them being enforceable here. I really do home your dust collector is ok. Ha what the H E double sticks does and engineer know about dust?
Anyway good luck.

[caskwith]

I can only speak from a UK perspective of course but this is how complex my arrangements are:

Once a year I fill out a form saying how much I earned and how much I spent, then I pay on the difference.

That's it. No inspections, no liability insurance, no regs on my workshop.

Maybe you all need to move here.

[benniesam]

Caskwith, you are lucky! Enjoy the liberty.

[OldCorps]

I read a little of that pdf and it looks like insanity spilled over paper. Im not sure about the regulations here but I cant imagine them being enforceable here.

Surely you jest. 35-years ago my partner and I were forced by the Codes Cops to tear out and re-frame two bedroom windows after the final inspection on a house we built because the windows were three SQUARE INCHES to small! According to The Holy Word, the reason was that: "In case of fire, a fireman couldn't climb through the opened window with all his equipment on." THREE SQUARE INCHES! Couldn't enforce it? No Occupancy Permit would have been issued and the fine would've been astronomical. Enforced!

That was 35-years ago... and it damned sure ain't got no better! Just let one nibby neighbor get a whiff of your Fiebings, or hear your compressor kick on at night, and you'll find out this ain't your grand-daddy's Oldsmobile anymore. Today a SWAT team would probably surround your shop and call you out with your hands on your head, because they figured you were running a meth lab or building bombs.

Ha what the H E double sticks does and engineer know about dust?

'Bout as much as a Community Organizer—and better than half the public—know about anything.

[benniesam]

OldCorps,
I know what you mean, you are right. I am in the construction industry and am well aware of how petty and power hungry the code enforcers can be, although I have run into on occasion an inspector or two that are very reasonable.
Yes, it only takes one disgruntled neighbor to ruin a good thing. It is important to surround yourself in a neighborhood of good people who also do questionable things, that way you all have an understanding that "if I go down, i'm taking you with me" ha!
Thanks for your input.

[LittleBill]

Benniesam, I am coming in a little late on the discussion here, but I have some experience. I have been in the business of woodworking for 22 years now. For much of that time I was a sole proprietor, but about five or six years ago, switched over to an LLC. The LLC helps to insulate my family and personal belongings somewhat in the event someone kills themselves with one of my products or decides to sue me for whatever reason. I was paying a tremendous amount in the way of insurance, and when my insurance company discovered that I was teaching classes and that I had instructional DVDs for sale, they about came unglued, and cancelled my policy. While that was hard to take at first, it caused me to do some serious searching, and I discovered another company that set me up as a woodworking (manufacturing) business as well as a school, so both the classes and DVDs are covered as well as my products. I am covered for all the usual stuff up to a million dollars (lability, fire, etc), and have coverage for theft and liability both on and off the premises. The really good news is, my premiums went down by 1/3, and the company is a well known name in the business - The Hartford.

Taxes are a cast iron you know what, and I leave that to your local laws and conscience. Then there is all the overhead beyond that - consumable supplies, raw materials, machinery maintenance, advertising, etc. It is amazing how the "astronomical prices" we charge for stuff get eaten up by the daily expense of keeping the doors open. But it beats punching a clock or sitting in a fabric covered cube somewhere.

To add on a bit to what Old Corps wrote, I bought one of my better tools years ago from a guy who was running a successful cabinet shop out of a garage in the alley behind his house. He had no zoning, no insurance, and one of the neighbors took a dislike to him. The city shut him down, and he was out of business immediately. He sold off all his equipment at a serious loss just to get rid of it. It really stinks to have to pay all the fees and jump through all the hoops, but if you are going to build a business, it is worth doing it right, so some butthole can't ruin it all with one phone call. You can fly below the radar for a long time, but if you get caught, very often you are done for unless you have the ability to relocate your entire operation and start new.