How to Set Up a Craft Business
If you're clever and artistic and looking for a way to earn extra money, consider turning your crafting abilities into cash. Whether you make jewelry, dried flower arrangements or children's toys, the basics of business remain the same. You need to be organized, keep good records and take time for the business side of crafting.
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Instructions
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Obtain the required licensing. Crafters sometimes think that because their business isn't a full-time business, or is an extension of their hobby, that they don't need any licensing. As a crafter who sells directly to the public you will need a general business license plus a license to collect sales tax. Check with the county and city where you live as well. Some craft shows will collect the sales tax for you, and others require you to take your own money. If the latter is the case, the city where the craft show is located may require an additional license.
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Find a reliable wholesale source. Crafting for yourself or friends and family is different than when you're crafting for a profit. How much the materials cost has a direct impact on how much money you'll make after expenses. Craft stores are convenient but don't offer the best prices. They often don't carry the quantities or variety of sizes you'll need. If the craft store has widgets for $2.50 each and the wholesaler offers them at $1.25, it makes sense to buy from the wholesaler. Choose the wholesaler based on their pricing, minimum order quantities and shipping charges.
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Decide how you'll market your craft. Potential customers need to know about your craft and how they can order from you. An online presence is a good idea even if you only market through local craft shows. Establish a website so customers can find you. Hand out business cards and include one with every purchase or attached to the craft. Consignment at retail stores is another option for generating sales. You leave your craft at the store, and they sell it for you at an agreed-upon price and give you a percentage of the sales. That percentage is agreed to in advance as well.
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Keep detailed records of sales and expenses. Separate your business expenses from your personal expenses. You might buy some craft supplies at the drug store or grocery store and not remember the expense. For example, you make dried apple wreaths and buy the apples at the grocer's to dry yourself. Circle the item on the receipt and save the receipt. Don't forget to include any home office expenses. You must pay income taxes on any profits. Keeping track of all expenses will help you deduct every legitimate expense from the sales.
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Tips & Warnings
Keep all your business records and supplies in one place for easy access.
Put a notebook in the car to record business mileage.
There can be stiff fines for not obtaining the appropriate licenses.
References
Resources
- Photo Credit arts and crafts image by Gina Smith from Fotolia.com
