turning a bonsai hobby into a business

cbobgo

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I never plan to make a living out of bonsai, I may not even break even. But I buy bonsai stuff and I occasionally sell bonsai stuff, so I thought it would make sense from a tax perspective to start a little business. That way I can right off my expenses on my taxes.

My main question is that if I am a business, and I sell a tree, does that make me a commercial nursery? So now I have to have licenses and inspections and Sudden Oak Death certificates and so on? If that's the case, the drawbacks would likely outweigh any benefits.

Has anybody else done this?

- bob
 

bonsai barry

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Although I'm no tax expert, I would think it would not be worth the effort. You don't mention how many trees you sell, Bob, but unless you are talking several thousand of dollars worth annually, then its probably not worth it. For one thing, you have to prove that it is an acutal business rather than a hobby. I believe one standard they use is that you must show a profit every several years. By the time you get a business liscence, pay for DBA ("Doing business as...") I would think it would be better to write off the write off... if you know what I mean. I tried doing something similar with the sales of my art a few years ago and realized that in my situation it wasn't worth the hassle.
 

Tachigi

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YEP...and my advise would be that if you don't want to be a shadow warrior you'll need to get all the appropriate licenses and be subject to inspection at the whim of the local Ag inspector. Write offs only go so far..eventually you'll have to turn a profit or the IRS will kill the deduction .... then they might get curious and ask to see what you been doing.

Licenses here in PA are expensive...my guess there obscene in Cali as you guys appear to have far more hoops than us.

My feeling is if you start a bonsai business, your starting it for more than monetary reasons. When I began I whittled down my gross income by 60K knowing full well that I was making a life style choice.
 

Dwight

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Theres an old saying that if you want to make a million with _____________________ ( enter whatever hobby business you choose ) start with two million
 

BUBBAFRGA

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Biggest problem you will face is the State Regs. and for what I know of Cali it is going to be a pain in the rear. I have reseach it for my State of Georgia and thought I might do it. But you will have to show a little profit, Not hard to do that if you do some of the festivals. I think I can give people better trees than the Malsai that Brussells is pushing at Home Depot for same or better price. Buyt You want know unless you try......
 

irene_b

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You like paperwork??? Think massive amounts...County,State,Federal....Every thing you spend has to have a reciept...Same with sales...Plus don't forget the taxes that you have to file every 3 months for just the state.....
Plus if you run it from your home it may be against deed restrictions..
Irene
 

Vance Wood

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I never plan to make a living out of bonsai, I may not even break even. But I buy bonsai stuff and I occasionally sell bonsai stuff, so I thought it would make sense from a tax perspective to start a little business. That way I can right off my expenses on my taxes.

My main question is that if I am a business, and I sell a tree, does that make me a commercial nursery? So now I have to have licenses and inspections and Sudden Oak Death certificates and so on? If that's the case, the drawbacks would likely outweigh any benefits.

Has anybody else done this?

- bob
Most of this kind of thing is regulated on a state to state basis, you need to explore state law and living in California I would think them convoluted and legion. It can be done if you go for a nursery stock sales license. Where you wind up with inspections is when you keep stock from year to year. As long as your sources are cleared by the state they don't bother you.

You need to show that you indeed are involved in sales: Shows and conventions are a good way. You must keep good records and you must show a profit from time to time.
 
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cbobgo

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Thanks everyone for the feedback, I'll do some more research on local business laws and let you know what I find out.

- bob
 

Vance Wood

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Thanks everyone for the feedback, I'll do some more research on local business laws and let you know what I find out.

- bob
The two most important pieces of documentation you will need is a nursery dealers license and a sales tax number. What else you may need in California is beyond my knowledge. However; this may all change if our beloved Dear Leader Obama is able to shove----sorry, I meant to say pass, a VAT (Value added tax) on top of everything else. They did something like that here in Michigan a number of years ago and it was disastrous. Any thing you purchased as a business from out of state was taxed additionally by Michigan. This drives prices up even more which drives down sales in the same way unless you are willing to eat the difference.
 

grouper52

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If you are at all a liberal in favor of big government, then I certainly suggest you start a small business in California. :eek: Us paleo-conservatives can always use a few more converts in our ranks. :D
 

DaveG

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Bob, I would probably be counted among the naysayers here, unless you sell A LOT of bonsai stuff. However, in case you decide to do this, I have a suggestion. If the IRS will expect you to make a profit every few years, then do so. Try to plan ahead and don't give your tax number for every bonsai-related purchase. A profit of $10 or so is still a profit.

You might also look into ways to start it as a non-profit organization, but this might turn out to be substantially harder. Then again, if you teach others in your area, it might be possible to pull this off.
 

rockm

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"Has anybody else done this?"

Yeah. The wreckage of dozens of bonsai businesses litter the road of the last 20 years or so. Ask some of the veteran sellers in the biz now and they will tell you that it is VERY hard to do.

Selling stuff from time to time comes with the hobby. I've done it. Most people who have been doing this for more than five years or so have too. That doesn't make me a bonsai business, nor make me want to get a tax number. The spare cash I make every now and then can help support my hobby, but it can't support my family.
 

Vance Wood

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Bob, I would probably be counted among the naysayers here, unless you sell A LOT of bonsai stuff. However, in case you decide to do this, I have a suggestion. If the IRS will expect you to make a profit every few years, then do so. Try to plan ahead and don't give your tax number for every bonsai-related purchase. A profit of $10 or so is still a profit.

You might also look into ways to start it as a non-profit organization, but this might turn out to be substantially harder. Then again, if you teach others in your area, it might be possible to pull this off.
A non profit organization is not the way to go. The regulations and subsequent anal exam-- and the penalties for failing such an exam--- make this kind of effort difficult and risky.
 

Vance Wood

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"Has anybody else done this?"

Yeah. The wreckage of dozens of bonsai businesses litter the road of the last 20 years or so. Ask some of the veteran sellers in the biz now and they will tell you that it is VERY hard to do.

Selling stuff from time to time comes with the hobby. I've done it. Most people who have been doing this for more than five years or so have too. That doesn't make me a bonsai business, nor make me want to get a tax number. The spare cash I make every now and then can help support my hobby, but it can't support my family.
If you are starting a bonsai business to get rich, or simply support your family you would probably do as well collecting pop cans and bottles to get the return deposits. If you are doing it to support your bonsai hobby then you have to make certain that you are actually engaged in some sort of enterprise that can be legitimately tracked, like shows and conventions. You also have to show a profit from time to time or the government will come back and tell you it is a hobby and no longer allow you to use it as a business with deductions. You need to file all the taxes, state and local, and pay all the fees including sales taxes. Some states require you to file quarterly. In other words; it can be done if you don't mind jumping through the bureaucratic hoops and the pile of paper work.

This paper work requires you to keep detailed records of all sales, all expenses and-----here is the fun one-----inventory. You have to keep track of inventory. What you bought for the business, what you sold for the business, and what you have left for the business at years end. This get tricky when you try to keep track of how much fertilizer you have left, how much insecticide, how much soil, how much wire, tools, paper products for keeping track of all of this and the preparation H you need to sooth the royal pain in the Arse all of this causes. Other than this go for it but do it right.
 

Dustin Mann

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What to start a successful bonsai business that there is a huge open demand? Make your own bonsai pots over 22" in length and sell them under $500. Do not complain that they have to make many attempts, waste stoneware/clay, and that the buyer should pay huge comission for your artistic talent. The Chinese are already doing this with impoved quality every year. They now under price Tokoname competitors. Dustin Mann
 

cbobgo

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Thanks again for the additional opinions.

As I said from the beginning, I don't plan to make a living at this, nor would I really want to even if I had the skills. i enjoy doing bonsai for fun.

So the consensus seems to be that it is a doable thing, but the extra headaches would likely be worse than the limited tax savings or writing off my expenses.

I'm going to keep looking into it, but I think the answer is clear.

- bob
 

J W

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I have three "small companies" in California. It's extremely easy to get them started... You will be amazed at the simplicity of how it's done. The license is easy, insurance is easy, the paper work from lawyers is easy(EVERYTHING IS EXPENSIVE) Year one is great and can be fun from the stress of figuring it out. Year two you think is easier because you have sold a few things and the paper work that everyone tells you about is completed by you and your wife or partner that has always wanted to start his own business...

Year three you start to realize that I'm working every day to pay for bill's, fee's, insurance, taxes and the time to say "yep I have a small Bonsai business"

Year four and five is when nationally 90% of small businesses go bankrupt!!!! There not GMC or banks and get bail outs.

Of course some people make it. And many more will make it. But it's still a major factor and life choice.

There's some wise words in the last few post. It might be better to do some horse trading to support your desire and HOBBY.

JW
 

Brian Underwood

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I think I have to agree with most of you. Yes, it is completely do-able, and yes it can be a total headache. Starting the business is easy, but keeping it going and paying estimated taxes every three months is a pain, especially in such a fickle market. Keeping it a hobby is preferable at least at first, and if you happen to acquire enough stock to make it into a business, go for it. Good luck, and have fun!
 
J

jwatson

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Would it be possible to look into hooking up with a local mom/pop nursery, and offer to do your own bonsai section in the nursery? Maybe even paying them a stipend for the space. The pluses for you would seem to be that you could operate under their biz license, you could place orders wholesale, you would get exposure from folks just coming to the 'regular' nursery and perhaps being drawn into bonsai. (How fun to get a newbie and train 'em the right way!). The advantages to the nursery would be that you would draw your specific 'bonsai' traffic in and the nursery would be able to offer more services to its clients. Having them host a workshop or seminar would also draw in more folks. Just some 'outside the box' thoughts. :)

My first post, although I've been 'lurking' around for a few months. :)
 

jk_lewis

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All in all, there aren't many of us bonsai people; we're a small pond with a comparative lot of frogs in it. I'm amazed at the bosai nurseries that DO stay in business, and not at all surprised at those that don't.

Whatever you do, don't give up your day job.
 
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