Hi Andrea! 🙂 The easiest route is to go to a certified tax account who understands home business. This type of person can get you squared away with all the things you’re stuck on – and can also set up any quarterly sales tax dates for the rest of this year. You will feel SO MUCH better once you put this problem into someone’s knowledgeable, certified hands – so you can go back to what you’re good at – creating beautiful things! 🙂

Hi Andrea, its Andrea! Great name btw.:)

So all of this trying to organize and invintory for my making and my selling and my overstock selling has started to give me panic attacks and nightmares… that’s not what you want for the thing that was supposed be helping with ones mental health, so I need to figure it out.

Are you saying you have groups of prices and that’s what you use, rather than calculating it based on each beads cost? Like rings 15 earrings 20 pendants 25 +10 dollars if it’s made of precious metals? (Making up numbers…)

So would you charge the same for a wire bracelet that you would with one that had swarovskis? Am I just over complicating the hell out of it?

I cant even figure out the best way to organize the ones I’m keeping or the ones I’m ready to part with so I can get more keepers. That’s part of it I think. I have so many I need to resell.

Blurg.
Any thoughts are much appreciated!
A.

Thank you for sharing this helpful information, Amanda! And this is why I always recommend using the services of a qualified CPA for jewelry business tax issues.

I am a bookkeeper who is now making jewelry due to health reasons. I used to run a bookkeeping service for small businesses and more recently ran an office that took care of four incorporated businesses.

Very important – take the time to count your starting inventory. Do the best you can in a reasonable amount of time. Use any receipts you can find for the past year or two unless their has been a drastic change in their value. Estimate the amounts of things difficult to count and not extremely expensive such as jump rings and seed beads. The value of your starting inventory is what it would cost you now to buy it, not what you paid for it 10 years ago.

The total cost of your starting inventory will count as equity. Since your husband already paid income tax on the money you spent on inventory, you do not have to pay income taxes on that amount again when you pay yourself until that equity is used up. Just like paying back a loan to a bank if they loaned you the money for your starting inventory.

You do have to pay sales taxes and all other taxes except personal income tax as long as you are not incorporated and then there are special rules depending on where you live.

This is just one of many tips that your accountant will explain to you and they will save you a lot of money. You need to find yourself a good accountant and talk to them now.

I had many clients who paid too much money to the government for different reasons. I got over $40,000 back for one company and the family that ran that business. Unfortunately, I could only go back so many years and the rest of their overpayments were unrecoverable.

Do not wait until after you set up your system only to find that you need to change the way you are recording your transactions and you have to redo everything so far. If you talk to the accountant now, they will tell you what they need to do your year-end processing. Having your data organized the way they need it will save you the money of having them reorganize it to their needs.

Find your accountant now, do not wait until tax season when they are swamped. Ask around and make sure they are reliable.

In Canada we have two types of accountants – CA’s which are chartered accountants and CGA’s which are certified general accountants. For a home run business you want a CGA and not a CA. CA’s are much more expensive. They have a lot more education and have to keep themselves updated with the ever changing rules in the corporate world. You simply do not need their level of expertise.

Find an accountant that will charge you by the hour instead of a flat-rate that they charge all small companies. If you give your accountant your information how they want it, it should take them a lot less time to do your year-end than a client who handed them the “shoebox” of papers. You don’t want to pay the same rate as that client.

I could go on and on but it is past my bedtime – so in short get a good respected accountant NOW and do things right the first time.

I should just figure out the cost of the item I’ve made (to help me determine pricing) and stick to a cash in-cash out type of journal, shouldn’t I?

However, when I asked my accountant (does my annual taxes) about inventory he said it wasn’t necessary to count everything. I make and sell jewelry on a small scale compared to some of the artists on this blog. I sell to Facebook friends, my family, and on consignment for a museum gift shop.

I searched for a software program for weeks that would work with my iPad, keep an inventory, create a sales receipt and deduct the sale from the inventory. Finally found it with Quick Sale. I got the upgraded version. worth it for the added flexibility and reports. It was also only about $40. You can design how your receipts look and you have quite a bit of flexibility with the pre formatted templates. I changed the word Invoice to Receipt on the template and ta da! I love it.

I work full time and usually don’t have more than a few hours during the week to work on jewelry and am lucky to get 5 hours or so on the weekends so I didn’t want to have to take the time to count and price every bead. It takes enough time to make a piece, develop a description, create my inventory number and enter it into inventory with a picture. (I photograph everything I make!) .

I did a lot of research on pricing too. I found Rena and subscribed to Rena’s web site and purchased several of her books. I investigated a pricing spreadsheet template and bought one.(maybe it was Rena’s) It is an Excel sheet and came up with several estimates depending on the cost of your labor. It was time consuming and you had to price each bead and wire used. But it was pretty accurate for what I felt the price should be. Too time consuming though.

I decided to cost price each piece with an estimate, one for earrings, bracelets, rings, pendants, etc. This estimate was based on exact bead pricing of about 5 items i made in each category and developing an average materials cost. If a new piece uses pricer elements, then I adjust the cost est of that item. I may also adjust the est. down if I use free beads. I add 10-15% for breakage, unusable beads, etc. The software, Quick Sale, has a place for the cost (my est. ) so I can generate a report for sales and see the cogs at the same time.

If I use really unique beads, I can list where I got them and how much they were right in the inventory page for that item in Quick Sale.

I save all of my receipts now and list each one at tax time and whether the items are beads, display, Packaging etc.

As all of you, I invested a lot of time in learning what to do and how to do it, the right way. I think you also have to find good mentors like Rena who will share their ideas that have worked for them. These blogs are also invaluable! I have learned so much.
Thank you and hope this has helped someone!

It’s really comprehensive, it’s very flexible, it’s cheap and it’s not scary.

Excel is scary.

You get to generate reports, which is great for taxes, and you get to manage and track your inventory.

I love it.