To register or not to register my business?

[Glitterfly Faces]

I a so torn.
I just started a face painting and glitter tattoo small part time business.
I have spend about $600 on supplies so far and am not sure if I should register my business or not?
I have not even booked an event yet, except a MOM 2 MOM craft sale in Nov 28th for glitter tattoos.  It cost $25 to get a space.  I am not even sure how many people will get the tattoos from me.  Someone else is already doing face painting. 

I have alot of expenses for this business and no income from it. 
Is it worth register this business since I am more then likely to spend more then I make.  Blah!!  Hopefully for now. 
Some venues require $2 million  liability insur. I seen an add for Ontario Clowns and they offer insur. for around $160 plus $40 to register with them.  Most normal insur. companies are asking between $750 to $1000 a year for liability insur. 
That is way too much since I have no income at this point.
Has anyone else register with Ontario Clowns org. for their cheaper insur?    Thanks ladies. Kim

[Shannon Fennell]

I don't know about Ontario Clowns... but I am a member of Clowns Canada and their membership and insurance rates are about the same.  I pay $150 a year for $2 mil business liability plus I pay extra for kit replacement insurance.

Regarding registering the business... you need to check into that with your local government.  You may not need to.  For income tax purposes in Canada you do not need to have a tax number until you hit the $30,000+ a year level for paying GST to the government.  But check into it in YOUR town/municipality/etc.

If you have decided to name your business you might want to do a corporate name search to make sure you aren't using a name already in use...

[Glitterfly Faces]

Thank you so much Shannon.
Do you think i will be worth getting a business license and a GST number for tax reasons?
I can write off part of all my househild expenses and paint supplies.
I will def. not make more then $30 K a year as it is part time.

Do you write off partial household expenses for the business?

I tried calling the Windsor, ON contact today and she never called me back. 

Do you recommend paying the membership fee of $40 to ClownsCanada?

Thanks again for all of your great adive.

[Shannon Fennell]

My accountant pro-rates my household expenses (mortgage, utilities, telephone, internet) as the business is based out of my home.  But you don't need a GST number to do that!!  And honestly, unless you are going to be making over $30K per year DON'T register for it!!  You will have nothing but headaches proving you aren't making enough and have to do paperwork... You do not need it to file your taxes - as a small unincorporated business/sole proprietorship you can file on your personal income tax.

As for paying the membership fee... even paying the fee, the insurance is reasonable.  Prior to joining and getting my insurance through them, the last quote I got was well over $3000/per year!!

Shop around... see if you can add your business to your homeowner's insurance.  Sometimes you can.

[Party Picassos Facepainting]

I have never had insurance. Thanks for the thought of getting it put under my home owners. I will look into that as well as the clown's insurance.

[Glitterfly Faces]

Thanks for the great advice.
I did join Clowns Canada for $45/year and can now get $2 millon liability insurance for $150/year.
I have a ton of receipts.  I have probably spent $700 on supplies so far and have not made one penny yet.
So, would it make more sense to NOT register my business, NOT get a GST number and just include my expenses and income (if any) on my personal income tax?
Will they allow me to do this without a business license?  How does the gov't know all my receipts are for a legitimate business?

I am so confused.
Thanks for the help.
Kim

[Shannon Fennell]

1) Get an accountant
2) keep all receipts
3) keep proper records of all income
4) keep a log of your mileage on your vehicle (even if it is your personal vehicle as you CAN claim it as a business expense)
5) create a business plan - my accountant highly recommended I do this when I was first starting - it proves that you have business intentions when you are first starting out and aren't showing much income.  If you do get audited you are able to prove your intentions with the business plan.

The rules for allowable business deductions are pretty clear - and I have always had an accountant do mine, and trust me.... it is WORTH IT!!!  If there is ever any problem he deals with Revenue Canada, and I don't have to!

I cover a lot of business information for face painters in my book "The Business of Face Painting"  - you can review the content here http://www.shannonfennell.com/bookcontent.html

[Alison]

Yes - It is important to register your business.  If you don't make money (or if you end up spending more money on it than you make during the year), that will be reflected in the taxes you'd have to pay (or not) at the end of the year.

If you decide on your own that it's unreasonable to pay whatever you imagine your share would be, you could get in trouble for it. Might even end up with outrageous charges (it might even be considered criminal?).  Not something I would want to play with.  If you do everything upfront, you won't have to worry. 

Sure you want to make money, but you're not making any more money by hiding a business that doesnt' make a lot of money. 

[Glitterfly Faces]

SO, do you think that I should get a GST (tax) number and register my business just to keep things legit?
I really appreciate your help.
Kim

[Alison]

Yes.  Of course. 

[Shannon Fennell]

Check into registering your business, yes.  But... you DO NOT need a GST number.  Wait until you are earning over $30K a year to get it.  You are NOT required to have one if you are not earning that level.

Check with an accountant!

[Wildcatfin]

Wow you get a choice? in the UK if you DON't register (for tax etc) within 6 months and get found out you get a big fine....

Not entirely sure what your registration entails but if you want to look like a respectable pro service, it would seem to be a yes.

cat x

[sarahmaie]

Wow you get a choice? in the UK if you DON't register (for tax etc) within 6 months and get found out you get a big fine....

Not entirely sure what your registration entails but if you want to look like a respectable pro service, it would seem to be a yes.

cat x

Hi Wildcatfin, I take it you are registered? I am considering it now.....is this the best thing to do now my business is starting to take off? Want to be legit. I'm in UK by the way In's and out's of this and how do I get registered??? Also, who are you insured with?? Thanks.

[jubob]

Hi sarahmaie, I am in the U.K but I only really do this for a hobby. I will p.m you for the best advice I can give, where I am Insured etc.

[MsMollie]

hey guys, i only do this to help with taxes here in the US...if your husband makes too much money, or you do, whichever, then you need another tax break....especially ifyou have no more deductions like kids, etc...which we don't. Taxes will kick your butt if your husband makes too much and with your income added in can be good till tax time...one year, we had to pay almost $7000.00! We almost died!  that's when we started our little business of kettle Korn! Yes, from kettle korn to face painting! what a jump!...

anyway, it saved us a ton because we claimed a loss, which wasn't a lie...kettle korn doesn't do too well down in the south for some reason....guess it's too hot here or something...plus it's alot of hard work...anyway, we since got rid of that business and now i am a face painter...

we haven't decided if we need to even claim it this year since we are both now just getting jobs...sounds funny to say that but we have both been out of work for over a year...so we have had to exhause everything we had in savings to get by...times are hard out there...however, we are doing good now, but i need to check and see if we need to claim my business since it's so late into the year. i haven't applied for a tax ID# yet....anyone know what's best to do in the US?