ToplessZ Posted February 22, 2006 Share Posted February 22, 2006 Ok guys please give me some feedback/encouragement. I am in college right now after getting off to a late start. Anyway to make a long story short 7.00 an hour (about 90-100 a week) isnt paying my bills. Anyways I do have a little cash saved up and am thinking about doing some tile jobs on the side. I have some experience as well as free advice from my uncle who has his own tile business. I am thinking about trying to do one job per weekend. I can get a nice wetsaw from harbor frieght for 199.00 plus 20% off if I hurry on this. With the rest of my equipment and some advertising I should be around 500.00 if not less. I really don't want to make this big just make enough money to quit my crappy job. Laying tile would pay twice as much or more even at a huge discounted labor rate. Home Depot is charging 4.49 sqf to lay it on concrete and 6.95 to lay on subflooring. In either case owner provides any and all supplies. I am thinking about shooting for 2.50-3.00 sqf probably hourly rate for backsplashes etc. Hope some of ya can chime in. Quote Link to comment Share on other sites More sharing options...
JMortensen Posted February 22, 2006 Share Posted February 22, 2006 You don't need a contractor's license for that? Not sure, but if you did that would put a damper on things. Plus kinda sounds like you're talking about doing it under the table. That's not the best idea, if that's what you were thinking. I have relatives who spent YEARS under the thumb of the IRS for such "crimes". Find out what it takes to do the job legitimately, then do it legitimately. Start a company so that any liability doesn't fall back on you personally. I think I have a couple grand into forming my LLC, but I used a lawyer and I think you can do it cheaper with some DIY kits. If that is too much hassle, I'm thinking you should be able to get a job working for somebody else laying tile and still making at least double what you're making now... $7/hr is MacWages these days. Quote Link to comment Share on other sites More sharing options...
Lewis Maudlin Posted February 22, 2006 Share Posted February 22, 2006 If you do a good job and are reliable and dependable, typically you will have more business than you can handle. If you don't show up when you say or don't finish when you promise, you will get a bad reputation fast. Contractors work by their reputations. I know many that have had serious problems then want to talk about their family situation. The person who hires a tiler to put in a backsplash probably does not want to hear about their family situation or other excuses. The most important things to remember with a small business. 1. Do not price yourself too cheap. Pricing yourself too cheap may make people think you are an inferior tiler. Also, it is hard to raise your prices later. I would stay a lot closer to the going rate. 2. Remember that you have to pay Social Security or Self Employment tax on your earnings which would normally be paid by your employer. This is an extra 8% (rounded up) that you owe in taxes. 3. Keep your receipts. Anything that is done for your business or used strictly for your business is typically deductible. Let's say that you make $50,000 a year of taxable income. That puts your marginal tax dollar at roughly: 28% taxes 15.5% Social security and medicare 5% state and local taxes This means that your marginal tax dollar is being taxed at 48.5%. What this means in layman terms is that anything you can deduct was HALF paid for by Uncle Sam. Each receipt is worth half of its value to you in real cash which would have to be sent to uncle sam. 4. Reputation and word of mouth will usually do your advertising in a service trade. Quote Link to comment Share on other sites More sharing options...
jimbob_racing Posted February 22, 2006 Share Posted February 22, 2006 I'd suggest trying to get hooked up someplace as a subcontractor for a kitchen and bath outfit. A friend of mine does installs and remodels for a big time kitchen and bath shop here in Pittsburgh. He doesn't have to do layouts, help customers make decisions or order materials he just installs what he's given and follows the designs somebody else spent time drawing up. The best part is that the kitchen and bath company pays him directly so he doesn't have to worry about collecting money from customers or hounding people who are delinquent. The bottom line for him is that all of the hours he puts in each week are billable. Quote Link to comment Share on other sites More sharing options...
JMortensen Posted February 22, 2006 Share Posted February 22, 2006 2. Remember that you have to pay Social Security or Self Employment tax on your earnings which would normally be paid by your employer. This is an extra 8% (rounded up) that you owe in taxes. This was a sucky lesson to learn. I put money away all year long for taxes in my first year, and I was looking at the 1040 books that the IRS sends every year thinking I'm going to get to keep $8K. Went to the accountant and that's when I was informed that your employer pays the same amount of tax you do every year. If you're self-employed you get to shoulder that burden. It all worked out OK, instead of keeping $8K, I got to keep $500. Would really have sucked if I didn't put that money away though... After the first year they expect you to put aside the money quarterly, so that is another small thing to look out for. Every 3 months you'll have to come up with a little chunk, so if you're the type of guy who spends what he makes you better figure a way to put some aside where you can't touch it. Quote Link to comment Share on other sites More sharing options...
Lewis Maudlin Posted February 22, 2006 Share Posted February 22, 2006 Oh, it is always good if you have assets to protect those assets by putting potential liability into an LLC/INC. This, however, costs money so those with few assets often opt to do without. If you are judgment proof anyway, what good does having an LLC or INC do? Quote Link to comment Share on other sites More sharing options...
JMortensen Posted February 22, 2006 Share Posted February 22, 2006 True enough, if you don't have anything they can't take anything. On the other hand any contractor is playing with fire to some degree. A mistake can cause large amounts of damage (thinking water damage in this case) and customers can be completely devoid of common sense sometimes. Some are impossible to please and very sue happy. One more thing, some corporations have tax benefits associated with them that may not be of much interest right now, but might be helpful down the line if the business takes off. I did the LLC on mine, and I'm going to restructure it as an S corp later on to take advantage of the tax laws fairly soon. Wish I had done it right the first time. Quote Link to comment Share on other sites More sharing options...
ToplessZ Posted February 22, 2006 Author Share Posted February 22, 2006 Ok guys really great comments so far. Just keep in mind I want this to be a weekend only business and I have to make enough to make it worth the extra taxes etc. Not trying to do a big tax evasion gig here just trying to make use of a skill I have. Not alot of tilers around here as there aren't alot of new homes going up as fast as they are further south. I am in a low income area Cleveland, TN so 7.00 is what I make at the local staples selling office equipment w/0 commission. I just need to make 2-300 dollars a week to make this worth my while. However, I do not think working for someone as a contractor is what I want to do. This is more complicated then what I want and will also cause problems with my predominatly weekend schedule. I have next to no assets so this needs to be as low budget as possible of course I do not want to sacrafice quality just need to keep it very simple and basic. I am planning on buying the equipment and maybe doing a job or two to recoup that cost. I am interested in getting a small business liscense or whatever I need to do but I can't afford legal fees etc. Like I said in my first post. I can get nice enough equipment to handle weekend jobs with quality results for 500 dollars max if not a bit less with some creative shopping. Above and beyone that I will have next to no cash in the beginning. Maybe I am just crazy to think this is an option? Quote Link to comment Share on other sites More sharing options...
Lewis Maudlin Posted February 22, 2006 Share Posted February 22, 2006 The suggestion to work as a sub-contractor does not solve anything. You still have to pay higher taxes and most contractors do not pay their subs until they are paid. Same dilemma. Remember, anyone that has the money to pay you, has the money to buy the materials and pay at least half of your labor up front. Do not start a job with promise of payment. I do not know about Cleveland, but in many midwest states, no license or permit is required. Probably the best place to ask in Cleveland is at the Building commissioners office in City Government. Quote Link to comment Share on other sites More sharing options...
mobythevan Posted February 22, 2006 Share Posted February 22, 2006 If you do a good job and are reliable and dependable, typically you will have more business than you can handle. If you don't show up when you say or don't finish when you promise, you will get a bad reputation fast. Contractors work by their reputations. I know many that have had serious problems then want to talk about their family situation. The person who hires a tiler to put in a backsplash probably does not want to hear about their family situation or other excuses. The most important things to remember with a small business. 1. Do not price yourself too cheap. Pricing yourself too cheap may make people think you are an inferior tiler. Also, it is hard to raise your prices later. I would stay a lot closer to the going rate. 2. Remember that you have to pay Social Security or Self Employment tax on your earnings which would normally be paid by your employer. This is an extra 8% (rounded up) that you owe in taxes. 3. Keep your receipts. Anything that is done for your business or used strictly for your business is typically deductible. Let's say that you make $50,000 a year of taxable income. That puts your marginal tax dollar at roughly: 28% taxes 15.5% Social security and medicare 5% state and local taxes This means that your marginal tax dollar is being taxed at 48.5%. What this means in layman terms is that anything you can deduct was HALF paid for by Uncle Sam. Each receipt is worth half of its value to you in real cash which would have to be sent to uncle sam. 4. Reputation and word of mouth will usually do your advertising in a service trade. Very good advice. My wife just started her business 3 months ago. She started an LLC and an s corp because of liability reasons. The s corp leases all facilities and supplies from the LLC to give two layers of protection because her business is inherently dangerous. Using the guidelines above she is already above her capacity and is working 7 days a week, but what more can you hope for when you start a business. good luck Quote Link to comment Share on other sites More sharing options...
ToplessZ Posted February 22, 2006 Author Share Posted February 22, 2006 Going to do some more research when I get off work tonight. This is a simple business Im going to try to avoid contracting since I am very limited with my time and also trying to see if I can do without the LLC. If anyone else has any additional information and advice especially about the financial end of things including taxes that would be great. Don't forget trying to get my feet wet with near no startup capitol and the longer I can keep it that way the better the chances that this could work for me. Quote Link to comment Share on other sites More sharing options...
ToplessZ Posted February 25, 2006 Author Share Posted February 25, 2006 bump. Still looking for more motivation/advice Quote Link to comment Share on other sites More sharing options...
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