Writing Prompt: I filed my business license and have an EIN. My next step is to ________.
Have you made your crochet business official?
The first thing you need to decide right now is if what you are doing is a hobby or a business. Your answer to this must align with what the government says. Read their article Hobby vs. Business for more information.
Search the SBA.Gov site for the following articles:
- Hobby vs. Business
- Register Your Business
- Business License and Permits
- EIN or Tax ID
Registering your business, getting the license and the EIN (Employment Identification Number) doesn’t mean you are ready to go selling. It means that you are legal. You need a plan. You need your goals and your objectives. You need a business plan.
Unlike most small businesses you aren’t developing your plan to gain funding, you’re doing it to see where you are going. Your business plan will be more like a road map.
What Should A Business Plan Include?
- Executive Summary – the fundamentals of your business
- General Company Description – what you will do include your goals and objectives
- Products and Services – description of your products and services
- Marketing Plan – include your market research and details on how, where and to whom you’ll market as well as information on your competition
- Operational Plan – how will you produce your product or service? Where will it be produced? Who will be your suppliers? Policies?
- Management and Organization – will you have employees? Who will be in charge? What will the job description be? Will you outsource? To whom?
- Personal Finance Statement
- Start-up Expenses and Capitalization
- Financial Plan
- Appendices – brochures, letters, research, etc.
Here’s an example template for a start-up business for Microsoft Office.
Where Do I Stand As Far As My Crochet Business?
I don’t have a crochet business. This little blog is not a business although the little I earn in advertising and through affiliate sales factor into my self-employment taxes, officially, it’s not a business.
I tried selling my crochet as a hobby to see if I could make a go of it and found I did not like on-demand crochet or design. I’d much rather write about other people and their crochet business success.
Once I do go official I will probably do business as myself. This will be when my monthly earnings reach the point where I can’t call what I do a hobby – the point where I actually do intend to turn a profit.
Do I Pay Taxes on What I Earn Now?
Yes, I do. In my state, California, you must pay taxes on anything you make over $600. Also, any prizes I win via giveaways have to be claimed and tax paid.
* Note – I am not a lawyer or an accountant. Please do check with your local government and state government agencies to double check everything you read on this blog or any other source.