# Started a new business with funds from primary job



## HotSpotWOP (Nov 27, 2019)

Hi all, 

I am new to the forums, registered a bit ago to look thru them and now I am ready to be a full on entrepreneur in the tshirt business.
At this point I am looking for some general guides/tips/etc. on how to proceed. I understand that no one here is going to give me the exact answer, just looking for some guidance, please, thank you in advance.

My wife recently decided to start a tshirt business, around september or november. She does not hold a full job, but instead works as a part-time contractor for a business in different projects. This is the money that she used to buy all the equipment for the business. Overall it was about 4,000-5,000 worth, she bought a heat press, inkjet printer, cricut, 34" vinyl cutter with software, 3d sublimation press, sublimation printer, along with all the paper, ink, tshirt blanks, advertising banners, and additional tools. Keep in mind from her contractor job she makes around 11,000-12,000 so about half the income she got she spent in the business. 

She started selling thru some family member and friends and got paid via paypal, about 90-100 was made, free shipping so in the end profit was minimal. She also started an etsy shop and posted some shirts, and got about 21 dollars or so. Overall, she made no more than $150 dollars. 

Now I hold a full time job and together, her and I make around 70K and end up having to pay taxes back (federal and state). 
We haven't established any paperwork for the business or otherwise, it's pretty informal but looking to get more established this year with everything.

As far as last year, since we haven't established anything with the government as far as making it a business, is there anything we can do for tax purposes? Half of the income she made was towards the equipment that will be used towards the new business. 

If we don't do anything like that, this upcoming year once we establish as a business (not to sure about that but still reading thru some posts about llc) will we be able to claim that money spent to start the business in 2019? 

I don't like the idea that she spent so much money on starting the business and ultimately not being able to claim those as start up costs and ending up paying taxes this year because we made so much money when in reality, half of her income wasn't even able to be spent by us. 

Any recommendations on what could be done or if we need to get an accountant or similar please let me know? If you need more info/background as well please let me know. I was a bit blindsided when she started buying stuff and trying to get things going that I never considered all the money she spent until I tallied up all the receipts for equipment and such.


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## binki (Jul 16, 2006)

I would start here and seriously consider a C Corp as it gives you the most benefits, both cash and non cash with paying taxes on it. 

https://www.t-shirtforums.com/t-shirt-articles/t17054.html

You also need to write a business and marketing plan and get a CPA right away. You have put the cart before the horse.

Also check out http://www.taxguru.org/ and https://creditboards.com/forums/index.php?/forum/27-business-credit/


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## proworlded (Oct 3, 2006)

I would definitely contact an accountant and not rely on tax advice from the Forum. Money spent on a professional will provide insight on how to proceed. Also, you might consider not sharing so much information on a public platform such as this.


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## binki (Jul 16, 2006)

I agree with Ed on sharing too much info. Since you should not have filed your taxes yet you should get a CPA than can help you out as a Sole Proprietor for 2019 but you need to figure out your best course for moving forward with a more beneficial tax structure. Check out the link I posted for a tax website and also find a good CPA. It is worth it to pay someone to do your taxes.


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## rpaul (Dec 8, 2013)

I do believe that if you do not want to register your business, you will pay tax on your sales, not profit, as well as as sales tax on the products you buy. To become tax exempt you want to file with the state and charge tax on your sales. You will be able to deduct some of your investment as depreciation if you incorporate in some way. Make sure you get this all done before tax time. March 31st for companies. Hope this helps.


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## webtrekker (Jan 28, 2018)

Hi. I'm from the UK so certainly not qualified to comment on your tax position, but I'd just like to say that your wife really needs to draw up a detailed business plan before spending any more money on equipment.


Family, friends and Etsy will never bring in enough to sustain a business of this nature. She needs to research the market and sell aggressively to the areas she knows will bring in the most business/profit. It's not easy, by any means. Marketing is the hardest and most overlooked part of any startup.


Also, although you know how much has already been spent purchasing equipment, you must also bear in mind the maintenance costs of the equipment and the price of the consumables needed over the course of time. These costs can be quite considerable! They knock BIG holes in the already meagre profits you'll get from selling t-shirts.


Not wanting to put you off, but just saying it like it is.


Good luck.


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## TABOB (Feb 13, 2018)

If you do have a viable business and plan to continue trading, get an experienced accountant to sort it out. 
Prolonging it is just making the situation worse.


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## LancerFlorida (Mar 20, 2018)

Your wife is a gig worker or 1099 instead of a W2 based worker. 
You, I think are a W2 based worker. YOUR SITUATION IS UNIQUE. You can steer your ship directly into calamity and watch you YouTube videos or hire a real captain and have an your assonant suggest if LLC, S-corp or INC is best for your situation. The rules are very different in 2020 due to events we all know aobut.
Then consult your attorney to make sure your legacy is protected.
These costs will be offset by the saving you will realize by getting wholesale pricing.

But you have a different problem. NO one is buying your stuff!!! That is what flying under the radar was all about...to see if anyone would hand over their money.
I suggest you hit pause and analyze the product you are making, the avatar of the intended customer and the access you have too that audience. Then take your baby for a walk in front of that audience and measure the response. 
This research will confirm your product AND reveal to you the incredible conversion pwr of a t-shirt.
Such an eye-opener just might alter where you think the money is waiting. In the t-shirt business B2B is king.....there is a reason for that and it, for us small guys, is not ALL about order volume.
Without more information all that can be suggested, as you suspected is call your accountant and attorney.


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## John Kallem (Nov 26, 2021)

I have been looking for a job for a couple of years


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