Ball Python Business

[mxrider42]

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

[Sausage]

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?

[Freakie_frog]

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?

[Cortana]

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.

[jknudson]

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

[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

[jknudson]

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

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

Archive those links!

-Jason

[Freakie_frog]

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

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.

[jknudson]

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

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

[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