Pardon my ignorance since I’m just starting out in the biz. But what is FET and why would I need to pay that? The only thing I’ll be doing in the near future is getting a tax number. I’m not sure about FET?!? Swizzle
FET = Federal Exise Tax. All fishing tackle manufacturered in the US is subject to a 10% tax. It is the responsibility of the manufacturer to collect and pay this tax.
If you’re not familiar with that requirement you should talk to your accountant about the implications. Or if you know someone else in the tackle biz they could likely fill you in on the nuts and bolts.
10%?!? So I’d have to charge $9.90 a card and then try to hold on that money and pay in every year? I was only looking at selling to mom and pop stores for a little extra cash and maybe in the future tie more as a business. As it is right now I haven’t made a profit on any of these yet. Once I figure in the cardstock, the staples, the bags, the line, beads, blades, clevises, hooks, paint, wire leader material, sleeves and ink from my printer to do all of this I’m still in the hole. I’m still looking for places that will sell beads by the thousands at a reasonable price. The best prices I’ve seen are on lots of 50,000 beads but they have a minimum order of $250 and $150 order every month. I can’t keep books for crap but if I do start selling in larger volumes I guess I’ll have no choice. Basically all the time I’m putting into these is for free. Maybe I should just throw in the towel. Swizzle
I didn’t mean to discourage you. If you REALLY enjoy making tackle, do it. But I would highly advise hiring an accountant to at least get you set up correctly so you don’t get hammered down the road by the IRS. A consult with a CPA really shouldn’t be that expensive and then you’ll know where you stand.
At least that’s what I would do.
I can’t afford an accountant. My electric was suppose to be shut off on the 20th so I’m still waiting for that, We’re about to be evicted, we have one working vehicle and that is going down hill quick. We get 1 check every 2 weeks now and the state takes out more in taxes because of the higher gross not to meantion the garnished wages. Our car needs to be inspected and it won’t pass. Until I get a stock built up I can’t afford to do anything else. I’ve had to turn down jobs because we can’t afford the $175 a week for day care and run 2 jobs with 1 car. This is just another punch in the gut. It doesn’t make any sence. They feds get 10% of my hard work and effort and then they get the addition 8.25% sales tax on top of that. Its insane. It really isn’t fair at all. Swizzle
Breaking into the tackle biz is a good time for sure…about as fun as a 10/0 Gamakatzu in the nose!
Jason, right next to the LOGOUT button on your tool bar is a flashing envelope. That’s the Private Message indicator.
Both James and Scenic have been in the tackle biz for…well since the natives have been using spears.
Follow your dreams…and don’t wake yourself up…I haven’t! 
I think I should clarify one thing. I’m just looking to get opinions and advise. I also want to apologize fr the little rant that I did earlier. Its just frustrating to be doing all of this work and if I want to go big then uncle sam wants to line his pockets. If I do decide to start a real business then I will do my best to learn the proper way to do it and go from there. Swizzle
Swizzle
I didn’t take ANYTHING from your post that sounded like advertising. You had a question about FET so I thought I’d throw out what I know. I’m not one to mess around with taxes so my advice is to raise your price 90 cents and pass it on to the baitshop. If you’re not making money on the blades at this point why would you risk getting yourself tangled up down the road with a tax liability? From a big picture perspective it sounds like you need to raise your prices to cover your time, materials and tax obligations…. or why bother?
At first I only wanted to tie a few to fill a gap for a friend and now I think I might want to do more. Just starting out in a half arsed way and not really knowing what I’m getting into is the hardest part. I’m gonna eventually have to raise my price and pay the toll to cross into business land. I’m just confused on a lot of things right now. First, I can’t afford and accountant and I’m reasonable intelligent, can I set the books up myself? Do I need a tax number, a wholesalers license, a retail license, a manufacturing license or is there another license or 2 that is required? The laws here in NY might vary from your state. Also what can I claim on my taxes? The gas to drive these lures from point A to point B and back? The electricity to run my computer to make print outs for the cards, the ink for the cards, the cardstock that I buy to print out on? All of the components from staples and bags to blades and beads? I suppose the list could go on for a while. I’m sure I can do the books myself but its just another arse cramp I was hoping to avoid. I appreciate your trying to help me and I hope no one took my little rant personally. I guess it boils down to a somewhat crappy day. Another question I have is what is a reasonable price to charge for these lures? I’ve seen price vary from $9 to $13+ for simpler harnesses then what I’m making. I guess I’m afraid I will overcharge and lose a potential customer from ignorance. At the same time I don’t want to keep raising my price everytime I bring new stock to the person either. In all honesty I wish I was already on the books. I’m quite confused right now as to what I do with the stock I already have built up. Do I start keeping track now or not? If I get a tax number tomorrow do I try to find out the price of everything I bought plus the shipping? Its all confusing and I know the only way to get this worked out is to go ahead and start the process and see where it gets me. Keep my books as accurate as I can and try not to mess them up. How would this effect me and my wife’s joint return? I’m gonna go drink some beer now and think about this a lot more….tomorrow. Thanx for all of your advise and any advise that you can give me from here on out. Swizzle
There is no way I would be in this business without a good CPA. The FET for fishing tackle falls under the Sport Fishing Tax. As mentioned before all manufactured fishing tackle is subject to this 10% tax. To the IRS it does not matter how large or how small of sales you make. To them if you sell a product you are fair game. For the best information contact your IRS office and they can help you obtain your FET number and/or provide you the book better describing this tax. This tax must be paid every quarter.
You can just about be guaranteed to be audited for this so keep very good records. When they audit you they will ask to see every sale, every purchase and they want to know how many pieces you have in stock. When audited your purchases, sales and inventory all need to balance. FET is not subject to deductions. If you make a sale they get 10% period. This is not a tax to play with at all.
Some companies you sell to will also require you to carry a $1.5 million dollar liability insurance policy or they will not carry your products. Check with your insurance company for this.
Welcome to the tackle industry. Making product is easy. Making money at it is another thing.
Jim – although painting/making fishing lures can be fun it also takes up lots of time and energy. If you’ve never heard of Fishlander blades you owe it to yourself to check them out. I’ve only begun using these and I can tell you they catch walleyes without a doubt. Their paint is high quality and to date I haven’t seen it come off.
Check out their website @ http://www.fishlander.com
I see the new Fleet Farm in Rochester carries a limited supply. Not the best colors for MN from my experience but some dandies for Great Lake walleyes. Kurt
Kurt
Well I guess I’ll just have to pick and choice who I sell to since I can’t afford insurance. So if I get audited will I need to count each bead? Make sure each lure has the proper quantity of beads and so on? How does anyone start out in business like this? Man this isn’t gonna be easy is it. Swizzle
The first person you need to see before heading into a business adventure is a very reputable tax accountant. Do NOT overlook this very important appointment or the chances are high that Uncle Sam will be paying you a visit and it won’t be pretty nor fun…… Lots and lots of tax laws that you should (need) to be aware of….
(Unless of course you like wearing orange jumpsuits, LOL! And you think your broke now, just wait…..)
I called the IRS today and after a short 15 minute wait I actually got to talk to a human. I asked one person what to do and they quickly directed me to someone else. At least this time it wasn’t the back and forth phone toss. The second person actually spent a good deal of time with me and after talking to him I think I should be ok for now. Before I do too much more I have a ton of reading to do and a lot more questions to ask. I was hoping I could sell my cards retail and just charge sales tax but he did indeed confirm what was mentioned earlier about needing to collect the FET. I do want a clean cut and ligit business and after a lot of swearin’ and a few more lost hairs I think I’ll be alright. I’ve been wanting to get my tax number for a while now just so I can start buying some stuff at wholesale. I’m thinking the worse part will be getting into the business. I don’t think it will be as bad once I’ve been doing it for a few years and know how the whole process works. I think the first few years I’ll be lucky to make a few extra hundred bucks. I’m trying to imagine how many of these things I would have to tie to make $30,000 a year profit and be able to stay at home and work for myself. I’m guessing that I will end up spending 12 hour days tieing lures 6 days a week though just to make that kind of profit. Swizzle
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