T Nation

Business Project

So, I am taking my last economics class and I have to get an “A” in it. To make sure I do I have to get an “A” on this project. The requirements are pretty straight forward, I have to take a simple job or service and make a business of it. The services are assigned and I got Dog Walker. We have to look into the smallest details, and that is where I need help I have a rough outline and would appreciate some input. Here Goes:

1)Business name: Healthy Pooch

2)Service: Walk customers dog once a week and give it a bath.

3)Cost: $6 a dog but, will be done by contracted year so total will be around $80.00 per dog.

4)Getting Customers: Will hire high school students to get customers and give them $5 for every refferal. Also I will have a number interested customers may call.

5)Materials: Dog toys, Eco friendly washing products.

Now some questions I have are:
1)If the business name I choose to use is used in another country or the same country as the name for a website is it off limits for my use?

2)Since it is contracted work how would I go about paying taxes? Would I have to send the IRS money quarterly? Also since I am contracted would I be able to deduct expenses like gas and materials?

3)Last question, as a consumer would the economic problems we are facing, make you think twice about paying for my service? Or is the price reasonable?

Thanks in advance for any responses.

[quote]xXSeraphimXx wrote:

1)Business name: Healthy Pooch

2)Service: Walk customers dog once a week and give it a bath.

3)Cost: $6 a dog but, will be done by contracted year so total will be around $80.00 per dog.

4)Getting Customers: Will hire high school students to get customers and give them $5 for every refferal. Also I will have a number interested customers may call.

5)Materials: Dog toys, Eco friendly washing products.

Now some questions I have are:
1)If the business name I choose to use is used in another country or the same country as the name for a website is it off limits for my use?[/quote]

Unless the business name is a registered trademark, you’ll have no problems. There’s a Joe’s Auto Body in every city, but not a Microsoft.

http://taxation.lawyers.com/Taxation-Independent-Contractors-FAQs.html

You’re priced WAY too low, something like $20 - $25 an hour is more reasonable. Most individuals employing such services have plenty of discretionary income (think opportunity cost), and this economic downturn probably wouldn’t materially affect the business.

[quote]Thanks in advance for any responses.
[/quote]

only thing I can say is if you enjoy doing it,price it competive but not lowball,dont cheat yourself.

if you are making a profit,you have to figure all your overhead
it is a solid plan though.

all you have to figure about the name is if it is available in your area.
not sure where you are but their are small bussiness adminestration offices tha tare ran by the gov.

this is where you will pay your state taxes and such and they can tell you if its trademarked or not.

also if you are really starting a bussiness and in the states contact the IRS and get yourself an EIN.

This is for an econ class?

Don’t forget SS, federal and state withholdings for your employees. Don’t forget the Federal and State minimum wage requirements. Some states and soon nationally (don’t worry, it’ll come) you’ll have to pay their insurance or some insurance tax.

Don’t forget liability insurance-- what if your employee gets bit, or worse, a dog dies on his/her watch.

Are you going to incorporate yourself? There are benefits to that tax and liability wise.

I would lean toward doggy daycare. That way you can also sell doggy product like, food, treats, toys. Hire students to walk the dogs.

[quote]SteelyD wrote:
Don’t forget SS, federal and state withholdings for your employees. Don’t forget the Federal and State minimum wage requirements. Some states and soon nationally (don’t worry, it’ll come) you’ll have to pay their insurance or some insurance tax.
[/quote]

If the people are independent contracts he doesn’t have to take care of that. You just write them a check for their work and report it as 1099 wages. They have to take care of paying at the end of the year.

Correct?

I work as an independent contractor for a lesson studio/music store. Never had taxes taken out–just get a check once a month. I stick 10% in an online savings account earmarked for taxes next year. When I file taxes, if my write offs/business expenses don’t cover everything, I have to pay in.

As an independent contractor though, you can write a lot of things off. I wrote off mileage to get to the studio, and all my guitar related purchases (including sheet music, strings, picks, etc).

OP, if your service is essentially about hooking dog walkers in with clients, you could approach it differently. If that was the case, you could charge your walkers a certain membership fee.

For their payment you provide scheduling services (based on their available hours) and marketing. You could also throw in other benefits or take commission from them. For instance, you could set up a standard hourly rate and take a certain % for your services of scheduling/marketing and they keep the rest.

So you set up the walkings, the consumers pay you, you take a cut, and then cut a check for 1099 wages to your walkers.

That’s essentially how lesson studios work.

[quote]etaco wrote:
This is for an econ class?[/quote]

It is for an Econ honors class, I guess this is the honors part.

[quote]xXSeraphimXx wrote:
etaco wrote:
This is for an econ class?

It is for an Econ honors class, I guess this is the honors part.[/quote]

so what all do you have to outline.
from startup or is this already established?

[quote]SteelyD wrote:
Don’t forget SS, federal and state withholdings for your employees. Don’t forget the Federal and State minimum wage requirements. Some states and soon nationally (don’t worry, it’ll come) you’ll have to pay their insurance or some insurance tax.

Don’t forget liability insurance-- what if your employee gets bit, or worse, a dog dies on his/her watch.

Are you going to incorporate yourself? There are benefits to that tax and liability wise.[/quote]

The highschool students would only be used to get referrels and the reason I chose them is because they would be able to set their own hours and work when they have time. Since they would be getting paid per refferel I figured they would not get hourly wage.

I would no have any employee’s so no liablity insurance.

What kind of benefits are there to incorporating? I did a little reading and what I found was that you don’t have to incorporate to take tax deductions from your business expenses, just list your business income and expenses on Schedule C of you tax return.

[quote]boyscout wrote:
SteelyD wrote:
Don’t forget SS, federal and state withholdings for your employees. Don’t forget the Federal and State minimum wage requirements. Some states and soon nationally (don’t worry, it’ll come) you’ll have to pay their insurance or some insurance tax.

If the people are independent contracts he doesn’t have to take care of that. You just write them a check for their work and report it as 1099 wages. They have to take care of paying at the end of the year.

Correct?

I work as an independent contractor for a lesson studio/music store. Never had taxes taken out–just get a check once a month. I stick 10% in an online savings account earmarked for taxes next year. When I file taxes, if my write offs/business expenses don’t cover everything, I have to pay in.

As an independent contractor though, you can write a lot of things off. I wrote off mileage to get to the studio, and all my guitar related purchases (including sheet music, strings, picks, etc).

OP, if your service is essentially about hooking dog walkers in with clients, you could approach it differently. If that was the case, you could charge your walkers a certain membership fee. For their payment you provide scheduling services (based on their available hours) and marketing.

You could also throw in other benefits or take commission from them. For instance, you could set up a standard hourly rate and take a certain % for your services of scheduling/marketing and they keep the rest.

So you set up the walkings, the consumers pay you, you take a cut, and then cut a check for 1099 wages to your walkers.

That’s essentially how lesson studios work.[/quote]

Well the high school kids are not realy hired by me, they simply get refferels for me and in a way I give them a $5 tip for each. I really do all the work. In theory if the business would get bigger I would hire different people as dog walkers and washers they would be hired and given hourly wages.

So since the kids are not really hired I figured I could pay them cash from my taxed earnings, would that work? or be legal?

[quote]Nich wrote:
xXSeraphimXx wrote:
etaco wrote:
This is for an econ class?

It is for an Econ honors class, I guess this is the honors part.

so what all do you have to outline.
from startup or is this already established?

[/quote]

Are you asking if the business would be from start up? If so yes. What I essentially have to do is pretend I had a love for dogs and was going to start this business from the bottom up.

A plan of attack, that takes into consideration all things like taxes and trademarking. Things that might not be considered by someone just starting.

Someone that has never had a business might just think, get leashes, soap, customers, and then collect the money.

Never thinking about taxes or the type of situations a self emplyed person might have to look into.

Judging from examples of past students projects, the plan has to be thorough enough that it could be taken and followed to actually build the business. In fact a girl a couple years ago took her project plan and started her business, it was a rental space business for college students on summer vacation.

[quote]xXSeraphimXx wrote:
SteelyD wrote:
Don’t forget SS, federal and state withholdings for your employees. Don’t forget the Federal and State minimum wage requirements. Some states and soon nationally (don’t worry, it’ll come) you’ll have to pay their insurance or some insurance tax.

Don’t forget liability insurance-- what if your employee gets bit, or worse, a dog dies on his/her watch.

Are you going to incorporate yourself? There are benefits to that tax and liability wise.

The highschool students would only be used to get referrels and the reason I chose them is because they would be able to set their own hours and work when they have time. Since they would be getting paid per refferel I figured they would not get hourly wage.

I would no have any employee’s so no liablity insurance.

What kind of benefits are there to incorporating? I did a little reading and what I found was that you don’t have to incorporate to take tax deductions from your business expenses, just list your business income and expenses on Schedule C of you tax return.

[/quote]
this may help a little bit on the tax level if you havent already read through this

http://www.irs.gov/publications/p583/index.html

xXSXx, Gotcha.

I misunderstood the relationship to the students-- thought they would fall under your business as employees.

Boyscout - I do the same thing (contract) as an independent contractor for programming and field mapping. Sometimes I am the contractor and sometimes I am the sub-contractor. You are correct about the 1099.

[quote]SteelyD wrote:
xXSXx, Gotcha.

I misunderstood the relationship to the students-- thought they would fall under your business as employees.

Boyscout - I do the same thing (contract) as an independent contractor for programming and field mapping. Sometimes I am the contractor and sometimes I am the sub-contractor. You are correct about the 1099.

[/quote]

So since they are not really employees as I stated above would I be allowed to pay them cash out of my taxed money? or can it be before?

[quote]pachell wrote:
xXSeraphimXx wrote:

1)Business name: Healthy Pooch

2)Service: Walk customers dog once a week and give it a bath.

3)Cost: $6 a dog but, will be done by contracted year so total will be around $80.00 per dog.

4)Getting Customers: Will hire high school students to get customers and give them $5 for every refferal. Also I will have a number interested customers may call.

5)Materials: Dog toys, Eco friendly washing products.

Now some questions I have are:
1)If the business name I choose to use is used in another country or the same country as the name for a website is it off limits for my use?

Unless the business name is a registered trademark, you’ll have no problems. There’s a Joe’s Auto Body in every city, but not a Microsoft.

2)Since it is contracted work how would I go about paying taxes? Would I have to send the IRS money quarterly? Also since I am contracted would I be able to deduct expenses like gas and materials?

http://taxation.lawyers.com/Taxation-Independent-Contractors-FAQs.html

3)Last question, as a consumer would the economic problems we are facing, make you think twice about paying for my service? Or is the price reasonable?

You’re priced WAY too low, something like $20 - $25 an hour is more reasonable. Most individuals employing such services have plenty of discretionary income (think opportunity cost), and this economic downturn probably wouldn’t materially affect the business.

Thanks in advance for any responses.

[/quote]

Yeah, re-visit your target market. People who can afford to hire others to walk their dog will pay more than $6. Many would probably not even bother contacting you assuming your services are subpar for their pooch.

Definately charge more. You are ripping yourself off and losing customers in the process. Research competitors and your market before setting a price.

[quote]xXSeraphimXx wrote:

So since they are not really employees as I stated above would I be allowed to pay them cash out of my taxed money? or can it be before?[/quote]

I’d think you would pay them as a business expense, ie line item expense of doing business.

That’s how I pay (or get paid). Say someone hires me to do an analysis for their project. I provide my deliverables, they write me a check. Similarly, when there’s snow on the ground, and I can’t shovel the drive, I call the plow guy. He plows, I cut a check for him-- that’s clearing the drive for my business (ie a business expense).

[quote]xXSeraphimXx wrote:
Now some questions I have are:
1)If the business name I choose to use is used in another country or the same country as the name for a website is it off limits for my use?

2)Since it is contracted work how would I go about paying taxes? Would I have to send the IRS money quarterly? Also since I am contracted would I be able to deduct expenses like gas and materials?

3)Last question, as a consumer would the economic problems we are facing, make you think twice about paying for my service? Or is the price reasonable?

[/quote]

  1. You get a DBA at the county clerk office. If there’s anyone else there with a DBA of the same name, it’s off limits (It’s not actually ‘off limits’, but it is confusing, and it’s better to not go there).

  2. You would have to send the IRS money quarterly. You will get to expense things like dog collars and leashes, but not gas (you get a … I think $.47/mi deduction, and it covers gas and wear and tear on your vehicle).

  3. I’m with the guys that say charge more. I’ve never used the service though, so I have no idea how well you’ll make out.

Would I need a business license? Since I would be operated for the most part out of my home. I would aslo most likely be recieving customers from different cities so even if a license was neeeded would I need multiple ones?

Not to rain on your parade, but I think you might be missing the forest for the trees. You are concentrated on a lot of business administrative type details that would be more suited to someone in business, not econ.

Just my two cents, but what someone said before about discretionary income and the dogs is the right type of question to be asking. Although, in this case dog walking might be thought of as a luxury good, and as with any luxury good, demand falls as the economy dips and people have less available income.

In this particular case, they have less available income - making them want to save money (walking the dogs), and the value of their spare time is worth less (they were previously losing an hour of paid work for every hour they walked the dog, now with the …dare I say recession?

they are either being paid less or they are not being worked at full time) which means their leisure time is more available than before, nudging them towards walking Fido on their own.

It’s econ, think econ mechanics, not business administration. Your last question in the original post has a few good thoughts. Think in terms of luxury goods and normal goods, costs of time foregone (opp. cost), utility gained from having the service done rather than doing it yourself, and things that you think it would make sense for you to do, given your own competitive advantages relative to other people.

You’re off to a good start, lots of enthusiasm, but for an econ class I would think you might be aiming slightly off the mark.