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Old 08-19-2014, 03:41 AM
Location: Moku Nui, Hawaii
10,694 posts, read 20,457,371 times
Reputation: 10267


I'm kicking around the idea of starting a small yarn shop. Kind of as a fun thing to do, not expecting to make a whole lot of money from it, but it should cover it's costs and generate some income. I can rent a shop front in our little town for $400 a month. I figure sell some yarn, sell some coffee and muffins, have several knitting classes now and then and that would cover rent and make a bit of money. However, some folks want to sell their craft work there too, so some commissions could on that, as well. I have to crunch some numbers, but I think it could be profitable. However, as part of the number crunching, I'm trying to figure out several things.

Most of my quandary is figuring out the folks who want to sell their crafts there. I'm thinking if I held the whole lease and then sub-let them a portion of it (this is okay with the landlord) and had them work several days a month in the shop as well, that not only lower business costs and almost guarantee the business would be profitable, but it would also give me time off. Probably I would also charge them a small 10% commission to cover taxes and lights and such.

However, would they be considered "employees"? Would I have to find health insurance and deduct taxes from the checks they'd get from their items that sell? I doubt the shop could support true "employees" if I had to pay wages and the rest of employee expenses. I'd actually not be paying them anything, they'd be tending the shop two or three days a month as well as paying a small rent in order to sell their things at the store. Are they "business associates"? Maybe "Vendors?" What sort of tax papers would I file for them?

If I can set this up with them as business associates/vendors, whatever their "non-employee" designation would be, then it might be a viable operation. I expect it would sort of morph into a knitter's club where everyone would hang out and knit, but that would be okay, too. However, I don't want to be in business for awhile and then find out they are actually employees and I'd owe back employee taxes and expenses for them. Anyone know the rules on this sort of thing?
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Old 08-19-2014, 03:17 PM
Location: East of Seattle since 1992, originally from SF Bay Area
33,369 posts, read 60,638,503 times
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I do stained glass and woodworking, and have sold through a local gallery. What they did was consignment, and they took 45% of the sale price. If you wanted to reduce that to 35%, you had to work 4 hours a week as cashier.
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Old 08-20-2014, 07:53 PM
Location: Moku Nui, Hawaii
10,694 posts, read 20,457,371 times
Reputation: 10267
It sounds like your gallery is somewhat of the same sort of thing I'm thinking of, although the folks here would mostly be paying a base rent for their space to sell things instead of a very large commission. The 10% "commission" is mostly to pay for sales tax and utilities. With them helping pay the base rent as well as filling in hours at the cash register, then the business model wouldn't have to make all that much money to pay for itself and with the folks helping, it wouldn't run one person into the ground. I would see myself as sort of an overseer to make everything tidy and organized, but the folks would take care of their own areas themselves and when working the cash register, they would sell whatever was in the store. As long as the folks working at the cash register weren't actually "employees", it might work. I don't think I could afford them as true employees.

When you work 4 hours a week as a cashier, are you technically an "employee"? Does the gallery owner have to provide you with health care benefits or take taxes out of the checks you get?
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