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First of all please excuse me if this thread is in the wrong place.

I have had a few hives for five years now and with hive numbers increasing (nine at present, including freshly captured swarms) and costs likewise I would like to start selling honey to cover some of my costs and hopefully eventually make a profit one of these years. Everything has been done on an ad hoc basis so far with little recording of expenditure and it is now time to become at least semi organised. All advice and/or ideas on how to set up a business gratefully accepted.

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First of all please excuse me if this thread is in the wrong place.

I have had a few hives for five years now and with hive numbers increasing (nine at present, including freshly captured swarms) and costs likewise I would like to start selling honey to cover some of my costs and hopefully eventually make a profit one of these years. Everything has been done on an ad hoc basis so far with little recording of expenditure and it is now time to become at least semi organised. All advice and/or ideas on how to set up a business gratefully accepted.

 

 

As long as you stay below a threshold of earnings you can be a sole trader and just tick along making a living,If however you wish for grander things ...Then welcome to the world of GST registration..Depending on how you want to build your business or your situation at the moment,,, there will be a period of expenditure (that seems like years...hahahaha) before you will start seeing a return,Add your costs(from fuel, to ACC levys,Tax and everything else that you can possibly think of) minus what you want to earn (as in how much you personally want in your pocket) equals what you need to turn over every season as it is seasonal(what do you live on in the winter?)

Apart from that work your numbers and go see an accountant, he will tell you what you need.

 

Cheers Hat

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Sit down and work out how much it's cost you so far. You may get a shock. Do you have time and money to burn till things start to pay their way and it's longer than you would like. Do you have site's for your hives do you have someone to buy your honey how much will you get. And there is much much more .

Speaking from experience wax we ordered 10 grands worth last year as I wanted all my gear ready. Then needed more wax and find out I should be picking up hens teeth. Have had to beg borrow and sometimes think about stealing the stuff to do some plastic frames as I also needed more frames asap.

I also have a wife that makes my woodgear with the help of a mother in law and a sister in law. I have a 80 year old offsider that can spot Queen's faster than most younger keepers including myself and kids to full in the gaps

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There is nothing to stop you selling your honey on the local market (friends & contacts etc) so long as all the extraction and bottling up, labelling requirements are properly met. Can do it yourself or have it done for you.

Having a plan is a biggie (home based cottage industry or grand plans) and how you intend to achieve that equally important.

At the simplest level, you can voluntarily register for GST and claim back the GST content of your business costs ( at 15% it's a help!). Filing GST returns on line is not hard at all and your dosh comes back quickly. IRD will require you to keep business records, expenditure & sales in a simple cash book type style and file a return annually (once again on line and not that difficult.

As Hat said, a short visit to an Accountant is a good thing to get you started out the right way. More money I know but very well spent.

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We both worked full time for 4 years, then I worked a further two years from where you are now. We GST registered and met with the accountant in about year three. We carefully planned increase, slowly but surely we grew as we could afford it. We made no profit in the first four years, but owe nobody anything.

 

Look into contract extraction in your area. Jarring can be done in a registered commercial kitchen. Then I'd try to hock it off on the local market, if it's not flooded already.

 

Have you got sites that can accomodate more bees? Forward planning is important if there's no bee space in your area this becomes problematic.

 

It's a long haul but it can be done.

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It sounds to me like you are wanting to run a small hobby business. Go and have a chat to your accountant-you may well be better off registering for GST and claiming every cost you can.... the business pays you rent for the room, office expenses, part of all the cars expenses etc so you end up paying part/all of your expenses from business income that you have not payed PAYE on....In my experience you kinda need around 25 hives to make a go of it.... Have a look around for an extract and buy operation (if they are trustworthy etc) that way you are not going through the hassle of trying to extract, package and sell a few hundred kg of honey per year....

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My husband is self employed and I do his books. I use a simple cashbook program that produces the gst return and I file online. Piece of cake.

Just set up a business bank account that everything goes through, then import the bank statements to the cashbook, code them up and produce the report.

It's not a bad idea to register for gst as you will have to buy lots of things at the outset. And you only pay gst if you make a profit.

I do his tax returns using the same information but you might want an accountant as beekeeping is a bit more complex than I am used to with more fixed assets etc.

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There's no way I'd be setting up a company. Unless you like making work for yourself.

i can't recall the details but there can be benefits to it. eg it can shield your partner from debt (possibly your own personal assets tho not sure on that), should you happen to burn down a forest.

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I've run a small business continuously since November 1984 (mechanical engineering). It is great that everyone has given such good advice and that it is exactly in synch with my own findings. Yesbut is correct that if you start a company it will create more work and there will be company tax return as well as your personal tax return (Accountant fees could double). But overall, there is not much cost or hassle from a company structure. It is probably seen as more professional and easier to trade. If you ever sell the business or close it down it is possibly more convenient for the GST registration to be associated with the company IRD number and not your personal IRD number. Similarly with insurance and other costs it is clearer and easier to do the books where your company is a separate entity to yourself. Particularly if you are charging the company rent so as to get back some of the costs of rates, house insurance, power, and so on. There can be some small benefits to shield you from collapse but generally they will come after the directors and that's you, so unless you are rich and slippery it wont work. Risk aversion is a personal thing, I guess you could look into setting up a family trust, but it might be better advice initially to talk to an insurance broker about what it would cost to have some cover for a bad mistake. Normally if you have a high excess, the premium costs are not so large for most kinds of public liability insurance.

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I've run a small business continuously since November 1984 (mechanical engineering). It is great that everyone has given such good advice and that it is exactly in synch with my own findings. Yesbut is correct that if you start a company it will create more work and there will be company tax return as well as your personal tax return (Accountant fees could double). But overall, there is not much cost or hassle from a company structure. It is probably seen as more professional and easier to trade. If you ever sell the business or close it down it is possibly more convenient for the GST registration to be associated with the company IRD number and not your personal IRD number. Similarly with insurance and other costs it is clearer and easier to do the books where your company is a separate entity to yourself. Particularly if you are charging the company rent so as to get back some of the costs of rates, house insurance, power, and so on. There can be some small benefits to shield you from collapse but generally they will come after the directors and that's you, so unless you are rich and slippery it wont work. Risk aversion is a personal thing, I guess you could look into setting up a family trust, but it might be better advice initially to talk to an insurance broker about what it would cost to have some cover for a bad mistake. Normally if you have a high excess, the premium costs are not so large for most kinds of public liability insurance.

Just a small correction to your comment it is not any different to sell your business as a company or a sole trader it has nothing to do with ird number.

 

I am an accountant and a hobbies who is planning to build slowly to sell bees. My work phone number is <contact detail removed as per forum rules> ask to speak to Mark and say helen said to call. The firm name is Martin Wakefield www.martinWakefield.Co.Nz regardless of whether you use an accountant lon term or not it's a good idea to chat to one in the beginning other wise you could be missing out on your tax advantages or setting yourself up for a big tax expense in the future.

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I've run a small business continuously since November 1984 (mechanical engineering). It is great that everyone has given such good advice and that it is exactly in synch with my own findings. Yesbut is correct that if you start a company it will create more work and there will be company tax return as well as your personal tax return (Accountant fees could double). But overall, there is not much cost or hassle from a company structure. It is probably seen as more professional and easier to trade. If you ever sell the business or close it down it is possibly more convenient for the GST registration to be associated with the company IRD number and not your personal IRD number. Similarly with insurance and other costs it is clearer and easier to do the books where your company is a separate entity to yourself. Particularly if you are charging the company rent so as to get back some of the costs of rates, house insurance, power, and so on.

 

Kev and I work through a simple self-employed partnership, rather than a registered company structure. The partnership has its own IRD number, which doubles as its IRD number, so there is no connection to our personal IRD numbers. Insurance and any business expenses are quite separate to any personal expenses and paid through the business bank accounts.

 

The only area where personal and business expenses touch is that in the end of year accounts we claim a percentage of our house expenses, eg, house insurance (house - not contents), power, phone, rates etc based on the area of the house/shed dedicated to business use. That, and I don't have a business credit card, so occasional online purchases are paid with my credit card and immediately reimbursed from the business bank account.

 

GST registration was actually helpful for cashflow in the first few years, and not difficult to do, so I'd not put it off on the basis of 'too hard'.

 

As everyone else has recommended, talk to an accountant as soon as you can. We can tell you what works for us, but that doesn't mean you won't end up in a pickle because your situation is different to ours.

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Kev and I work through a simple self-employed partnership, rather than a registered company structure. The partnership has its own IRD number, which doubles as its IRD number, so there is no connection to our personal IRD numbers. Insurance and any business expenses are quite separate to any personal expenses and paid through the business bank accounts.

 

The only area where personal and business expenses touch is that in the end of year accounts we claim a percentage of our house expenses, eg, house insurance (house - not contents), power, phone, rates etc based on the area of the house/shed dedicated to business use. That, and I don't have a business credit card, so occasional online purchases are paid with my credit card and immediately reimbursed from the business bank account.

 

GST registration was actually helpful for cashflow in the first few years, and not difficult to do, so I'd not put it off on the basis of 'too hard'.

 

As everyone else has recommended, talk to an accountant as soon as you can. We can tell you what works for us, but that doesn't mean you won't end up in a pickle because your situation is different to ours.

We have our business set up exactly the same way.

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Wow it looks like I started something here. Thank you everyone for your input - very helpful advice. Looks like its to visit an account for advice. I have been told by some friends that you have to be above a certain income to be able to register for GST to be able to claim it back. Is this true ?

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No. Here is what the IRD says:

 

When to register for GST

 

As soon as you think you’ll earn more than $60,000 in 12 months, you have to register for GST. You may be charged penalties if you do not register when you need to.

 

If you don't think you'll turn over that much, it's up to you whether or not to register. One benefit of voluntary registration is you might be able to claim a GST refund, eg if you have a lot of expenses but not much income. Once you've registered, you have to complete regular GST returns.

 

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The reason I reckon it's worthwhile is that you have a lot of upfront expenses with not much income to start with. But you can claim back the GST, which helps.

When you sell your honey/wax/propolis/whatever, your price will include GST. You deduct the GST you have paid on expenses (petrol, power, insurance etc) and you pass on the rest of the GST you have collected to IRD. It's pretty easy to manage and if you don't make a profit, you don't pay any GST and may even get some back.

The computer program I use is Cashbook Complete Lite. That costs $170.

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You guys mention many times "insurance". Is there any compulsory insurance when you have a business?

Not as far as I know but you probably want to have have building, contents and vehicle insurance, as well as liability insurance in case you set fire to a farmer's tussock, hay paddock or forestry block with your smoker. And maybe income protection insurance

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No, no compulsory insurance.

 

As Janice mentioned though, there are the basics that you'd be a bit silly not to have - vehicle, public liability and possibly buildings or tools. Gear in storage might be worthwhile if you feel it's vulnerable.

 

Hives, bees and crop you need to weigh up whether to insure as they're not cheap premiums... but given the thefts and such the last year or two insuring becomes more attractive.

 

Then of course if you're extracting and packing there's another whole business area to cover.

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My main advice for people who are looking to set up a business is try to set it up in terms of structure for what you want/expect it to become not what it currently is. I set up a limited liability company, GST and PAYE right from the start and have paid myself a salary (rising as the business grew) right from the start. Doing things this way allowed me to grow rapidly when there were opportunities as the structures were in place. I find taking a salary and paying PAYE better than taking drawings as it smooths out my tax commitments rather than having to pay a large block at the end of the financial year, and it helps when dealing with banks with personal mortgages etc...they understand salaries, variable drawings not so much. Similarly if I was to sell I have a set of books, and a business structure that can be bought and understood easily.

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