Federal Excise Tax??

I would like to know what all is involved getting set up so that I can sell some of my jigs to some of the local shops. When I approached one the other day, they said they loved what they seen and thought they would sell, however since I don't pay the Federal Excise Tax they couldn't do anything with them.

My own research has left me pretty confused on the whole thing. I buy the jigheads already poured and then paint them myself. I would assume since I am buying from the shop I mentioned above there has been tax paid on the jig heads. According to the documentation I have found, I didn't seen where tying materials were taxed already...

So here is kinda how I have read everything... Let's say I have $0.50 of materials in a jig and the final sale price is $1.50, I deduct the manufacture cost of $0.50 from the final sale price so I would owe tax on $1.00

I would appreciate some info from those in the know.

Okay. You take a hook and lead and make a jighead. You pay 10% excise tax of the lowest wholesale price for that product. I will have to find the documents for that and share. If you buy a jighead and tie a feather on it, you resale it, you owe 10% excise tax on lowest wholesale price for that jig. So, for example. I have two price scales. Wholesale and retail. Wholesale price lets say $1.00 and retail $2.00. Because I do sell at both price scales. So the tax is 10% of the $1.00 on either sale. So I will adjust prices to $1.10 and $2.10. Also you do not show this tax in your invoice. It is a hidden tax. Why I don't know. You will need a EIN for your venture as well. You can also get a 635 exempt number and not pay excise taxes on hooks and materials. Then you make the jigheads, paint, tie and package. Then, On the finished product charge the 10% tax. A very large tackle company a few years back overlooked the excise tax and it caught up to them and almost shut the company down. I remember they had ads everywhere. Then no more adds. It took several years for them to repay the tax and get back on their feet again to advertise. Hope this helps you a little. I just woke up.

TT

Quit now while you are ahead!!! The cost of your time put in the bait,jig ect!!!(you will never come out ahead) As long as its a hobby you are good!! Go to your tax person and talk with them!!! and keep( GOOD RECORDS) for tax audits!!! We make our own baits because we cannot get them anywhere else!!! NOT TO GET RICH!!!

The only other option is to work at it for somebody else. Those posts above are precious, I promise. You have friends-they have friends.

It is a 637 form.

TT

The Tax number is the 637 and you have to fill out a form 720 at the end of each quarter

The good thing about excise tax is you're able to buy through a wholesaler or a manufacturer just giving your number and you do not have to pay the excise through them but it allows you to do business with a lot of different manufacturers.

The 637 is easy to get. Just go online and print off the forms,fill out and mail it in or there is a number to call. Just dont forget to fill out the 720 each quarter.

I found out the hard way! They came to my house and looked at everything! My fed. Return, my pay pal account, I did not have the EIM # I do now. All the late nights all the work...and the fed. Excise division paid someone to drive from Tenn. To look at my books. Very discouraging needless to say I will close the doors end of 2014 to my web site.. Just do it for fun! The climate change of the present administration, made it a point to come after little guys.

Wow, kinda a bummer. I sure was thinking about eventually doing the whole business thing.

You will never make minimum wage playing with this stuff. I started making jig heads, because it was a type of physical therapy for my hands due to an on the job injury. Folks started buying my jig heads, but when you look at the time and lead involved to make a hundred jig heads you make around 3.50 to 5.00 an hour if you are lucky. I had some worm nose with a screw lock take me over 2 1/2 hours to make a 150 the other day. I do it because I love playing with the hot stuff and I also love to make my customers smile. I seldom tie anymore now due to said nerve damage, but the jig heads still allow me to stay in the game a little bit.


Bobo

Bobo quit tying because he saw my ties:Rofl

Thanks for the info Bobo

Quote:

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Originally Posted by crappiepappa

Bobo quit tying because he saw my ties:Rofl

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What our buddy here forgot to tell you, is that I showed him how to tie his first jig. LOL

Bobo