Are you starting a sign business, or considering starting one? If so, this new book will introduce you to many of the important facets involved in running a sign shop. Getting Started in the Sign Business ...
Deductible and non-deductible costs
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By Judi Smith
My father, who was always self-employed, didn't keep business records. Because he had no idea what his expenses were, he often didn't charge enough for his work. He innocently violated zoning laws and omitted proper paperwork more than once.
Home-based businesses often share the same fate, because their owners don't realize they face business expenses. Whether you operate your business in another city or work at home, running a business still incurs costs.
Hopefully, within the next two years, we'll move our shop for the first time in more than 25 years. We believe the benefits of living and working on one property outweigh the moving expenses. But, when I asked how other, home-based signshops track home-office expenses, too many told me they have no expenses because they work from their home.
They overlooked a few things. Home-based businesses incur not only materials and supplies expenses, but also innumerable business expenses that appear hidden.
Professional services
Each governmental entity has its own set of business laws. Any business, regardless of location, must know zoning regulations and obtain the required work licenses. Local zoning laws may require a home-business license or limit customer traffic, which would increase outside sales calls and vehicle expenses. In Greeley, CO, any violation of the zoning laws can result in a $1,000 fine, plus a cease-and-desist order.
Our new location, an innovative, mixed-use, residential-commercial zone, will allow customers to visit. Because we perform installation work, we must maintain contractor licenses in the communities we serve. We also have a sales-tax license, because we provide "items of a material nature," not merely services. This license, which costs $8 a year, "allows" us to charge sales tax and remit it to the state and city.
Our county no longer requires an annual material-and-supply inventory, but we pay property tax, not only on real estate, but also on equipment and furniture "used to produce income." Both the IRS and many states have enacted specific laws applying to artists. These may, in some cases, apply to signshops.
Any public business needs appropriate insurance. Liability coverage, a necessity, is often required for licensing. Property insurance (for home, vehicles and equipment) is discretionary, but not automatic. Many personal insurance policies (for house, health and vehicle) require a rider to cover business activity. We learned, the hard way, about the advantages of disability insurance if you're not covered by workers' compensation.
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