Ball Python Business

I have thought of turning my Ball Python passion into a business. It would be a part time thing and I would not plan to make a profit. I was thinking about becoming an LLC. But I don't know anything about it. This is all an idea and nothing is set in stone. I am just trying to figure things out. Does anyone know anything about the rules and regulations of business? Or has anyone done it?
Thanks
Trey

You want to make a business out of selling morphs? If so, Adam from 8 Ball Pythons would be the one to ask.

I don't know a whole lot about businesses, so maybe I'm not understanding you correctly? :confused:

I'm doing it right now. I will try my best to answer any questions you have.

p.s. how do you plan to own a business and not turn a profit?

You should look into the rules in your state for state tax issues. I wouldn't bother setting up a LLC. If you don't make a profit, the IRS considers it a hobby, and you can't write off the losses forever.

First thing you need to do before you start a business is write a VERY detailed business plan....layout every expected and possibly unexpected costs. You'll need a bit (on average 80k capital) to start.

My advice to you would be...use your hobby status to start your business....but still write-up a detailed plan for all of your goals/expenses/etc. It will help you stay focused and organized with what you want to acheive with this "side business" and give you a good look at what the costs will be long term for a small scale breeding biz.

Also, doing it in the way of starting small and reinvesting in your business you have very little debt upfront. Yes you COULD writeup a business plan, get shop space, and buy a large quantity of high end morphs to start.

Just some thoughts from me, I'm by no means an expert...I've been in your position about thinking of starting a business...I decided to keep it as a fun hobby, I don't think many people realize how much work it is to maintain such large collections of reptiles.

With whatever you do, good luck.

-Jason

This year would be a lose but next year I could turn a profit IF everything comes out as planned. What are the profit cutoffs for determining if it is a business or a hobby?

Thanks
Trey

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Originally Posted by mxrider42

This year would be a lose but next year I could turn a profit IF everything comes out as planned. What are the profit cutoffs for determining if it is a business or a hobby?

Thanks
Trey

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http://www.irs.gov/newsroom/article/...169490,00.html
http://www.irs.gov/pub/irs-pdf/p535.pdf

Archive those links!;)

-Jason

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Originally Posted by mxrider42

This year would be a lose but next year I could turn a profit IF everything comes out as planned. What are the profit cutoffs for determining if it is a business or a hobby?

Thanks
Trey

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You would need to check with your CPA to find out where the IRS and your state draws the line on hobby and small business.

Oh, and here's a really good link for "Home based businesses" and some of its rules.

http://www.irs.gov/faqs/faq-kw82.html

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How do you distinguish between a business and a hobby?




Since hobby expenses are deductible only to the extent of hobby income, it is important to distinguish hobby expenses from expenses incurred in an activity engaged in for profit. In making this distinction, all facts and circumstances with respect to the activity are taken into account and no one factor alone is decisive. Among the factors which should normally be taken into account are the following:

1. Whether you carry on the activity in a businesslike manner
2. Whether the time and effort you put into the activity indicate you intend to make it profitable
3. Whether you depend on income from the activity for your livelihood
4. Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business)
5. Whether you change your methods of operation in an attempt to improve profitability
6. Whether you, or your advisors, have the knowledge needed to carry on the activity as a successful business
7. Whether you were successful in making a profit in similar activities in the past
8. Whether the activity makes a profit in some years, and how much profit it makes
9. Whether you can expect to make a future profit from the appreciation of the assets used in the activity

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Jason,
I plan on starting out small and reinvesting the money into the business. I am not palnning on living off of the business but just mainly for fun.
I don't really know if I want to start a business. I am just looking into it.
Thanks
Trey

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Originally Posted by mxrider42

Jason,
I plan on starting out small and reinvesting the money into the business. I am not palnning on living off of the business but just mainly for fun.
I don't really know if I want to start a business. I am just looking into it.
Thanks
Trey

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Honestly even as a hobby I would still recommend to write up a solid business plan...it will help you expand your "hobby" into a larger business if you ever choose to do so.

In that one link I posted they state that if you make a increased profit for 3 of 5 years it is technically a business, so even if you sell any snakes and break past your initial investment technically (and legally, I believe) you do have to file those gains in your taxes...but you can always skirt that by making yourself "break even" by putting more money into your business.;)

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Originally Posted by JBallPython

First thing you need to do before you start a business is write a VERY detailed business plan....layout every expected and possibly unexpected costs. You'll need a bit (on average 80k capital) to start.

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Okay, I take exception to this. I have no idea where you came up with the $80,000 in capital. Every business... EVERY business has different requirements, and as such, different startup costs.

The first business I started, I had about $800 to invest in. By the first year I had quit my day job. That's certainly not something one should consider the norm, but it's certainly an example of why a static number isn't wise to hand out as an average.

The list given by the IRS on what constitutes a business or hobby is fairly vague. However, the rule of thumb is a profit made 3 out of 5 tax years is a business. So, if you assume that over the next five years, a minimum of 3 of them will be profitable, you are indeed running a business. If there's potential that you may only make a profit on 2 of them... you have yourself a hobby.

An accountant would probably advise you to wait until they have 2 straight years of profitablility before filing as a business. The biggest risk of starting the business now, and claiming deductions, is if you run 3 years without profit... the IRS can (and may) retroactively tax you as a hobby. That's going to hurt when the bill comes in.

I have decided to wait and see how the next few years go. Thanks for everyones help. I found www.sba.gov has a lot of info. I have decided to make a business plan and start mapping expenses just to give me some ideas. I'm going to talk with an accountant also just to see what he says. But I have found out there is a lot more to it than I expected.

Thanks
Trey

getting everything set up is the hard part. Once you get things rolling its no big deal to stay on top of it..

P.S Quickbooks Pro is a life safer when it comes to business related money software

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Originally Posted by jhall1468

Okay, I take exception to this. I have no idea where you came up with the $80,000 in capital. Every business... EVERY business has different requirements, and as such, different startup costs.

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This is true every businesses investment requirements are different. However I had found to be true that for a retail business the average capital used to start was 80-100k.

Now if it starts as a hobby and takes off rolling, and you make a profit year after year you really don't need that amount of money...but it started as a hobby, you aren't renting space, paying extra utilities, etc.... and the business has the taken a longer route to get started, which there is nothing wrong with.

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Originally Posted by JBallPython

This is true every businesses investment requirements are different. However I had found to be true that for a retail business the average capital used to start was 80-100k.

Now if it starts as a hobby and takes off rolling, and you make a profit year after year you really don't need that amount of money...but it started as a hobby, you aren't renting space, paying extra utilities, etc.... and the business has the taken a longer route to get started, which there is nothing wrong with.

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but do most of those retail businesses consist of multiple $3000 or $4000 snakes along with others in the $1000 range

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Originally Posted by tmlowe5704

but do most of those retail businesses consist of multiple $3000 or $4000 snakes along with others in the $1000 range

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Probably not...but many have several thousands of product and hardware. And honestly when you can afford to drop 3-4k on a snake...its probably no longer a hobby.;)

I would say the main thing you should do when you look into selling your animals is to check with your states guidelines. For example in the state of florida in order to sell or exhibit class III wildlife (almost all reptiles and exotic pets) you must have a class III license/permit.
You definatley dont want GA version of Fish and Game up your you know what about that one.
I have enjoyed our run of it so far. I can tell you it have been very rewarding for me.

Good Luck!!
:rockon:

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Originally Posted by Freakie_frog

You would need to check with your CPA to find out where the IRS and your state draws the line on hobby and small business.

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Right, in Iowa anyone who makes more than $500 a year selling animals must be licensed as a "pet shop".

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Originally Posted by Wild Bill

Right, in Iowa anyone who makes more than $500 a year selling animals must be licensed as a "pet shop".

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I also wanted to add that does include trades for animals, if you trade more than $500 worth of animals you're a "pet shop".

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Originally Posted by JBallPython

Probably not...but many have several thousands of product and hardware. And honestly when you can afford to drop 3-4k on a snake...its probably no longer a hobby.;)

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Being able to afford it means nothing. I have seen people here drop $1000 for their first snake and I'm sure someone who has some money laying around would have no problem dropping $4k on a snake if they really like it.

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Originally Posted by JBallPython

Probably not...but many have several thousands of product and hardware. And honestly when you can afford to drop 3-4k on a snake...its probably no longer a hobby.;)

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No I think being able to drop 3-4K on a snake could still be a hobby. An expensive one but still a hobby. I think when you can pay your house note and build wealth with only the sale of ball pythons then your a full time business.

Somebody's been reading the new Reptile's magazine haven't they.....LMAO.

Interesting articles this month.

It really doesn't matter what your personal opinion is. The federal, state, county and city guidelines are what determines what a business is. As responsible owners/breeders/traders/sellers etc. it is our job to find out where we sit within the regulations and follow them accordingly. For every person that ignores these laws and regulations and doesn't get the appropriate paperwork to do even the smallest of trades/sales causes problems for 10 more people. Do EVERYONE a favor and find out what laws/regulations apply to you in your area. Don't take anything for granted, it really doesn't matter if you want to call it a hobby. The fact is, it's not up to personal opinion.