The official "Starting my own business" thread, but need help with pricing!

[ApacheChief]

Sounds like you're on the right track.

I suggest you EASE into this though, don't go crazy

 

[John]

tin10, I co-own a small and successful computer business in West Texas. I'll try to answer a few of your questions since it's already 3:30am and my eyes are heavy.

1) If you are going to buy and resell parts you'll need a Texas Sales & Use Tax Permit. Computer labor is also a taxable item. Find a reliable CPA.

2) Are you going to take cash only? Accepting checks is a liability and be prepared for NSF's. How do you plan on accepting credit card payments...paypal?

5) You should set an hourly rate and charge for the time you are at the pc. Automated scans and diags should not count as "billable" labor. I charge $45 hr. for in-store service on PC, $60 for mac.

6) On-site service is a time killer. You have to sit there the entire time and when you are @ home or your shop you can work on multiple systems at once. I charge $75 hr for on-site service which includes networking.

7) You're going to charge $50 to install the first part and $10 per additional? $50 to install an expansion card, floppy, optical drive, etc. is a little steep. $15 to $25 per item is not unreasonable and depending on how many parts there are you may even want to offer a "package deal". I charge $25 for a part install, $67.50 for a clean OS install and $45 if they have a recovery cd.

8) Unless you are also offering a "tutor" service you do not show the customer how to fix the computer. I charge extra when someone likes to look over my shoulder. The customer broke the computer to begin with and will forget what you've told them the minute you leave.

9) Be prepared for phone troubleshooting because even though you think you may have fixed the system something will go wrong and the customer will be upset since they just paid you to fix it.

10) Keep in mind that customers will lie to you. I typically hear "it was working when I brought it in...." among other BS, so you have to learn how to read between the lines and caress the customer. Patience and good customer service goes a long way. If you promise something you need to deliver!

11) You need to keep records of all sales and service. You will also become self-employed so be prepared to pay the IRS at the end of the year.

There is so much more that goes into opening a new business, but since you are basically going to work out of your home the overhead and headaches will be minimal.

 

[addragyn]

My advice. Stay far far away from selling HW. Just send you customers a link and let them buy it. Sell you time and expertise, not cheaply made componenets with no margin.

Checkout nolo.com for lots of good business/legal info.

Also try From Serf to Surfer by Matthew Strebe.

 

[Blain]

My question is... Why did you post this thread in the General Hardware forum?

 

[arsbanned]

All the cautionary stuff is good. Starting a venture like this should never be taken lightly. The warning about protecting people's data is right on as well. How about this scenario: Woman brings you computer, saying they can't "do anything with it" etc. You say, "If I can clean up what is there I will do so, otherwise, I'd like to do a clean install. Simply wipe everything and re-install all your software.." Customer says :"Great! This is just an old machine the kids are going to use. I'll bring all of our original software so you can load it back on the clean installation."
You start the box up, and discover it is so corrupted with virii, spy, ad, and malware, nothing can be done but a clean install. You format and proceed to install the customers software, at which time the box is thrumming along beautifully. Call the lady up "Your computer is ready to go!"
"Great!"
2 weeks later they hook it up for the kids in the spare room in the basement, relieved to finally have an extra machine for them to thrash around on (yeah, a 6 year old K2-450 and 64 mb RAM will be wonderful for parsing those huge databases ;-)) Phone rings. "Hi, where're my husbands files from 5 years ago?" badaboom badabing. So much for that Website work they were going to have you do.
On the sales tax thing, check your state laws (or country in this case, since you live in Tejas ;-)). Here in Maine, unless you are moving in excess of 10 grand in goods annually, you get no tax number. Anything above you do and you must file at appropriate intervals to keep the state happy. Check town ordinances for running a business out of your home. You may require a permit of some sort. Check into insurance. Print up some cards, a letter head, get a checking account.
Most of all, yeah, go for this thing, and good luck.

 

[jmagg]

Signed contracts regarding what is, and isnt included in partictular services rendered, will save you from major hassles.

I think you may find your competitors prices may not be very far out of line, when big brother wants their cut. (income tax)

Best of luck!

 

[Elcs]

I believe one of the statistics here in the UK is that 3/4's of new businesses fail within the first 3 years.

Overtrading is one main business killer.

Studying as an Accountant here in the UK, Im beginning to grasp how things work. I have an exam in January on Managing Corporate Finance. Our lecturer mentioned that one problem the smaller businesses that failed faced were the fact that even though they were profitable, they had cash flow problems. Keep on top of the money issues, keep legal and keep your targets realistic.

It seems as though you have thought a lot about it and missed some things because your human and because maybe your education doesnt cover some of the issues such as law. I think you stand a good chance of becoming successful if you keep level headed.

Good Luck with the business. Im 19 and just waiting for the spark of inspiration to make my fortune.

 

[mplutodh1]

For tax information look for a Small Business Association in your area or call your state offices (depending on who you apply for a business license from they will usually help you with tax information) Washington state has pretty detailed website for those starting small businesses and almost all of those questions are answered.

I started a web design business just over 4 years ago (My senior year in high school) . I have learned a lot, one thing is to specialize your services, focus on an area you wish to do the most. I toyed around with doing onsite technical services in addition to web development and it turned out to be a headache. Working on your computer is one thing, working on a friends is another but working on a business computer can be crazy, half the time they wont have the installation CD's, they wont have a clue what was installed on the computer, they wont know how to use the technology they have, and they expect you to do it all for them as inexpensive as possible. So my suggestion to you is, focus on one thing, not a dozen, when/if you hire employees down the road you may consider broadening your services.

One other thing noted, cover your ass with contracts, contact a lawyer, you will need them (speaking from experience). Also, get certified in as many areas as possible, it shows your clients you have taken the time to do so and have the knowledge (not just say you have it!) Being 21 you run the risk of getting walked all over so stand your ground, protect yourself and good luck.

 

[meltdown75]

Hi tin10. Check out this link, you will enjoy it and it has a lot of info that is applicable to someone such as yourself. Althought it is only excerpts from a book, if you read through the whole content you will be enlightened... I was.

Starting a Computer Business (excerpts)

Just don't spread yourself thin to start. Be as upfront and honest with your customers as possible. If you come upon a situation that you aren't qualified for, don't try to improvise (especially on-site). They will think you are a brainless money-hungry hack and they will be even more inclined to look over your shoulder. IMHO on-site work is for the birds. Pickup and delivery is much better because you can take the problem PC and work on it in your own home or shop. Besides, some people will think that if you unhook their case and remove it, the sky will fall and all their data will be gone.

Like the link points out, qualifications are great to have, but not necessary. If you fix Joe Blow's computer for a reasonable fee and you're nice and approachable and easy to deal with, that's all the qualifications he is going to care about.

Most of all good luck! Relish the role of the "small guy" while you can - things can get busy real quick!

 

[bob4432]

one of the things i ran into a lot was that people, for some unknown reason, don't understand " when i wipe the drive clean, ALL of your OLD DATA will be gone ", make sure you have that in some kind of formal writing agreement, as arsbanned noted

 

[tin10]

now, is a business license the same as a DBA (doing business as) certificate?

I dont see why someone would have to pay taxes on a service, there are loads of people who I know do this and dotn have a penny taken from them, but maybe they just havent got caught yet?

All in all I appreciate all the help, and to those who say I can't do this, I am sorry, but you are weak minded as well. I dont care what happens with this in the next few years to come, im 21 years old, I have nothing and everything to loose

 

[thirdlegstump]

If you make ANY income, I think it has to be filed and reported. Whether they will tax you on that I don't know, it depends on income level and expenses.

"I don't care what happens......I'm 21 years old, I have nothing and everything to lose."

Way to go responsible boy!

 

[meltdown75]

Originally posted by: tin10
I have nothing and everything to loose

How can you simultaneously have nothing and everything? hehehe just kidding. I know you meant nothing to lose and everything to gain.

I'm going to go out on a limb and suggest you think you're invincible... don't. Just be cool and do what you can dude... people are just trying to help you when they say to take it slow. They're not saying you're not capable. Many of us have been down this path before, and know the pitfalls! I used to want to start a full-fledged business. But with the comfort of an easy 9-5, I stick to referrals and doing jobs 'on the side' . again, best of luck

 

[thirdlegstump]

Better yet, quit worrying and just get it done.

 

[AgaBoogaBoo]

Offer 10% discounts to your customers the first few months and give them each two business cards. Tell them anyone they refer gets 10% off. This way people will be inclined to refer you. If anyone doesn't have the card but mentions the deal, give them 10% off easily.

Also, don't expect a decent profit for a year or two, assume that you aren't making money for that much time. WOrd of mouth will be your biggest method of getting customers.

 

[randal]

I started my CyberCafe when I was 21, and I don't think I'd look back and second guess it - one of the best decisions I ever made, if only for the personal emotional/mental gains.

As for taxes, yes, you have to do them all. You're not selling a product, so there won't be any sales tax, but all of the income you receive HAS to be accounted for - both state and federal - or else they'll come and screw you big time. edit This *INCLUDES* all services. We do PC maintenance here at the cafe and we have to account for it. We bill for computer time - which is not a product, but a service - and we have to pay taxes on it. If anybody is providing services in your line of work and it not booking it on either their personal tax statements or under a business name, they are committing a crime, fair & square. Avoid this. We also had to pay for a federal TaxID and a state business charter, the latter of which has to be renewed every year.

Get a CPA/Accountant. Put all your money into a bank account and don't spend money without them knowing. When tax time comes, *DO* cough up the $250-500 it will cost to have them do your taxes for you. It will save you soooo many headaches. We tried to handle our own taxes here at the cafe for the first two quarters we were open, and we fscked it up bad and got upside-down with the IRS to the tune of ~$1500. They are not nice. At all.

People pay you to do the thing you are good at (computers), not to balance their bills & do their taxes; similarly, pay an accountant to do what they are good at.

 

[Ns1]

Skipping the replies so far, but this is how you SHOULD be pricing your services

your yearly costs + your desired yearly salary/how many hours a year you plan to work = rate

that's a pretty general way to price your sht, but unless you want to get REALLY technicall...

don't forget to pay yourself

 

[Elcs]

Originally posted by: randal
Get a CPA/Accountant. Put all your money into a bank account and don't spend money without them knowing. When tax time comes, *DO* cough up the $250-500 it will cost to have them do your taxes for you. It will save you soooo many headaches. We tried to handle our own taxes here at the cafe for the first two quarters we were open, and we fscked it up bad and got upside-down with the IRS to the tune of ~$1500. They are not nice. At all.

People pay you to do the thing you are good at (computers), not to balance their bills & do their taxes; similarly, pay an accountant to do what they are good at.

Im training to be an Accountant so my side of the coin would be biased in this case. Nice to see someone recommending the hire of my future profession.

The tax module we handle is in my final year so Im not that far into things. Hiring an Accountant should ensure you dont, as randal did, and make a mess of things. As randal said, $250-500 was money better spent than the time/stress wasted on doing their own tax then having to pay the fines. If you do your own tax, it just takes away from the time you'd be working usually and your income takes a hit. If you do it on your own time, it'd increase your stress and we all know how nasty that is. The Government is not something you want to mess with.

As I pointed out above, managing your physical cash (the bits of paper with $ signs on and bank balance) is one of the biggest reasons for new/small businesses failing in the UK. An Accountant may cost you money but with their knowledge in handling money, their services may be beneficial to your survival.

 

[tin10]

Originally posted by: Elcs

Originally posted by: randal
Get a CPA/Accountant. Put all your money into a bank account and don't spend money without them knowing. When tax time comes, *DO* cough up the $250-500 it will cost to have them do your taxes for you. It will save you soooo many headaches. We tried to handle our own taxes here at the cafe for the first two quarters we were open, and we fscked it up bad and got upside-down with the IRS to the tune of ~$1500. They are not nice. At all.

People pay you to do the thing you are good at (computers), not to balance their bills & do their taxes; similarly, pay an accountant to do what they are good at.

Im training to be an Accountant so my side of the coin would be biased in this case. Nice to see someone recommending the hire of my future profession.

The tax module we handle is in my final year so Im not that far into things. Hiring an Accountant should ensure you dont, as randal did, and make a mess of things. As randal said, $250-500 was money better spent than the time/stress wasted on doing their own tax then having to pay the fines. If you do your own tax, it just takes away from the time you'd be working usually and your income takes a hit. If you do it on your own time, it'd increase your stress and we all know how nasty that is. The Government is not something you want to mess with.

As I pointed out above, managing your physical cash (the bits of paper with $ signs on and bank balance) is one of the biggest reasons for new/small businesses failing in the UK. An Accountant may cost you money but with their knowledge in handling money, their services may be beneficial to your survival.

I dont understand why I would need to pay someone to handle my money, the simple fact is I will do the service, as much and as many in one day, at the end of the day, take all money and put in the bank, that way I have record of EVERY transaction possible, and make it easier at the end of the year, or month, however income taxes are done, to send them the money the state "DOESNT" deserve, but requires me to pay........down with TAXES on small businesses!

I really appreciate all that you guys are telling me, althought it is SCARING the be-jeezus out of me, I am still inclined to have all preparations ready for the first of the year, I mean, I can start small, and if push comes to shove, higher some people, and do it that way, but time and TRUST in the customers will only tell, thanks to all so far, and I would appreciate more help....

Also, is it a requirement, even if I am doing the business out of my home, to have a DBA license (Doing business as), if so I can do that easily. Also, since people say I dont have to charge a SALES tax on the service, but still have to pay income tax and possibly SS taxes, where and how do I start with this, does it cost anything at first, thanks again!

 

[Klixxer]

50$ says that in one year from now you have forgotten this idea and agree that it was a stupid idea to begin with.

1. To get big, think big
2. If you think small you will become nothing
3. Without money, you can't make money, so dive in, head first and loan at leat 100-200k
4. Be definate about it, win or loose, all or nothing, anything in between is loose.
5. Handling a few computers to people you know isn't experience, it's favors.


Bottom line, either you go for it full strength or you keep doing it black market style, for a few friends, once you go into business, everything changes.

Do you know anything about taxation of companies, book keeping? Are you going to handle that by yourself without knowing shiat about it? LOL, yeah, how successful you wil BE!

Then comes the support calls, "my mouse stopped working" free support to drive 15 miles to change the batteries in some old hag's mouse? Live with it.

I think you are very young, very naive and very stupid for your age.

 

[tin10]

Originally posted by: Klixxer
50$ says that in one year from now you have forgotten this idea and agree that it was a stupid idea to begin with.

1. To get big, think big
2. If you think small you will become nothing
3. Without money, you can't make money, so dive in, head first and loan at leat 100-200k
4. Be definate about it, win or loose, all or nothing, anything in between is loose.
5. Handling a few computers to people you know isn't experience, it's favors.


Bottom line, either you go for it full strength or you keep doing it black market style, for a few friends, once you go into business, everything changes.

Do you know anything about taxation of companies, book keeping? Are you going to handle that by yourself without knowing shiat about it? LOL, yeah, how successful you wil BE!

Then comes the support calls, "my mouse stopped working" free support to drive 15 miles to change the batteries in some old hag's mouse? Live with it.

I think you are very young, very naive and very stupid for your age.

Well Klixxer, seeing's how your from Germany, the American way here is a little bit different. Most compaines started the same way I did. They start small, grow, become a corporation, and you know the rest.

I appreciate that you actually think I am stupid, since I do hold a 3 yr 4.0 gpa at T.C.U in Computer Engineering. I laugh and feel nothing but pitty for you, why u might ask, because the simple fact is, you know NOTHING about me, who I am, what I am capable of doing, so I would rather you not post in my thread anymore, if you do, I will ask the mods to remove it, because your not even giving constructive critizism, your just saying what you think of me, and frankly dear, I dont give a damn!

Thanks!

 

[bob4432]

Originally posted by: tin10

Originally posted by: Klixxer
50$ says that in one year from now you have forgotten this idea and agree that it was a stupid idea to begin with.

1. To get big, think big
2. If you think small you will become nothing
3. Without money, you can't make money, so dive in, head first and loan at leat 100-200k
4. Be definate about it, win or loose, all or nothing, anything in between is loose.
5. Handling a few computers to people you know isn't experience, it's favors.


Bottom line, either you go for it full strength or you keep doing it black market style, for a few friends, once you go into business, everything changes.

Do you know anything about taxation of companies, book keeping? Are you going to handle that by yourself without knowing shiat about it? LOL, yeah, how successful you wil BE!

Then comes the support calls, "my mouse stopped working" free support to drive 15 miles to change the batteries in some old hag's mouse? Live with it.

I think you are very young, very naive and very stupid for your age.

Well Klixxer, seeing's how your from Germany, the American way here is a little bit different. Most compaines started the same way I did. They start small, grow, become a corporation, and you know the rest.

I appreciate that you actually think I am stupid, since I do hold a 3 yr 4.0 gpa at T.C.U in Computer Engineering. I laugh and feel nothing but pitty for you, why u might ask, because the simple fact is, you know NOTHING about me, who I am, what I am capable of doing, so I would rather you not post in my thread anymore, if you do, I will ask the mods to remove it, because your not even giving constructive critizism, your just saying what you think of me, and frankly dear, I dont give a damn!

Thanks!

this is stuff you will have to learn to deal with, grow some thick skin. you can not cry to the admins in the real work world, having your own business, and you will not be able to ask the admins "...to remove it, because your not even giving constructive critizism, your just saying what you think of me". trust me, even though you have excellent intentions many people will say what they think of you. just a matter of time.

 

[Nuriko]

Originally posted by: tin10
[
I dont understand why I would need to pay someone to handle my money, the simple fact is I will do the service, as much and as many in one day, at the end of the day, take all money and put in the bank, that way I have record of EVERY transaction possible, and make it easier at the end of the year, or month, however income taxes are done, to send them the money the state "DOESNT" deserve, but requires me to pay........down with TAXES on small businesses!

I really appreciate all that you guys are telling me, althought it is SCARING the be-jeezus out of me, I am still inclined to have all preparations ready for the first of the year, I mean, I can start small, and if push comes to shove, higher some people, and do it that way, but time and TRUST in the customers will only tell, thanks to all so far, and I would appreciate more help....

Also, is it a requirement, even if I am doing the business out of my home, to have a DBA license (Doing business as), if so I can do that easily. Also, since people say I dont have to charge a SALES tax on the service, but still have to pay income tax and possibly SS taxes, where and how do I start with this, does it cost anything at first, thanks again!

Well, first as randall pointed out, they can cover you come audit time, which is a good thing. Few things after more frustating than an audit, especially for small business owners with a lack of records. To that extent have you looked into any of the accounting software out there, such as quickbooks? While having every deposit slip is helpful, it gets a bit tiresome to wade through hundreds of such looking for the one you need, whereas with the software, you can bring it up in a few seconds.

As far as letting accountants help you, I recommend it (of course, I will say that I'm part of the profession, so I may be a bit biased). And yes, you have said you're smart and so far haven't done anything to make me doubt; actually, asking about starting up a small biz before you take the leap is a great idea, which too few people do. But even with intelligence, do you think that you could go and operate on yourself, like removing an appendix. The point being, the tax code is large (more so than even I like, but that;s another rant) and is it worth your time to spend 5-20 hours searching to see what is and isn't deductable? The same time that you could be using to make more money? As well as tax planning issues, say that you do eventually want to incorporate or want to get some sweet tax breaks, would you trust someone that has never done worked through one before, or the experienced professional that makes their living off of doing say things?

 

[Fern]

Originally posted by: tin10
now, is a business license the same as a DBA (doing business as) certificate? No, in most places a business license it just a way for a local/municple goverment to raise a wee bit of revenue. Whereas a DBA is nesseccary for two reasons (1) it protects your right to use whatever business name your going to use. Typically, one must go the county Courthouse where they live and/or work (i.e. could be more than one if your work area is covers more than one county) and pay a small fee ($15 here)to register that biz name so noone else can legally use it. (2) You should open a seperate bank accout for your buisiness and since you are unincorporated, the banlk will want to see the certificate from the county granting you that biz name b4 they will open you an account. This is for fraud protection (no one can steal your checks and deposit them in their own an account also using the same name etc.). Further more, banking has become a bit more strict ect after terroism (i.e., anti-money laundering legislation)

I dont see why someone would have to pay taxes on a service, there are loads of people who I know do this and dotn have a penny taken from them, but maybe they just havent got caught yet? YES

All in all I appreciate all the help, and to those who say I can't do this, I am sorry, but you are weak minded as well. I dont care what happens with this in the next few years to come, im 21 years old, I have nothing and everything to loose

Fern

 

[blakeatwork]

Originally posted by: NautikaL 8

Originally posted by: Agamar
I didn't know a 14 year old could legally earn money via working, without working for a parent.

yea man. those ten year olds that shovel snow sure are doing illegal things. Man we should just arrest them all...i mean wtf theyre getting paid for working!

i think its you have to be 15 to legally hold a job and be employed by someone. Its not illegal for people under the age of 15 to earn money...

The issue would more be for customers, as they cannot legally enter into contracts with you, so one party or another could give the other the big shaft. Are you actually registered as a business, or fixing them on the side?