Small business question

[xxclaro]

Looking for some advice on if and when starting a small business is a good idea. Basically what I'm thinking about is something you do as a hobby that you could probably make a little money at if you ramped it up a bit, but would need to put some money into equipment and supplies.

For example I like to raise some chickens and other birds, and there is a pretty good market for the right types, as well as little urban coops and such. If I want to sell more though I need to fix up some of my buildings and maybe construct some more, as well as getting some more equipment. It wouldn't take much, a few thousand maybe, and profits wouldn't be that high either but I thought it might be helpful to register a business so that you can at least save a little bit on taxes. I don't know enough about it to know if it's worthwhile, and not sure who I would talk to. Any advice on this?

[R3illy]

if your only making a few thousand its not worth it to incorporate. The tax benefit would be minimal at that point.

[Ken07AOVette]

Talk to your Accountant. I mean one in an office with accreditation not cousin Jenny who 'does the books'. If you are making it a business and charging customers the last I heard was you do not have to charge GST until you do $30,00 in revenue, BUT if you are doing this for profit keep track of all expenses that have anything to do with the work. It is 100% of the time better to do it right and legal than get caught and beg forgiveness afterwards, CRA has zero sense of humor.

[Dewey Cox]

Deal in cash

[KegRiver]

I set out to start my own business a few years ago. I'm still not there in the traditional sense.

Like ken says, you don't have to deal with GST until your income reaches $30,000 per year. I''m a long ways from that.

I have a business name but not a business license. I'm home based so my county says I don't need a business license for what I do.

What you do need is a business plan.

How are you going to market your product, who will you be marketing to, how will you promote your business, do you need your premises or your product inspected if you are selling to the public, where will you source supplies, how will you minimize costs, how will you support yourself and your family if you have one, while you get your business up and producing profit, how will you finance your business during and after startup, how will you deal with customer complaints? Who will you be competing with and how will you counter that competition?
How will you meet demand if demand exceeds you production. What will you do if you wind up with a surplus of product?

You need names, you need prices, you need volumes produced and volumes required, both for your product and your supplies.

You need to answer all these questions and more as best as you can before you invest time and money into you venture.
The answers are for you, so you will be prepared for all aspects of running a business before you get in too deep and find you weren't prepared.

The better prepaired you are the better your chances. Some businesses can be started with no plan and no preperation. But most have a far better chance if a good business plan is set up before one doller is invested.

If you need to ask for loans they will want to see your business plan which is basically the answers you came up with for all aspects of starting and running your business.

I can't advise you on the specifics of you chosen business venture. It is not the type of business I am in.

I can tell you it is not uncommon for a new business to cost more then it earns for the first few years.
I can tell you that dealing with customers can be the best experience you will ever have one minute and the worst the next minute.
Most people are honest, reasonable and interesting, a few are royal PITA.

It is not good to react to the negative customers negatively.

Customer relations make and can break any business. Know who butters your bread and respect them for doing so.

Always always always pay your bills. Bad credit will sink your plan faster then anything else.

And remember, everyone has a bad day, but you can't afford to let your customer see you having a bad day, hold it till you close for the day.

[Twisted Canuck]

There is so much truth in this article, it is beyond depressing...

https://business.financialpost.com/o...sh-your-spirit

[tirebob]

Originally Posted by Twisted Canuck

There is so much truth in this article, it is beyond depressing...

https://business.financialpost.com/o...sh-your-spirit

Yep!! Exactly this... There are tons of drawbacks, and many people, myself included, would make more dollars in my pocket every month if I was employed by someone else, BUT, I have full control over my work life which is my main reason for doing this.

In the busy season I work like a slave and do anything and everything I can, but in the slow seasons I take as much time off as I like, come in late, leave early, spend time with the wife doing stuff I want to do rather than being obligated to be at work by a specific time with lunch at a specific time and leave at a specific time with only exact vacation times etc. I much prefer this, and when times are good, you can make up for the less money, but when times are bad, I am the first guy to take a pay cut.

You definitely need a stronger constitution to deal with the financial fluctuations of being a small business owner. When the bank account runs low and your people and suppliers need to be payed, you eat rice. If you can't roll with the financial tough times until the better times come back, you will find your stomach will feel like it is eating itself and you will always be stressed out, but if you can handle it, the rewards can definitely outweigh the drawbacks.

[Twisted Canuck]

Originally Posted by tirebob

Yep!! Exactly this... There are tons of drawbacks, and many people, myself included, would make more dollars in my pocket every month if I was employed by someone else, BUT, I have full control over my work life which is my main reason for doing this.

In the busy season I work like a slave and do anything and everything I can, but in the slow seasons I take as much time off as I like, come in late, leave early, spend time with the wife doing stuff I want to do rather than being obligated to be at work by a specific time with lunch at a specific time and leave at a specific time with only exact vacation times etc. I much prefer this, and when times are good, you can make up for the less money, but when times are bad, I am the first guy to take a pay cut.

You definitely need a stronger constitution to deal with the financial fluctuations of being a small business owner. When the bank account runs low and your people and suppliers need to be payed, you eat rice. If you can't roll with the financial tough times until the better times come back, you will find your stomach will feel like it is eating itself and you will always be stressed out, but if you can handle it, the rewards can definitely outweigh the drawbacks.

All very true, and why I've had my own company since 2002. The good does outweigh the bad.

The best piece of wisdom on this thread is from Ken. Take it very seriously. The CRA has ZERO sense of humor. Pay them first. Pay them on time. Never give them a reason to take a second look at you. Don't play 'silly buggers' with them and do work 'for cash', it's just not worth it. I have customers ask me if I will 'cut them a deal for cash'....Nope. I usually reply that if they pay immediately on completion, I will discount the job the equivalent of the 5% GST from the invoice, it's worth it to get paid quickly. Don't do cash deals.

Without exception, every shady tradesman I have met who is trying to work and fly under the CRA's radar, has gotten caught, and it's not pretty. I know one old painter, he is in his mid 70s, and he will not be able to quit work till he drops dead over his roller. Sad.

[2 Tollers]

I set up a small business a year ago and the advice given by others previously is good. Work with an accountant (not a book keeper) to get advice on what type of company you should set up. Sole proprietorship or Incorporated, who should be shareholders, timing for year end and how they want you to keep your files. Savings receipts in a box is fine but it will cost you extra at year end.

What the accountant will want to know --- business plan -- start up costs (legal, insurance, accountant, WCB, business tax from the COE / Municipality or not, supplies, employees or not), revenue stream, how long do you want to keep the business going

You will need to decide on the level of risk to your personal assets that you are willing to take on when looking at a sole proprietorship vs incorporation. Sole P is easier to report on and much easier to wind up so if this is a short term thing that could be a consideration.

Billings -- keep track of everything and do not do under the table cash deals. Watch your receivables closely as 30/60/90 is out of your pocket.

I went incorporated for a number of reasons related to insurance requirements and the complexity of the paperwork from the province and feds can be daunting. I use the accountant to keep everything in order. I know what I am good at and make money at vs what I could screw up by not understanding. Screwing up with CRA or Alberta Registries is not something I want to do.

If you need business insurance shop around a bit as Brokers for Business coverage are different than homeowner brokers and I found a wide variation in coverage value to fees charged.

Good luck on your decision and path forward.

[tirebob]

Originally Posted by Twisted Canuck

All very true, and why I've had my own company since 2002. The good does outweigh the bad.

The best piece of wisdom on this thread is from Ken. Take it very seriously. The CRA has ZERO sense of humor. Pay them first. Pay them on time. Never give them a reason to take a second look at you. Don't play 'silly buggers' with them and do work 'for cash', it's just not worth it. I have customers ask me if I will 'cut them a deal for cash'....Nope. I usually reply that if they pay immediately on completion, I will discount the job the equivalent of the 5% GST from the invoice, it's worth it to get paid quickly. Don't do cash deals.

Without exception, every shady tradesman I have met who is trying to work and fly under the CRA's radar, has gotten caught, and it's not pretty. I know one old painter, he is in his mid 70s, and he will not be able to quit work till he drops dead over his roller. Sad.

Ooooh great point!! It always amazes me when people talk about wanting to open a business so the can "write everything off" etc... People don't realize how screwed they will be if they mess with Revenue Canada! It just isn't worth it...

[Dewey Cox]

Every time someone tells me to "write something off" I think of the Spaniard in The Princess Bride:
"You keep using that word. I do not think it means what you think it means."

[Xbolt7mm]

Originally Posted by xxclaro

Looking for some advice on if and when starting a small business is a good idea. Basically what I'm thinking about is something you do as a hobby that you could probably make a little money at if you ramped it up a bit, but would need to put some money into equipment and supplies.

For example I like to raise some chickens and other birds, and there is a pretty good market for the right types, as well as little urban coops and such. If I want to sell more though I need to fix up some of my buildings and maybe construct some more, as well as getting some more equipment. It wouldn't take much, a few thousand maybe, and profits wouldn't be that high either but I thought it might be helpful to register a business so that you can at least save a little bit on taxes. I don't know enough about it to know if it's worthwhile, and not sure who I would talk to. Any advice on this?

No advise here, just good wishes hopping your ideas come through

[KegRiver]

I hope we aren't discouraging you.

Being an independent business owner can be very rewarding in many ways.

With some business it is possible to do it with minimal startup cost and effort. Kinda work into it in a sense. The example you give is one where this can be done.

You may not need an extensive business plan or advice from lawyers and accountants. Depending on the business type and how much you want to produce and sell.

But the more you know, the better prepared you are, the better your chances.

Learning as you go can work, especially with farm type business. People have started with very little input and even less information. And succeeded.
It took most of them a lot of years to make a decent income but they did eventually get there.
In the mean time they put in astronomical amounts of time and effort for little to no pay.

But they answered to no one. They made their own decisions and the reaped all of the rewards.

Today, many of them have time to spare, money to spend and a good future ahead.

It's not for everyone. One has to be willing to take the bad with the good but for those willing to put in the time and effort it can be the best thing you will ever choose.

[MyAlberta]

Originally Posted by xxclaro

Looking for some advice on if and when starting a small business is a good idea. Basically what I'm thinking about is something you do as a hobby that you could probably make a little money at if you ramped it up a bit, but would need to put some money into equipment and supplies.

For example I like to raise some chickens and other birds, and there is a pretty good market for the right types, as well as little urban coops and such. If I want to sell more though I need to fix up some of my buildings and maybe construct some more, as well as getting some more equipment. It wouldn't take much, a few thousand maybe, and profits wouldn't be that high either but I thought it might be helpful to register a business so that you can at least save a little bit on taxes. I don't know enough about it to know if it's worthwhile, and not sure who I would talk to. Any advice on this?

'if and when' My only thought on this is when you have identified a need, and can fulfill that need at your required rate of return, is when a business is viable. Ramping up production isn't always the best approach. Brokering other producers products might be easier on the pocketbook.

[ssyd]

The amount of business regulation you face will be entirely unknown. It is up to you to discover what regulation applies to you as there is no central source for this crucial information.

This is the truth. Even as an owner/operator I learned this. Everybody will have an opinion based on what they heard from a guy one time but without scrolling through the actual laws as they're written or hiring a lawyer, you'll never know for sure.

[2 Tollers]

xxclaro -- the only other item I would add for you to think on is related to your comment "Basically what I'm thinking about is something you do as a hobby that you could probably make a little money at ".

If you have a hobby that you enjoy and find it relaxing do you want this to become a business where you are essentially tied to it having to make it successful vs a hobby you enjoy. Some people can do this others find that once a hobby becomes a job it is no longer enjoyable.

All the best on your decision and if you chose to go to a small business I wish you success.

[warriorboy10]

The changes the feds (CRA) have introduced has decimated many small businesses. These days in many cases having a small business just isn’t worth it. And as far as “Oh I can write everything off” hearing many comments of this nature their are few that really understand what that statement or should I say practice really means!!

[Chixfishing]

Originally Posted by xxclaro

Looking for some advice on if and when starting a small business is a good idea. Basically what I'm thinking about is something you do as a hobby that you could probably make a little money at if you ramped it up a bit, but would need to put some money into equipment and supplies.

For example I like to raise some chickens and other birds, and there is a pretty good market for the right types, as well as little urban coops and such. If I want to sell more though I need to fix up some of my buildings and maybe construct some more, as well as getting some more equipment. It wouldn't take much, a few thousand maybe, and profits wouldn't be that high either but I thought it might be helpful to register a business so that you can at least save a little bit on taxes. I don't know enough about it to know if it's worthwhile, and not sure who I would talk to. Any advice on this?

I have no idea on this but am just wishing you a good luck.

[Chixfishing]

Originally Posted by Twisted Canuck

There is so much truth in this article, it is beyond depressing...

https://business.financialpost.com/o...sh-your-spirit

Truth beyond the truth....

[Reeves1]

Originally Posted by xxclaro

Looking for some advice on if and when starting a small business is a good idea. Basically what I'm thinking about is something you do as a hobby that you could probably make a little money at if you ramped it up a bit, but would need to put some money into equipment and supplies.

For example I like to raise some chickens and other birds, and there is a pretty good market for the right types, as well as little urban coops and such. If I want to sell more though I need to fix up some of my buildings and maybe construct some more, as well as getting some more equipment. It wouldn't take much, a few thousand maybe, and profits wouldn't be that high either but I thought it might be helpful to register a business so that you can at least save a little bit on taxes. I don't know enough about it to know if it's worthwhile, and not sure who I would talk to. Any advice on this?

Didn't read all the replies...

I've raised lots of bird species / breeds.
Hobby farm.
I have never made a nickle.
Lots of write offs.
Good accountant.

[Big Grey Wolf]

Most small business go through the 5 year life cycle before they die. Some good advice hear, marketing your product and receivables very important.

[Ken07AOVette]

Originally Posted by Dewey Cox

Every time someone tells me to "write something off" I think of the Spaniard in The Princess Bride:
"You keep using that word. I do not think it means what you think it means."

Haha yep perfect!!

[The Cook]

Best advice I got was Get an accountant ( reputable like Ken said).