Online Storefronts

[jimbob91577]

So friends and family have advised me that I should start selling my work - mainly pens, ornaments, bottle stoppers, and the occasional bowl.

I live in a fairly small town, and have had a couple of pieces in some different shops around town. I have also donated several items to silent auctions, fundraiser events, and friends. Needless to say, I don't sell much.

I have a day job and do not production turn nor do I want to. This is a hobby for me and I want to keep it that way, but I am intrigued by getting my pieces out there.

I'm considering an online retail outlet for a couple of reasons - one is my location. I can't see folks in my area spending lots of money on nick-nack items such as bottle stoppers - thus I would have to price my products fairly low which doesn't really justify the time expense involved with trying to find someone to retail my products locally. Second, I feel, and I may be wrong, that an online store could still reach people in my area but also people in other areas for the same time and financial costs, thus killing two birds with one stone.

With that said, I'm looking at opening an eBay store - but before I do, I thought I would seek out knowlege from those who have traveled this path before me.

So what are some good options? I'd like to spend no more than $20 a month, and would like to be able to accept paypal and/or credit card payments. I want to try and avoid setup costs, and want no commitments other than month to month payments. I don't necessarily need my own domain name, but I won't say that having it is a bad thing.

Also - what are the tax implications both personally and professionally of selling hobby items via an online store - I dont live in a state that has a sales tax but will I have to actually start a business in order to sell hobby items?

Any help on this topic would be great!

Thanks!

 

[Ed Davidson]

The following is just my opinion…

There are basically two reasons to set up a formal business for your craft sales...to shelter your personal assets (in case someone pokes their eye out with one of your bottle stoppers and sues you), and to write off your business related expenses against business income, thus minimizing your tax liability. Without a formal business, all sales would be considered ordinary personal income.

The process to set up a business is pretty simple, especially if you're selling though the net and not having to collect local sales tax:

1) Get an Employers Identification Number (EIN) from the Fed.
2) Set up your business (normally a Sole Proprietorship or Limited Liability Company), probably through your state's Secretary of State Office.
3) Keep good records, being careful to segregate business expenses and other transactions from personal ones.

As for online sales, if you're considering setting up an eBay shop, do a search on eBay for similar products that you want to sell...see how many competitors are already there, assess their product's quality relative to your own and measure their price point against your pricing expectations. That’ll give you a good idea of what you’re up against.

There are lots of other ways to try selling your crafts online. Here are links to a few resources to study:
NICHE magazine
About.com: Arts & Crafts Business
American Craft Council
Fine Art America
Crafts Report magazine
Artful Home

Good luck...

 

[Steve Worcester]

Also - what are the tax implications both personally and professionally of selling hobby items via an online store - I dont live in a state that has a sales tax but will I have to actually start a business in order to sell hobby items?
Thanks!

While I am not an accountant (disclaimer), since you will have to count any sold items as revenue, you might as well start a business. It is usually as easy as getting a business license, and MAYBE filing a fictitious name, if you don't use your real name in the title. This way you can file a schedule C for the business and write off the tools and materials used in the course of business. Yes, you will have to keep some records, but if you use something like Quicken and Turbo Tax, it is pretty easy to keep up the records for year end.
As far as a web site, there are a bunch available. $20 a month is a pretty limited budget though but in the ball park. You might also want to look into taking credit cards via paypal that way.
Look for website packages that offer a store front with an secure link (SSL).

 

[Jim Curlee]

Something else you'll want to check into is your homeowners insurance policy (I'm assuming you'll be producing from a home shop). If you don't notify the insurance company and have to file a claim and they find out your running a business out of your home it could cause problems.

 

[Jim Stoppleworth]

I'm considering an online retail outlet for a couple of reasons - one is my location. I can't see folks in my area spending lots of money on nick-nack items such as bottle stoppers - thus I would have to price my products fairly low which doesn't really justify the time expense involved with trying to find someone to retail my products locally. Second, I feel, and I may be wrong, that an online store could still reach people in my area but also people in other areas for the same time and financial costs, thus killing two birds with one stone.

With that said, I'm looking at opening an eBay store - but before I do, I thought I would seek out knowlege from those who have traveled this path before me.

So what are some good options? I'd like to spend no more than $20 a month, and would like to be able to accept paypal and/or credit card payments. I want to try and avoid setup costs, and want no commitments other than month to month payments. I don't necessarily need my own domain name, but I won't say that having it is a bad thing.

Also - what are the tax implications both personally and professionally of selling hobby items via an online store - I dont live in a state that has a sales tax but will I have to actually start a business in order to sell hobby items?

Any help on this topic would be great!

Thanks!

Since I'm in the middle of traveling into this world here's a couple of things I've found so far:
1) the key is getting "qualified unique visitors" to your site (ie people who want to buy what you are selling);
2)to do that you need to be on the first page of search engines' returns;
3)this is accomplished by attaining a high rating on relevancy search engines, such as Google, Yahoo, MSN, etc.;

I'm finding it to be a great deal of work.

I've registered a domain name. GoDaddy has them on sale at $7.95 a year right now.

While building our site I'm in this realitively intense learning process of what the needs are to be succesful. I've got a long way to go.

From the business side I don't have the issues others have alerted you to as I already have a business and a store front that the woodturning is a "division of". Since our main business is embroidery I've learned the importance of "qualified visitors". Persons who want a design on their garment aren't necessarily interested in handcrafted wood items as it isn't the reason they came into the store in the first place.

Like you I have items in several stores and gift shops, some sold wholesale, some on consignment where they get 30 to 40% commission. I've also found donations to charity auctions to be a viable way of becoming known.

Good luck - hope you can glean some help from the above ramblings.

Stoppy

 

[BNeddow]

There are a number of services out there now that will help you set up your website without the need to understand html (which is a hobby in itself!) I use a company called Citymax (citymax.com) It costs me $14 a month. I was originally put off by the hard sell on their home page -- but try the "free site for a month". It will allow you play with a site and see if you like their software. There are hundreds of templates availlable so you can customize the look of your site to make it your "own. lI do not try to sell via my site. But they have software to allow you to set up a catalogue of items you want to sell and provide access to PayPal, free e-mail, etc. etc. I have been very pleased with the service -- and you can do it easily yourself. (If I can, anybody can.) There are lots of other similar services out there, so ask around and save yourself a ton of work setting up a site.

 

[Jerry Hall]

Take a look at weebly.com

Easy to set up, non technical, free, reliable, simple web site at yourname.weebly.com, or 25/year with your own domain name yourname.com

Or for a little more work set up a domain name at godaddy for 10/year and it is a fairly easy table change to redirect it to weebly. weebly shows you how in a simple tutorial. I would pay weebly the extra 15 so they can make a buck.

weebly also has a slick integrated paypal interface you can set up in your web site. Also simple statistics so you can see who is looking at your site. You can integrate a slide show based on flickr also. Integrate a blog. All looks like a part of your web site.

They actually respond well (within a few days) to customer emails on tech problems on their free site. Amazing to me. I pay 3.99/month for the 3 year rate for their pro service just because they are great, altho it offers little more than the free service at present. They have gotten great national press and have been around a few years, and I think they will continue so.

My weebly site is at jerryhallstudio.com

IMHO a simple, albeit limited, service like this is the way to go so you can turn more and spend less time on the )()&&*(*( internet.

 

[jimbob91577]

There are a number of services out there now that will help you set up your website...

So you chose to go the route of creating your own store front. How do you generate traffic - do you advertise?

...by attaining a high rating on relevancy search engines, such as Google, Yahoo, MSN, etc.;

I'm finding it to be a great deal of work...

Hense my leaning towards an eBay store. Why did you choose to go the route of creating your own storefront rather than piggy-backing off of an already established outfit?

There are basically two reasons to set up a formal business for your craft sales...to shelter your personal assets (in case someone pokes their eye out with one of your bottle stoppers and sues you), and to write off your business related expenses against business income, thus minimizing your tax liability.

At what point did you start a business? Did you do this from day one for this very reason, or did you opperate under the "Ordinary Personal Income" category for a while? What additional tax filings are necessary


--

Jerry - do you have a physical studio or just your online studio? Do you operate a business or do you sell your work as "Ordinary Personal Income"?

 

[Ed Davidson]

The following is just my opinion...

You should speak to a local tax accountant - a good accountant should be able to tell you exactly when it makes sense to transition from a hobby (ordinary personal income taxation) to a business baseline. In my case, the transition point was when I had enough business expenses to offset a fairly large portion of business income. If you have little or no expenses to "write off", then you're probably better off treating this as a hobby rather than a business and recognizing the income as personal.

 

[Jerry Hall]

Studio!

JimBob,

My shop IS the "studio," it's obligatory these days! It is only open by appointment or at one of our Artist Open Studio events. That way I can get it cleaned up once or twice a year. I am only a half a step ahead of you, having done four shows. I was not sure if I wanted to get bogged down in production, but it has made me a better turner and more critical of my work. And when I get bored and have new ideas I just make something else.

It is just minor personal income for me, but as they say it is supporting my addiction, and helps dispose of my turnings, but not the shavings. My web site for now is just an extension to my business card, gives me something to present when I apply to craft shows, and may lead to followup or custom sales I hope. Also it seems to have drawn interest from a couple local galleries.

So it provides choices. Also has caused some free wood to find its way to me! I am not sure how far I am going on the web storefront, but may give it a little try as I have had some inquiries.

It's a journey...

 

[jimbob91577]

Ed,

At this point, I don't forsee any expenses that would be incured by having a business other than having an online store front (either purchasing a domain and hosting services, or opening an eBay store) - roughly $20-30/month; and replenshing materials such as wood, pen blanks, bottle stopper ends, finishing supplies, etc.

I'm prepared to eat the cost of all of that. I look at it from the perspective of If I sell 1-2 pen/pencil a month at $15-20 each, that would be enough to cover the web hosting fees. And if I don't sell anything for 6-12 months then I close my store and call it good - if I'm out a couple hundred bucks, then oh well it was a learning experience.

What concerns me is the establishment of a business - you brought up a very good point; having an LLC shields my personal assets in the event someone sues me for whatever reason. If you had it to do over again, would you have setup a business from the get go, or aside from the expenses (tax obligations), is there really no reason to have a business?



Jerry,

Obligatory - so you must have a physical place of business that people can visit? I haven't done any shows per say, but have donated a few things here and there, and let friends and family have some of my work or at least cover my cost of said work (aka You buy the materials, I'll make it - sort of thing).

It seems you and I are in the same boat as we are both starting out, but it also looks like we may be on opposite sides of said boat - I don't want a studio, I don't want to attend shows (yet), I don't want folks to visit my shop. I want an online store that I can retail my things through, or retail my wares through a gallery, nick-nack outlet, or word of mouth.

This is a hobby for me, and I don't want it to turn into an obligation. The minute it becomes work for me will be the minute that I no longer want it. I'm not even really looking to make money off of it - its just nice knowing that somewhere out there someone is using something that I made.

 

[Jim Stoppleworth]

Hense my leaning towards an eBay store. Why did you choose to go the route of creating your own storefront rather than piggy-backing off of an already established outfit?

I wanted multiple websites, one for woodturning, a couple for niches in the embroidery arena and some for drop shipping. IMO Ebay is fine but your selling price points aren't going to be any better (probably lower) than what you feel you'd be able to charge in your small community.
Given your goal of keeping turning a hobby Ebay is probably a good bet.

Jim

 

[Ken Grunke]

I would not place much faith on ebay for selling quality handcrafted items at the prices you would need to set. Ebay is an auction where people go to look for deals and steals. Sometimes you see bids go up on certain things but I've looked into selling my turnings there and looked at other people's listings and as a rule, the bids are pretty pathetic.
Look into etsy.com instead, it's specifically intended for handcrafted items. I haven't tried it yet myself but will soon. There are some woodturners with etsy.com storefronts, maybe they'll pop in here and offer some tips.

 

[waltben]

I would not place much faith on ebay for selling quality handcrafted items at the prices you would need to set. Ebay is an auction where people go to look for deals and steals. Sometimes you see bids go up on certain things but I've looked into selling my turnings there and looked at other people's listings and as a rule, the bids are pretty pathetic.
Look into etsy.com instead, it's specifically intended for handcrafted items. I haven't tried it yet myself but will soon. There are some woodturners with etsy.com storefronts, maybe they'll pop in here and offer some tips.

eBay can work if you place your items in the right categories and at the right time. They don't have to be listed at auction either. I've had some success selling pieces on it, but since I've a few galleries and we vend at art & craft shows, that means I've got to set advertised ones aside. Works if I've a lot of inventory, but that hasn't been the case until recently with the economic downturn. We don't know anyone who has been selling much of anything lately.

 

[Dick Sowa]

My wife and I started a small online business several years ago, but had little time to keep it up, so have discontinued it. But some lessons I learned early on...

-Like others have said...check with an accountant and take their advice on when/how to get an EIN and file for a business name (dba). We did both, but it hardly seemed worth it, since we didn't really make enough to warrant the cost of keeping the dba, and accountant fees, etc.

-Check with your homeowners insurance company. A lot homeowner policies do include clauses for hobby type businesses, where you don't deal with public access.

-You don't need to set up an eBay storefront to use PayPal. PayPal takes a cut out of every transaction. But they are well known and folks seldom hesitate to pay through them.

-Use an existing storefront service, rather than trying to set up your own web site. Web design, domain registration, etc can (like others have said) become a job in itself.

-My sister makes and sells doll clothes through Etsy.com. It's a part time hobby for her, and she is very happy with the traffic and volume of sales she gets. Plus, the storefront was a breeze for her to set up and manage.

Good luck!

 

[Curt Fuller]

I'm definitely not an accountant, tax advisor, or anything that would give any real credence to my advice. But I'm in the same catagory as you described with my day job and my desire to sell some of my hobby efforts. For taxes, I file my own using turbotax, and somewhere in there in the "other income" section is a box for hobby income. It doesn't require a bunch of itemization or anything. If I felt I ever made enough from my hobby to report it to the IRS I would use that method.
As for eBay, I've purchased several things before but just last week posted the first turnings I've ever tried to sell on eBay, a few Christmas ornaments. Setting up the Paypal payment process was easy enough. I sold everything in my first crack at it. But of 6 items, I haven't recieved payment on 2 of them. And I didn't read the fine print on the charges from eBay and Paypal so I was a little surprised by the fees they charge. Then I had to find some boxes and packing materials to ship what I had sold, which I probably over killed because I didn't want them to break. Then a trip to the post office to mail it all off. Overall, I rate it as a good learning experience. I should have done more homework on the fees and shipping costs and I need to find out what to do with someone that bids but doesn't pay. But I'll do it again, just with a little more attention to things and make sure I have all the costs covered.

 

[loberg]

I have been in the accounting business and was a certified tax preparer. I would advise you look at a local college for a class on taxes. Many are scheduled for business people. That class will tell you what you can use in your business. A LLC or LLP is going to cost you. Maybe (depending on your state) more than you could make. If you are using your name as a business name then you do not have to file a fictious business name (this is also expensive depending on where you are located). There are several "shoe box" accounting systems that are free and they will do very nicely to keep track of your expenses. You can deduct all expenses occured while you are trying to set up your business, whether you actually fire it up or not. So keep track of them.

There is a book on setting up a business from woodworking. It is generally at your local library or Amazon. They help you structure your prices and give good overall advise on woodworking for profit. I'm at home, otherwise, I would tell you the name of the book (I'm a librarian). Good luck and as a last shot--if you are going to do this, remember to figure how to stop if it doesn't work out. In partnerships, the divorce is the item that needs the most attention not splitting the profits.
:cool2:

 

[Ken Grunke]

As for eBay, I've purchased several things before but just last week posted the first turnings I've ever tried to sell on eBay, a few Christmas ornaments. Setting up the Paypal payment process was easy enough. I sold everything in my first crack at it.... Then a trip to the post office to mail it all off.

More power to ya if ebay works for you, Curtis. Some things to know that make it easier in case you aren't aware of them: First, USPS will ship bundles of mailing cartons and envelopes completely free of charge. Look on www.usps.com it's on the site somewhere.

Second, you can print a shipping label through Paypal, prepaid, and get free delivery confirmation for Priority Mail saving, I think it is now, 55 or 60 cents of the over-the-counter cost.

Third, if you have a prepaid package that's too big to put in your mailbox, you can request a pickup from USPS up until 2 am on their website, or by phone that morning--latest time is probably up to the particular office.