Business side of breeding

[JamisonSmith]

Hello all,

I have been researching more and more about the possibility of establishing a business on the side of my day to day 'real' job. I am almost getting to the point of having enogh clownfish on hand to consider selling some of them to local fish stores and being able to support some continued interest from the LFS.

My question is: (and moderators if this is breaking any forum rules discussing business policy, etc, please delete) At what point do (if you have) you create a licensed business to be able to sell of fish? Or does it all occur on an informal (non-licensed) level? I go around and around if it is worth the extra hassle of managing account books and the initial costs of business licenses for the benefit of wholesale costs from pet supply companies.

I have some other BIGGER long-term plans that a legitimate business would be necessary so maybe it is just a fact of life and just do it now.

How do others handle this? Curious to any input you all can provide.

Thanks,

Jamison

 

[Kmiec123]

I thought that if you have a business card and an Assumed name with the County, you can use as a valid business expense/Deduction. I thought you only need a licence if your doing work that requires health code, inspection, such as electricians and Plumbers.
This is a good topic and I was just considering starting something on these lines as it was sort of brought up in another tread off topic. My accountant was going to look up new rules as to the definition of this as a hobby or business. I guess it depends on Income level, but can you write off more for business start up than sales. I don't know.
I just started looking into this myself so don't hold me to anything.

That reminds me....I need a licence for my pet fish! MP

 

[GreshamH]

If your planning to sell on any sustainable scale, it's best to simply get a business license, and all that is required in your city/state. Here in my part of California, we have to get a business license, submit a ficticious name statement and get a tax ID #.

As a vendor, and some one that spent a long time in MO wholesale, non of the business's I've worked at would buy from any non business. If they're putting out even a few hundred dollars to you, and the get audited, there will be some fines to pay for them

 

[billsreef]

Re: Business side of breeding

<a href=showthread.php?s=&postid=8753660#post8753660 target=_blank>Originally posted</a> by JamisonSmith

My question is: (and moderators if this is breaking any forum rules discussing business policy, etc, please delete)

So long as your not trying to sell anything or otherwise promote your business or soon to be business your in the clear

 

[mwp]

Someone mentioned licensing. Here's the deal...if you get to a certain level of sales, you're going to have to report that income ( I believe it's 2K,but we're WAY OUT of any field of my personal expertise). The issue with fish is that they are governed by the Department of Agriculture. The Cichlid Hatchery was regularly inspected. When actively selling orchids through my website (SlipperOrchid.com) I reached that "critical mass" where I was selling a lot, had to report income, become a real business instead of a hobbyist, and oh BTW, had to have a "Greenhouse Inspection" and "Nursery License" even though I was a private individual growing under lights. The USDA tends to like to work regular business hours (9-5) which means you'll have to take time off work to be there for an inspection...

An accountant can surely help you with all of this.

Matt

 

[Cuervo]

There is a bonus though.. many states offer tax breaks for agriculture. There's a really good thread on this topic in the Coral Proppagation section of the forum on here.

 

[Kathy55g]

Please link that thread, Cuervo, and many thanks!

 

[JamisonSmith]

Thank you all for the great information so far!

I have been contemplating going to sit down with an accountant to answer some of these questions. I think that some of them have geographic differences in licensing requirements.

I'll post back what I am able to find out.

Jamison

 

[Cuervo]

lol Kathy caught me slacking...

http://www.reefcentral.com/forums/showthread.php?s=&threadid=898883

Here you go!
IMO This thread is more than worth the read for anyone looking at the business side of our hobby. There's some great links in that thread to actual business plan's that are being developed for a coral propogation business. Fish breeding is different, but not that much different, and many of the key points are the same between the two.

One thing I found interesting in there is that aquaculture in florida falls under agriculture, and that means you can get the same tax breaks that farms and ranches get. Some of them are BIG.

Of course, this depends on the state, and sometimes even on the county.

It's well worth the read IMO, and honestly, that thread should be stickied somwhere.

 

[ediaz]

If you want the advice form someone who has been dealing with TR clownfish sales for almost 15 years, don't do it, find another branch of this hobby to make money.

It looks like you will soon be able to produce more and more fish and it will sauturate your market, then you will have to sell to wholesalers for dirt and your time and resources are worht more I beleive.

Ed

 

[David M]

If you ever expect to be taken seriously and want money for your fish rather than "store credit" you will have to set up a legitimate business. Gresham is right on, but fortunately for us setting up a business in California is a piece of cake, if you get an early start you can be done by lunchtime and out of pocket maybe $200. It's easy, it's cheap, and anyone can do it. For these very reasons it doesn't really impress anyone You will still have to prove yourself over time. I don't know how it works in other states but here in CA :
1) Go to the nearest County Recorders office and file a Fictious Business Name Statement
2) Take that to your local City Gov't office and get a Business Liscense. If you are going to be home based here is a hint, lie your arse off. I'm serious, you answer NO to everything. No employees, no stored materials, no deliveries to the house, no customers comming to the house, ALL business activities except the actual breeding take place "off site".
3) Take those two documents to the bank of your choice and open a commercial checking accout in the business name.

If you want to be able to buy from any wholesalers that agree to sell to you you will need to
4) Take all the above to the nearest State Board of Equilization office and apply for a State Sellers Permit. No one is exempt from State Sales and Use Tax, but wholesalers can't be bothered collecting it and keeping track. You will be responsible for keeping track of your purchases and sales and paying the sales & use tax on a quarterly or yearly basis. Remember it is a sales and USE tax, you have to pay the tax on supplies you buy and use as well as anything you sell.

Do these things in exactly the order laid out and it will probably take you 3-4 hours tops.

As I say, that is California. Other locals may be different but at least you have an idea where to start.

The rub is that even after all that it doesn't mean any potential buyer or wholesaler has to deal with you. Many wholesalers require a storefront and do not sell to "jobbers", breeders or service companies. You still have to build your business but at least you have a legitimate platform from which to build it

 

[mwp]

David, I think you're pretty much on target with some of the basics. I.e. in IL here we have a resale ID for wholesale purchasing, as well as collecting sales tax if you're selling retail within the state, but no taxes to collect if you sell outside the state (ship) or act as a wholesaler.

I'm pretty sure that you may need some licensing from the USDA as well though and will need to be inspected on at least a yearly basis.

FWIW,

Matt

 

[billsreef]

<a href=showthread.php?s=&postid=8757665#post8757665 target=_blank>Originally posted</a> by David M
fortunately for us setting up a business in California is a piece of cake, if you get an early start you can be done by lunchtime and out of pocket maybe $200. It's easy, it's cheap, and anyone can do it. For these very reasons it doesn't really impress anyone

I got you beat $35 and half a day About $5 for the DBA (fictitious name) forms, needed 3 copies, and $30 for the county clerk to stamp them and keep a copy for their files. Had a friend of my wife's notarize them, so that was free. Went to the bank and gave them the second copy in order to set up the checking account. NY State sales tax certificate was only a matter of filling out the form and waiting for the wheels of bureaucracy :lol: So long as you don't have any employee's, you don't need to do anything with the Federal Gov't. If you do plan on hiring, than you need an Employer Identification Number from the Feds which will also then become your business tax identification number as well.

 

[David M]

My $200 included the $100 initial deposit to open the commercial account and the total gov't fees are less than $100, I was just rounding up.

My point is that any high scool kid with some spare change can easily set up a business, it doesn't mean much to anyone

 

[GreshamH]

A fax machine + a couple hundred bucks + a van = transhipper

couple hundred bucks + business card + truck = service guy

website + couple hunded bucks = etailer

It so easy even a caveman could do it :lol:

 

[billsreef]

<a href=showthread.php?s=&postid=8759019#post8759019 target=_blank>Originally posted</a> by GreshamH
It so easy even a caveman could do it :lol:

Hey! I resemble that remark this time of year

 

[Kathy55g]

Why is a business checking account needed? They are an expense to run, and a regular checking account works just fine for what I have needed so far.

Is there any advantage to a business checking account?

 

[mwp]

It only adds "crediblity" to your "business" as an actual "business"...rather than paying for items with personal checks.

That's my take on it...that and it helps keep finances separate.

Matt

 

[Dman]

Gresh,
Your level of self-depricating humour is awe inspiring.

Setting up shop here in the Great White North isn't much harder, I think it took me half a day and 80.00CDN (which at one time was about 3.50USD, or seemed like it)

 

[GreshamH]

:lol: But I'm neither of the three I listed, nor have I ever been a part of any of those