Abn?

[suganspice]

I've been thinking about getting an ABN for my store but I'm kind of freakin out about doing the accounts :eek: Does anyone know how often I would need to do them? (I've heard 3months, yearly?)

Also, would I need to register my business name as well?

Any info would be great :D

xo Suga*N*Spice

[annalaura]

I would get an ABN. If you want to supply stuff to shops, get wholesale accounts with shops to buy stuff you need an ABN.

Regardless of having an ABN, you should still be taking into account what you're earning and what you spending and declaring it at the end of the financial year. I know a lot of people don't when they are doing it as a hobby and I'm not 100% sure on how it works if you are.

If you're trading under a name that isn't yours you should register it, although I am not sure if WA is different in terms of that. You can register in your state, or across the whole country. I just registered in Victoria.

It doesn't cost anything to get an ABN either.

[suganspice]

Thanks for the info Annalaura! Sorry I meant activity statements when I said accounts. Anyone know if those are those lodged yearly as well?

[annalaura]

I have no idea about activity statements and I don't lodge them. I went to a info night once with an accountant and she didn't mention them. Is that when you're registed for GST maybe?

[Jane]

The company I do the accounts for has to lodge an activity statement every three months.

As for your craft business you don't need an ABN unless you are running it as a business. Anna says you need an ABN to buy wholesale stuff and I don't know anything abou that but I do know if you sell stuff to a shop and you don't have an ABN you just give them a Suppliers Statement. You can download one from the ATO
http://www.ato.gov.au/content/downloads/nat3346.pdf
Otherwise they will keep over 40% of what you invoice them. So thats what I've done so far and all the shop owners seem happy enough with it. It just says for them not to withhold GST as you are doing it as a hobby. You are doing it as a hobby as long as you don't try and claim any of your expenses when tax time comes. There is probably a dollar amount of earnings you hit where it becomes more than a hobby but I'm not sure what that is.

There, wasn't that involved and boring.

[annalaura]

I forgot about that Suppliers Statement form. With some wholesalers, they will sell to you at a wholesale rate if you have an ABN. It can be handy when you plan on buying a larger amount.

[Emmarose]

Does any of this apply if you are planning to send stuff to a shop on commission? As in, will I need an ABN or supplier atatement just to do the commission stuff???? Also, what is a common percentage for commission?

[annalaura]

What do you mean by commission? Is it consignment, where they pay you when it sells? I think the supplier statement is fine. You can get one from the ato website I think?

[Emmarose]

Y'know wnen you give some stock to a shop, and if they sell it, they keep (for example) 20% percent of the sale, like a commission for selling the item. Is that how you do it????

[annalaura]

If I knew where the shops that take 20% are I would be in them in a flash.

Everyone I have ever dealt with take 50%, plus add on GST. I either deal with them on consignment where they take stock and when it sells they will give me the money or they purchase an amount of stock at my wholesale price.

[suganspice]

Thanks cat! The places I consign with take either 30% or 40%. You don't need an ABN to do consignment but I know some stores ask for it.

[Emmarose]

Sorry Annalaura I am VERY new to this!! I have approached a shop (the only shop in my hometown that sell's handmade stuff) and I am making arrangements to meet up with her next week, and discuss putting some of my stuff in her shop. I have no idea, what the legistics of this means! So, in your case, if you have stuff with someone on consignment do they retain anything for the sale?

[Emmarose]

Errr, sorry everyone, I guess consignment is the same as commission.... They take your product and retain a percentage if the goods are sold. This percentage can vary by the sounds of things.... Am I on the right track now?:)

[annalaura]

Don't apologise, it thought you found a shop that did that, and it sounded very good.

All the places I have dealt with on consignment take 50%. I'm guessing that is due to the rent being quite high in Melbourne maybe, as it seems other places in other places do take less as Suga mentioned.

[Emmarose]

Thanks again guys. I will let you know how I get on next week! Wish me luck.

[Imaginart]

Hi Emma. I know this is a bit off topic but don't forget if all goes well in your meeting to organise a contract to be drawn up. Make sure your rights are looked after when it comes to damaged stock etc. If my stock is damaged the shop has agreed to pay me 50% of the retail price. They are insured for stock damage so this is only fair.

HTH All the best!!!

[boxofglory]

Sorry Annalaura I am VERY new to this!! I have approached a shop (the only shop in my hometown that sell's handmade stuff) and I am making arrangements to meet up with her next week, and discuss putting some of my stuff in her shop. I have no idea, what the legistics of this means! So, in your case, if you have stuff with someone on consignment do they retain anything for the sale?

Emma, don't know if you already have read it, but craft inc (http://www.amazon.com/Craft-Inc-Creative-Hobby-Business/dp/0811858367) is a fabulous book to get info about consignment/wholesale, ABNs, Pricing, etc... I had practically no idea about any of this stuff, but reading that book made everything crystal clear! I definitely recommend it to anyone wanting to make their craft hobby into a business.

I don't have an ABN yet as I've only had 15 sales on etsy and none on madeit so far... and it's still more of a hobby for me than a business. But if I was selling more, and therefore MAKING more - I'd need an ABN to buy supplies at wholesale prices, and I'd need an ABN for tax purposes too.

[muchlove]

I just got an ABN last week. I wanted to stock at more shops, and it seemed like a good idea to start treating my activity as a business instead of a hobby.

It felt a little dauting going through all the documents, and I'm still not 100% sure I understand everything.

So how do we declare our earnings at the end of the financial year?

[muchlove]

oh, and most places I know take 50% too.
But there's one place that takes 20%, it's Gallery 696 on Sydney Road. They're an art gallery and retail space. They stock quite a lot of accessories too.
If you're interested: http://www.696.com.au/

[heidiandseek]

You are doing it as a hobby as long as you don't try and claim any of your expenses when tax time comes. There is probably a dollar amount of earnings you hit where it becomes more than a hobby but I'm not sure what that is.
I think it's around $50,000. At least that's what my dad's accountant told me a couple of years ago. It might have changed a bit since then.

[bottledupemotions]

I think it's around $50,000. At least that's what my dad's accountant told me a couple of years ago. It might have changed a bit since then.

Yep, that's still correct. When you reach $50,000, you would also have to register for GST through the ATO.

[ms salt-shaker]

The GST registration has now increased to $75,000. This came into effect at the start of this financial year. You can register if you earn under this as well.

I have registered for gst unfortunately I don't earn anywhere near that figure but my suppliers (designers) encourage that I register. To be honest if your not earning this kind of money I wouldn't register. Doing the gst every couple of months is a drag.

The joys of running a small business.

You only have to do your gst every 3 months, the ABN just means you declare your earring to the Tax man. If you only have a ABN you only have to do it once a year at Tax time.

If your buying a lot of stock and want to claim this than I suggest you get an ABN, only register for GST if you earn over $75,000...

There is a thread about home-based businesses (http://www.talkmadeit.com.au/showthread.php?t=191) on the forum and the NSW Small biz (http://www.smallbiz.nsw.gov.au/) website may have some helpful tips.

You can also go and see free business advisers in your area. I will try and find the link for you.

Hope this helps.