question for zachary Vex or Paul Perry of Frostwave

[zachary vex]

i have always worked with a tax preparer.  in the last 6 years or so, i've had a business accountant who processed my year-end paperwork and at this point, receives weekly updates from me.  we run our own accounting software which is double-checked once a week for a few hours by an expert who catches anything that is not in the proper column or has a decimal misplaced.  paperwork becomes absolutely consuming after this many years.  we have a river of paper flowing in and out of zvex effects now, and a river of emails... my inbox holds over 4000 emails since Jan 1 this year which i have answered individually.  if i spend 3 minutes on each one, on average (i've never calculated, really), that's 12000 minutes, or over 4 hours per day.  that doesn't include spam.  you suddenly wake up one day and realize you're working 18 hour days, 6 days a week, and you can't remember when you weren't.  it sneaks up on you.  i don't know what the cure is.  drastically raising prices seems like the only real answer sometimes.  i've reached the point where i really couldn't give a f*ck what my detractors think about that.  8^)  it's always the do-nothings that squeal the loudest.  they can eat my dust.

if you have the balls, go into manufacturing, and good luck.  i used to suggest that everyone here should give it a go in the boutique pedal business, but if you asked me today... you might just get a glazed-eyed stare, a "huh?" and a goofy grin.  8^)

[ESPguitar]

i have always worked with a tax preparer.  in the last 6 years or so, i've had a business accountant who processed my year-end paperwork and at this point, receives weekly updates from me.  we run our own accounting software which is double-checked once a week for a few hours by an expert who catches anything that is not in the proper column or has a decimal misplaced.  paperwork becomes absolutely consuming after this many years.  we have a river of paper flowing in and out of zvex effects now, and a river of emails... my inbox holds over 4000 emails since Jan 1 this year which i have answered individually.  if i spend 3 minutes on each one, on average (i've never calculated, really), that's 12000 minutes, or over 4 hours per day.  that doesn't include spam.  you suddenly wake up one day and realize you're working 18 hour days, 6 days a week, and you can't remember when you weren't.  it sneaks up on you.  i don't know what the cure is.  drastically raising prices seems like the only real answer sometimes.  i've reached the point where i really couldn't give a f*ck what my detractors think about that.  8^)  it's always the do-nothings that squeal the loudest.  they can eat my dust.

if you have the balls, go into manufacturing, and good luck.  i used to suggest that everyone here should give it a go in the boutique pedal business, but if you asked me today... you might just get a glazed-eyed stare, a "huh?" and a goofy grin.  8^)

Succsess is not something you get over night or you work in one year and live happy rest of your life..

We who "walks" into this buisiness have to work pretty hard...

RB

[Clipped]

Paul Perry (Frostwave)"
personally, I havn't made enough money from boxes to pay tax yet.. but, here's hoping!! I made enough to pay my accountant

I'm livin' that dream Paul.....

Luckily I have a "real" job to feed the family, which allows me the opportunity to see how things go without jumping in the water without a lifejacket.

I really feel for you guys when people run their mouth about prices. It's what I call the "Walmart Mentality". Why should I pay $199 for this when I can by a crackerjack pedal at Fiddlemart for $39?

One day in the life would probably change a few people's minds about pricing. People don't realize that the small guy is at a HUGE disadvantage when it comes to buying things. Me for example - There are a number of things from the wholesalers I qualify for that I can <almost> get as cheap through Musician's Friend or American Musical Supply. Hard to sell anything when people off the street can buy it for the same price. MF & AMS get such huge quantity discounts that I have trouble coming close to their prices and make ANY money.

Can you make a pedal from a schemo cheaper than buying one from your favorite pedaler? Sure. But you don't care about cutting corners and putting it in an Altoids box. Your .99 stomp switch blows out after three stomps? Big deal. It took you 8 hours to build it? So what, your time was free.

Now go into business for yourself. Your stuff needs to be reliable over the long haul. Remember that 8 hours? If that's your sole income, you're sure as hell gonna start caring about your "hourly wage".

It's the epic struggle of   versus  :twisted: ....The vendor versus the consumer and vise versa. No matter what side you are, take a minute to see it from the other perspective.

Good Luck to all -
Ron

Small edit: Let me clarify the "small business costs more" statement a little though - Personally, I would not pay $269+ for a booster either...

[saultime]

I like that Zack also offers a cheaper Fuzz Factory without the paintjob. That's a great gateway. Honestly, that's the only pedal I've ever loved right out of the box.

The way I found out about it was from Nels Cline's website...that lead me to Zack's website, blah blah.

I think a lot have players have realized the difference between mass produced crap and real high quality gear. Especially modern mass produced crap. I mean jesus, why couldn't Ibanez spend 40 cents and put the right op-amp in their tubescreamer reissues?

[Paul Perry (Frostwave)]

I mean jesus, why couldn't Ibanez spend 40 cents and put the right op-amp in their tubescreamer reissues?

Because 40c times 18,000 sales per year (guess) = $7,200.
This is the tyranny of mass production.. for a keyboard that sells 100,000
(plenty of Casios used to do this) it is worth paying an EE for three weeks to get ONE resistor out of the circuit.
The suprise is, that anything has anything inside it at all. Oh wait...

[saultime]

I mean jesus, why couldn't Ibanez spend 40 cents and put the right op-amp in their tubescreamer reissues?

Because 40c times 18,000 sales per year (guess) = $7,200.
This is the tyranny of mass production.. for a keyboard that sells 100,000
(plenty of Casios used to do this) it is worth paying an EE for three weeks to get ONE resistor out of the circuit.
The suprise is, that anything has anything inside it at all. Oh wait...

Yeah, but I always wonder why they just don't charge a few cents more. People are willing to pay a lot more than 40 cents for the mod. Goes to show, I guess, the difference in decisions between musicians who make gear for other musicians, and bean counters who have product fabricated for a market.

[Paul Perry (Frostwave)]

You have got it exactly, Saultime. Since 95% of people can't tell the difference, and the other 5% want a better product anyway, there isn't any point.
Another key aspect of merchandising, is to decide how much to spend on 'hype'. This can vary from 0 to damn near 100% of product cost.
Often, a product costing 30$ to make plus 30$ hype will outsell a product
costing 60$ with no hype. Sad, but that is how the world is.

Still, the world of fx is very honest & straightfoward compared to pharmaceuticals! and I doubt many people have been killed by faked pedal reports.

[Alpha579]

hype-its just so damn hard to resist...

[mojotron]

So, in the US... What paper work do you have to fill out to offset revenue with expenses for taxes, IRS....?   :cry:

As well as directing lawsuits toward your business and not you?  :roll:

[O]

... As well as directing lawsuits toward your business and not you?  :roll:

I think you either have to become an LLC, or incorporate.

[ESPguitar]

Is it the TA45448 OP or something that's in the TS 9 now?

:roll:

Can't remember the exact number of the OP..

RB

[Peter Snowberg]

For a single person the magic term is: Sole Proprietorship

http://www.irs.gov/businesses/small/article/0,,id%3D98202,00.html

Welcome to Schedule SE.

You need at least two people to incorporate. Three is MUCH better in the eyes of those who assess these things for Uncle Sam.

LLCs are recognized at corporations in some states, and as partnerships in others. They do not provide the protections of C and S type corporations, they're more for the tax advantage.

Corporate tax is brutal, but self-employment can be much worse.

Nevada residents and to a little lesser extent Delaware residents get special options.

I am not a lawyer, and I don't even play one on TV.

[zachary vex]

a sole proprietor can change to S corp... see your local accountant for details.

[jrc4558]

That's cool. I'll have to incorporate this season. Way safer too!

[mojotron]

For a single person the magic term is: Sole Proprietorship

http://www.irs.gov/businesses/small/article/0,,id%3D98202,00.html

Welcome to Schedule SE.
....

Sole Proprietorship sounds like the way to go for me.... So is there any licensing process/paper work?

I have heard about "Doing Business As" documents.... Or a business license...

[drummondrs]

For the guy who started the thread GOOD LUCK, sorry I can't remember your name I have a very short attention span. However, I have some advice that I think you should take into consideration. Is it a very smart idea starting with a booster? You are trying to make your product stand out and be unique (frostwave and Zvex have done both) but boosters seem to be quite common. And you will need to build a hell of a boost because there are so many clones. Rangemaster's etc. Thats just my thoughts.

[ESPguitar]

For the guy who started the thread GOOD LUCK, sorry I can't remember your name I have a very short attention span. However, I have some advice that I think you should take into consideration. Is it a very smart idea starting with a booster? You are trying to make your product stand out and be unique (frostwave and Zvex have done both) but boosters seem to be quite common. And you will need to build a hell of a boost because there are so many clones. Rangemaster's etc. Thats just my thoughts.

Alchemist started this thread..

[drummondrs]

Good Luck Alchemist I wish I had the skills to set up a business of effects.

[R.G.]

LLCs are recognized at corporations in some states, and as partnerships in others. They do not provide the protections of C and S type corporations, they're more for the tax advantage.

The laws on LLCs were revised to make them have the protections of S corporations. In fact, they have largely supplanted S corporations. That's why you see "LC" or "LLC" so often these days, even on monster corporations.

The LLC is something that Europe had for a long time before it came to the USA. It is intended specifically for limiting liability (hmmm.... "L..L..") in sole proprietor and partnership setups. It effectively ends the personal liability of the partnership. It suffers the same issues as S corps in terms of lawsuits attempting to pierce the corporate veil, but heck, they all do that.

Some states require two or more people on an LLC. Some only one. At least **one** state does not require you to list the officer's names on the articles of organization. It makes a lot of sense to organize your LLC where the government intrusion is less onerous. Like NOT the People Republic of Kalifornia. It also helps to have a primary corporate address somewhere quiet and peaceful - like Grand Cayman.

Search for and read "How To Be Invisible" if you have any itch for privacy at all.

[joegagan]

One of the great advantages of the LLC is that it limits liability in lawsuits to going after assets of that particular LLC(if I understand it correctly). People with multiple companies, numerous  income properties etc commonly file a separate LLC for each entity to put a liability bubble around each one.