anyone own a home-based business for sewing...?

Question

hey, i am currently doing a sewing project and i am looking for someone that has set up a business for something like sewing a certain amount of one product i.e. 50 bean bags, and i was wondering what did you have to do for this to happen, things like...
laws, permits, licenses, setting up, workers, code requirements?

if anyone is able to answer this question it would be a huge help! :)

Answer 1

I've been doing it for years.

I have a name for my business, which I registered as a sole proprietorship with my state capital (I got a mobile sellers permit through it since I don't have a 'store'). That cost $15 here in WI, I needed a permit for PA too since I do one show there, and that cost me $10. The one I just got for IL was free. Each state is different. The fee in WI and PA was a one time thing only, it renews for free each year.

I act as an independant producer, selling my things at craft shows or as wholesale to someone to resell. As such I need to file a Schedule C on my taxes (for the extra income made) and pay in a self employment tax on the tax forms (don't forget to do that!). The state taxes collected are sent in in January for WI, and twice a year for PA. IL says they want a monthly return on tax collected, but I only have one show there so I have to call and put the paperwork 'on hold' after my event so I only file for the one month I did a show in.

Remember to keep track of all expenses -- they're used as deductions on your taxes. This means any sewing machine cleaning and repair, boxes purchased, office supplies, tags, packaging, fabrics, stuffing, beads, accessories, needles, thread, ANYTHING associated with making your products or shipping them. You can also claim the mileage to and from the post office and the fabric and craft stores as necessities for the business. Keep track of how many trips made and the distance traveled.

And on your taxes, if you have a room devoted to the business, claim it as STORAGE, not a business room. This is a red flag with the IRS, a hobby business has to be 100% use of that room for the hobby, with no actual use for anything else in your home. I can't claim my living room because it's used for regular living in, even if I do sew in it. BUT my upstairs room is where the fabrics and my completed stuff is kept, and nobody uses it for anything else. As such that square space is alloted as storage for the business and is deductible, as is 10% of my heating bill and electric bill. Not the water bill though, there's no water source up there.

When you file, even with a hobby business, if you have a loss for 4 years out of 5 the IRS is going to question why you're doing a loosing business and sticking with it. So try not to claim in the red that many times. That raises a red flag with them too.

You'll need to pay sales tax on stuff you sold in your own state. You'll need to file the extra income on your Federal and State taxes. Other than that, it's pretty simple.

Answer 2

You should be able to come up with about $200 in order to make your first blankets. If you go to the thrift stores for fabrics and look for fabrics which are on sale you should be able to get enough fabric for several blankets for not more than $100. You can also ask on a place like your local freecycle group for fabric scraps and you could also see whether you can get free or cheap fabric/scraps on craigs list. You'll also need thread, good scissors and batting and probably some other small items for which the second $100 is for and should cover. Then after you made your first blankets you'll have to sell them. You could also ask stores which sell fabric whether they'll sell your items in commission. With the proceeds you can buy more material. If they don't sell at all you picked the wrong business. You don't need a loan. You just need to get started. You don't want to start it as a business (though you want to keep records like for a business for taxes), you want to start as a hobby which you want to develop into a business.

Answer 3

If you are starting a small home-based business, there is not much that you have to do as far as laws/permits, etc. First off, unless you are using a business name, your own name suffices for legal and tax purposes. If you are planning on hiring employees, you can pay them as "Independent Contractors" for the first year or so until you can afford to pay them as employees, or until they are working regular hours for you. This will also save you on tax money until you are an established business. You cannot post a business sign in your window as a home-based business, so that takes care of code requirements. Plus, as a home-based business, you get all the tax write-offs of working in your home, like mortgage/rent, utilities, cell phone, auto gas and mileage, etc.

If you don't want to operate under your own name, go to your local courthouse or city hall and get a "dba." This costs about $75 or less and makes you a legitimate business in the eyes of your county and state. It works out better if you should like to purchase a home or condo later on.

Hope this helps.

Answer 4

If this is a one-shot, you're looking for a sewing contractor.

If you intend to go into this, you really need (assuming you're in the US) to read the federal laws on home sewing contracting, and
http://www.ftc.gov/bcp/conline/pubs/buspubs/thread.shtm
and you probably also need Kathleen Fasanella's Entrepreneur's Guide to Sewn Product Manufacturing. There are a lot of ways to get badly skinned in the business.