The Health Care Bill vs The Sole Proprietor

Though I am not sure how successful the changes proposed in the new health care bill will work out for the millions of uninsured, I am fairly certain one of the hidden tax changes is going to hurt many sole proprietors. This article was highlighted on the yahoo home page on Friday and reading about the amount of paperwork the IRS will be expecting me to do beginning in 2012 upset me. I work as an office manager full time and am very familiar with how long it takes to gather the information and send out 1099 forms to our subcontractors each year. The IRS now wants all businesses to send out 1099 forms to all businesses (corporations included) which provide them with $600 or more of goods or services each year.

It's the part about goods that bothers me. As of right now, you only send out a 1099 form to an individual (sole proprietor) who has provided you with $600 or more in services. It makes sense. You are hiring that person to do a service which they will get paid for and which cannot be tracked easily by any other method. Generally people such as myself, who make & sell items to stores, online and at craft fairs are more visible and easy to track down without all this paperwork. Perhaps the teams that are already traveling the state checking for proper business permits could do a bit of multi taskings and pass names to the IRS of companies that they think should be audited. Then again, maybe it's too late to get the hidden tax torture erased from the bill.

Considering I have experience preparing these forms and Homemade by Hoyt would have less than 10 vendors who would qualify for a 1099, I think I can survive the change. However, I think there are many sole proprietors (artists, handymen, contractors, etc.) who work their business full time but aren't very good at paperwork. They manage to produce the required sales receipts, invoices or contracts required for the day to day business, but rely on an accountant to do the more complicated things like taxes. It could cost anywhere from a few hundred to a few thousand dollars for someone to gather the information for you and prepare the forms. Maybe it's because I'm the type of person who believes that people will always find a way to cheat, no matter how hard you try to stop them, but I think this 1099 thing is a bad idea. Are they ready to handle the piles of paperwork they are asking us to send? Do they really think they will make enough additional tax money to pay for the extra jobs? I really hope they've thought this through...

April showers bring May flowers...

Spring and Summer have always been the hardest times for me to remain motivated to work on my side business. I could blame it on the change in weather calling me outdoors, the fact that there are less holidays that get me out of my full time job for a few hours, or the fact that people don't seem to burn as many candles when it's sunny and warm during the day, but the fact is that sometimes the best time to promote your business is when you're making the least sales... and I could take better advantage of my down time. I plan to do a few things every year to try to grow my customer base, but usually don't get everything done. I'm hoping this year will be different.

The main thing I try to make time for each spring and Summer is to take samples of my products to the buyers at local stores in hopes they will decide to add my line to their retail selection. Times have changed since I started my business... stores have closed... and only two of my original retail locations remain. (Thank you Hemp Wise & Midnight Sun for your loyal support.) My current strategy for obtaining more wholesale purchasers is to research the location and then bring some nicely wrapped free samples for the store's buyer to try out along with some printouts telling about the ingredients I use and prices I charge. I send custom postcards to thank them for meeting with me (assuming I get that far) and sometimes just to keep my products in their mind (i.e. when the buyer says they would be interested, but want to wait one to two months). It is hard to talk a store owner into expanding their selection during a recession, but I'm hoping to meet the ones who are optimistic about the 2010 economy.

At the same time, I need to continue working on my direct sales if I want to make more than a slight bit of frivolous spending money off my candles & soap. In 2009 I added a website, blog, facebook profile, and the occasional flea market or home sales party appearance to my job description as chief candle maker & marketing guru for Homemade by Hoyt. I even hired Google Ad Words to advertise my website day and night. I have definitely had some success due to these efforts, but the battle for increased direct sales is tough. My experience has proven that the best "advertising" I can buy is the personal referral of a friend. Last week I got to see a thank you note that came all the way from Budapest for a gift box that included Homemade by Hoyt soap & specially decorated Recycled Jar Candles. Many more friends have given my products as gifts and helped me win over another customer. (I'm not going to give you an exact figure, but I do like to give discounts and/or gifts to appropriately thank people who help me grow my business.) I also offer other special deals on my website and facebook page throughout the year, which I hope are making people peek at my products, but don't have a method to measure the traffic from facebook to etsy.


What I do know is that I would love to hear your opinions & suggestions if you happen to be reading this and could spare an idea. Is there a store you think I should check out? A craft fair or home party situation which you would like to attend? Do you or people you know read the blogs that review products and have contests for free samples? I am actually hoping to join an entrepreneurial women's networking group soon, so hopefully they can help me with these ideas if no one on the world wide web can... either way, the May flowers are here... 'tis the season to promote.

Fighting Freight Fumes

On January 1, 2010 I pledged to donate 5% of every purchase to support the Environmental Defense Fund... I think many people wondered why? Well, here's the scoop. I am a bit of a flower child at heart and see myself as someone who really cares about the environment. Yet, I've had more than one semi-heated discussion over the so called evils of paraffin wax which left me wishing I could make certain people understand that those candles are my art, and they would never be the same if I changed the wax. Different wax means an all new texture and color scheme. And, the fact is that my pillar candles are the least of our worries when it comes to slowing and/or stopping global warming.

This week I read some information on the EDF website that made me think (in a new way) about the ways that my habits as a modern candle maker help or hurt the environment. It was a study just published called The Good Haul: Freight Innovations for the 21st Century. It highlights various ways to modernize shipping which are already at work around the world, proving that we can make a huge impact on carbon emissions. I can't say that I read the entire 68 page report, but there were several case studies I found really exciting!!! Did you know that a truck produces 22 lbs of carbon dioxide for every hour that it idles? Now think about the fact that every trucker must rest on the road and often requires air conditioning or heating in order for the cab to be comfortable enough to sleep... and the only way to turn those things on is with power. Thankfully, some states are adding "electrification facilities" at truck stops in order make a dent in the 11 million tons of carbon dioxide produced annually as a result of long-term idling. I personally can't believe this hasn't been done sooner. Idling big rigs are not only unhealthy for the environment, they are more directly harmful to the driver... that air they breathe while resting can't be good for their lungs! I get upset when I see regular sized vehicles idling longer than 5 minutes.

There were many other innovative programs described in the report... cranes replacing forklifts, off-hours driving incentives, and meticulously structured emissions taxation systems... so many great ideas that need to be used on a larger scale.

However, I do not feel that independent entrepreneurs should exempt themselves from personal participation in this cause. I am pretty sure there are a large percentage of us that get our materials shipped to us and who ship products to our customers. Here are three ways I feel that I have directly contributed to the cause:

1. I buy materials from vendors who are located nearby whenever possible to reduce shipping distance. My #1 material supplier, General Wax and Candle Co., is actually only an hour and a half drive away. I stop by whenever I'm driving to or through L.A. to pick up supplies myself, cancelling the need for shipping all together.
2. I purchase my materials in bulk. No matter how close or far away the items come from, it seems to me that the less often I purchase them, the less often a large truck would need to haul the package to my house. My goal is for each order to last a minimum of two months, but for vendors which only sell one or two products I desire, I try to order at least a year's supply.
3. I price my candles in a way that encourages long lasting candle orders. If you haven't already noticed, my smallest candles aren't that much cheaper than the medium sized ones... and my large candles are very fairly priced. The USPS backs up my system by charging progressively less per ounce as the package gets heavier... and candles are not feathers, which means shipping can cost a bit. But, if you spread that cost over four candles, it's a much smaller extra charge than if you only buy one.

I would love to hear any and all tips you may have about how I can be more green in regards to shipping products and/or ordering materials. In the mean time, I hope you will support and promote the Environmental Defense Fund's fight to modernize shipping.