How do I start my own wood business?

Start a woodworking business by following these 10 steps: Plan your Woodworking Business. Form your Woodworking Business into a Legal Entity. Register your Woodworking Business for Taxes. Open a Business Bank Account & Credit Card. Set up Accounting for your Woodworking Business. More items... •

howtostartanllc.com - How to Start a Woodworking Business | TRUiC

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Start a woodworking business by following these 10 steps:

Plan your Woodworking Business Form your Woodworking Business into a Legal Entity Register your Woodworking Business for Taxes Open a Business Bank Account & Credit Card Set up Accounting for your Woodworking Business Get the Necessary Permits & Licenses for your Woodworking Business Get Woodworking Business Insurance Define your Woodworking Business Brand Create your Woodworking Business Website Set up your Business Phone System There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your woodworking business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What are the costs involved in opening a woodworking business?

The costs of opening a woodworking business are significant but manageable. Business owners might expect to spend around $6,500 total, which would break down as follows:

$2,000 for wood and other materials

$1,500 for woodworking tools and equipment

$1,000 for a computer

$1,000 for miscellaneous expenses

$800 for a website and camera

$200 for business cards

This example doesn’t include the cost leasing space for a shop or storefront. Many business owners are already woodworking hobbyists and, therefore, have space to work in. They can avoid leasing a store space by selling at festivals or online. Business owners who already have tools can further keep their costs low by using tools and equipment that they already have. Those that need specific equipment they don’t have might be able to convince a family member or friend to pay for the equipment in exchange for a product that requires that piece.

What are the ongoing expenses for a woodworking business?

The main ongoing expenses for a woodworking business are material costs and overhead. Material costs should be covered by the sale of finished products. Overhead typically includes rent, utilities, and purchasing small supplies (e.g. nails, sandpaper and finishing materials). These expenses are usually equal to 15 percent of materials and labor.

Who is the target market?

A woodworking business’ ideal customer is someone who appreciates wood products and has discretionary income. Such a person is likely to be interested in products and have the money to afford them.

How does a woodworking business make money?

A woodworking business makes money by producing and selling wood products. These products may be furniture (e.g. Adirondack chairs, cabinets or dressers), or smaller items, like jewelry boxes, smartphone holders, manual coffee grinders, cutting boards or wooden beer mugs.

How much can you charge customers?

How much wood products are sold for varies a lot. Even the same types of wood products might be sold for vastly different prices, depending on how they’re made and where they’re sold. For example, Svetulka on Etsy sells kids’ name signs for between $19 and $73 (depending on the number of letters and finish). Kolorize lists similar signs for between $68 and $163 on the same site. When deciding how to price their wood products, business owners should consider the cost of materials, their desired hourly wage and any selling expenses (e.g. shipping to a store). A simple formula to follow is: Material Costs + (Hours of Work x Hourly Wage) + Selling Expenses = Price

Putting this formula in a spreadsheet makes calculating prices simple.

How much profit can a woodworking business make?

The profit potential of a woodworking business depends on what products a business owner makes, where the products are sold and how skilled the business owner is. Some business owners only sell small products locally, and their revenue might be similar to the income supplied by a part-time job. Other business owners are master craftsmen and highly in demand. Their work might produce a comfortable salary, in some cases even breaking six figures.

How can you make your business more profitable?

A woodworking business may be able to add revenue and increase sales by offering classes. Classes will attract people who are interested in the field, and some may decide to purchase finished products in addition to taking a class.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Woodworking Business Name Generator If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more. When registering a business name, we recommend researching your business name by checking:

Your state's business records

Federal and state trademark records

Social media platforms

Web domain availability.

It's very important to secure your domain name before someone else does.

Find a Domain Now Powered by GoDaddy.com

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

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Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your woodworking business is sued.

Form Your LLC

Northwest LegalZoom ($79 + State Fees)

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee. Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business. In order to register for taxes you will need to apply for an EIN. It's really easy and free! You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?. Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection. When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account: Separates your personal assets from your company's assets, which is necessary for personal asset protection.

Makes accounting and tax filing easier.

Open net 30 accounts

Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term. NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

Get a business credit card

Getting a business credit card helps you:

Separate personal and business expenses by putting your business' expenses all in one place. Build your company's credit history, which can be useful to raise money later on. Recommended: Apply for an easy approval business credit card from Divvy and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Your first step is to find out if you need a business license. If you plan on operating a home-based business and live within city limits the best place to check is with your city business license office. Otherwise, check with your county business license office. If you need to get a business license, you also need to check for zoning issues. You will not be able to get a business license if your business address is not zoned for the type of business you want to run. Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For more information about local licenses and permits:

Check with your town, city or county clerk’s office

Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources .

Certification

Although not required, becoming certified can demonstrate competence and professionalism. It also may help a candidate advance in the profession. The Architectural Woodwork Institute (AWI) offers a national certificate program, which adds a level of credibility to the work of woodworkers. The Woodwork Career Alliance of North America also offers five progressive credentials.

Insurance

Prepare for potential problems and hazards by making sure you have the right types of small business insurance coverage.

general liability insurance

business ownership policy

commercial auto insurance

workers compensation insurance

property coverage

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Labor Safety Requirements

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss. There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage. Recommended: Learn what business insurance for your Woodworking Business will cost. Business Insurance for

Woodworking Business

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors. If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business. Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker. If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a woodworking business

The internet makes it easy to market a woodworking business for little cost. There are several ways to promote a wood shop online:

classified sites like Craigslist offer a free space to post local advertisements

kitschy sites like Etsy and Handmade at Amazon provide a low-cost space for listing handmade products

social media platforms give businesses a method of targeting particular demographics

How to keep customers coming back

A woodworking business can set itself apart from other wood shops by offering high-quality products at reasonable prices, and by educating customers about the crafting process. In-person conversations, pamphlets and even tags can be used to share with customers what work went into making a piece and why that piece is different from ones produced by competitors. Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business. While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online. - full stop. The size or industry of your business does not matter when it comes to getting your business online. Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own. that you own. Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of. Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete. Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you. There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business. Recommended Business Phone Service: Phone.com Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

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howtostartanllc.com - How to Start a Woodworking Business | TRUiC

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