When I launched tshirtreviewblog.com at the beginning of the year, there have been a number of little things I’ve been meaning to do since then. I spoke a bit about “get it out there and tweak it” in this blog’s first post, and I’m finally putting that into practice.

The last week or so has kept me pretty busy solidifying tshirtreviewblog.com in a few different ways. I have quite a bit more to go between now and this weekend (my arbitrary deadline) but things are coming along alright. Many changes are behind the scenes, but it’s worth a look nevertheless.

One important thing I’ve noticed though is that I’m finding is my groove. It’s my procedure every day; the things I have to go through to generate the best content I can and make sure I’m in the loop on everything. I’ve got to see what’s new, I’ve got to see what others are writing about. I’m an obsessive stats checker, so that’s of course part of the routine. I need to find out where my traffic’s coming from, why some things are getting a larger response than others, etc.

A lot of this is old news I’m sure to those of you that are veterans, but it’s new to me. The biggest thing I can suggest to anyone in my position though is to read. Nothing helps me stay in the right frame of mind and make correct decisions more than absorbing as much outside information as possible. Read everything you can on your given topic, but read completely unrelated sites and blogs as well. Finding someone’s archives, and determining how they’ve developed their “voice” and their outlook over time has been particularly helpful.

I find that once housekeeping tasks are out of the way (checking servers, email, stats and traffic, checking for comments, etc.) that my time breaks down to something like 70% reading and 30% writing, roughly. This may of course change over time, but that seems to be where I’m at right now. Does anyone have any similar experiences?

Whenever you’re selling anything, either online or in a brick-and-mortar environment, it’s important to be aware of your state’s sales tax requirements. If you’re selling anything with the intention of making a profit to those inside your home state, a sales tax license (in those states that require them) is essential.

The State of Michigan has a tiered payment schedule for those of us that have state sales tax licenses. Depending on how much sales tax you expect to collect throughout the year, you’re required to pay annually, quarterly or monthly. Since I estimated a particular amount for the course of a year, I was dropped into the quarterly category. 2007 was a short tax year though, because I started the company in the middle of July and wasn’t liable for sales tax before August 23 or something like that. I also didn’t anticipate well over 99% of my sales going to customers out of state.

Basically, I forgot about my quarterly status, thinking I was on the annual tier for some reason. I realized today I had $4.80 of tax due in October for a single sale just before the Sept. 30 cutoff date. I’ve been accruing penalties and interest on it since, to the tune of a whopping $0.59. The next quarter’s payment is due at the end of this week, and since I incurred no tax liability during that quarter (I’m such a slacker) I got to fill out that return with zeroes.

This really could have been a lot worse. Had I been selling merchandise in-state with volume, I’d have a much larger liability to contend with. Also, had I missed this second quarter, Michigan would have estimated my tax based on the annual estimate I gave them when applying for my license, and then they would have charged me interest and penalties based on that (much larger) amount. Once that happens, I’m responsible for that amount, regardless of what I would have actually owed.

 I did mention initially that part of this blogs goal was to help you learn from my mistakes so you don’t make them, here’s a perfect example! Thankfully my foul-up was done on a pretty small scale. It may be helpful to add tax due dates to your calendar. That was something I initially planned to do, but in the rush and excitement of getting everything set up, overlooked.

Well this weekend certainly seemed to fly by, is it Monday already? Lunch with Microsoft on Thursday was pretty good. It wasn’t the best steak I’d ever had, but I certainly can’t complain, it was a wonderful experience. I had the chance to learn a lot about their unified communications tools and licensing, two things I’ve been out of the loop on for a while now.

I do know that Cisco has an amazing unified communication/PBX type system as well. While I have an extensive Microsoft background, I also trained with the Cisco Academy for two years. I learned everything I would need to attain CCNA certification, but never actually took the test. Don’t ask me any questions about spanning tree protocol, I don’t remember.

In any event, I spent the better part of the weekend catching up on some much-needed housecleaning and running some errands. I fell quite a bit behind being sick in bed the first week of the year. Things are finally back to normal on the home front, and that feels good.

I have read on various blogs where people have trouble trying to work on a side business while also holding down a full-time job. I have to admit I can certainly feel where they are coming from. It’s indeed a challenge, not just fighting for the time, but also for the motivation. There are a lot of nights where I come home and I’m looking forward to unwinding, maybe playing a little guitar or something. I look at a computer screen all day, some days it’s just not that appealing to do the same when I get home.

That being said of course, I do find at least a part of every day where I get charged about the next step for BKE. I’m a procrastinator though, and I do need to work on my execution. You can plan forever, and sometimes you just have to pull the trigger.

My friends at Microsoft have invited me to lunch at Ruth’s Chris Steak House in Troy later today. I’ve known of Ruth’s Chris for quite a while and have been waiting for the opportunity to go. I’m certainly looking forward to it. The focus will be on maximizing productivity and getting the most out your company’s relationship with Microsoft. Alright, the focus will be on a great steak, but that’s what we’ll be talking about anyways.

So you’re raking in some dough with your business now. Maybe you’re a powerseller on ebay, or maybe you’re selling some tshirts online or something. No matter how you make it, you’ve worked for your coin. You should make sure your coin is working for you. Where are you putting all that money? If you have any noteworthy amount sitting in a checking account, it’s time to pack up and stash your loot elsewhere.

A standard checking account earns no interest. There are a number of high-yield savings accounts available online for individuals, but not many for businesses without high minimums. Don’t make the mistake of trying to store your company’s money in your personal high-yield account, separate accounts are important. Many money market accounts at large institutions are looking for $10-50k before they’re even paying a decent rate.

ING Direct has an Orange for Business account which is modeled after their Orange Savings account. There are no minimums, and it’s currently paying 4.50% APY. At that rate, $5k will earn a little less than $20 of interest in a month before it begins to compound. I currently have everything that’s not immediately needed to prevent a cashflow crisis in one of these accounts. It’s not the greatest return, but it’s a great return with minimal risk. The account is linked to your pre-existing checking account, keeping the funds close at hand.

If you’re interested in opening an account, give me your email address and I’ll send you a referral. It’ll get you a cool $25 bonus for making a $250 initial deposit (I get $10).

I’ve been sick as a dog this past week. I started to feel sick while writing about work-life balance and a few hours later I was in bed with the flu and all the fun it brings along with it. The doctor confirmed my suspicions the following morning. I’m back to work today, but spent the better part of last week in bed, certainly uninterested in touching a computer.

Now that 2007 has come to a close, it’s time to start thinking about taxes. Your own taxes are enough; nobody wants to have to worry about going through the process twice. If you use a business to house all your side projects, that’s exactly what you get: two sets of books, and two tax returns. The advantages however, far outweigh the drawbacks.

Separate Books and Accounts
It’s very difficult to see how successful a project is when you pool that money into your personal accounts. It will make tax time a nightmare. Sorting through receipts trying to figure out what was a business expense and what wasn’t would NOT be fun. When your books and accounts are separate, none of this is an issue as your business is a separate legal entity. You can think of the business as a really dumb friend that needs you to keep an eye on his account balances and checkbook register for him. This is a requirement in many jurisdictions, and even where it’s not it’s just plain stupid to not do things this way.

Sorting Mail is Easier
In the interest of keeping overhead low I work from home, and so should you. BKE’s legal address is the same as my home address. For true separation I should use a PO box, but given the kind of mail I receive, I manage well like this. When I get the mail, the first thing I do is sort it into three piles. Everything addressed to Brad Kelly goes in one pile, everything addressed to Brad Kelly Enterprises goes into another, and advertisements go into the trash. Except for pizza coupons. I like pizza.

Income Splitting and Lower Corporate Tax Rates
LLCs, Partnerships and the like use pass-through taxation by default. Every profit and loss flows through to the owner’s personal return, even money that’s left in the company as capital for expenses. While this makes tax time easier, it can also bump you into a higher tax bracket, increasing your overall tax bill.

If you file IRS Form 8832, you can elect to be taxed as a corporation. This forces a separate return for the business and allows you to decide how much money to leave behind in the company and how much to give to yourself as personal income. Any money left in the company (they call this retained earnings) is taxed at the corporate rate, which is 15% on the first $50k, and 25% on the first $75k. This can save you money because anyone earning over roughly $30k personally will be taxed at 25%.

It’s Easy to See How Much You Made Personally
Instead of taking “owners draw” or anything like that, I run a payroll and issue myself a check or direct deposit. You operate like any other employee would, and it’s nearly impossible to pull the kind of shenanigans that interest the IRS. You also get a W2 at the end of the year, making it a breeze when you do your own taxes.

Avoid Self-Employment and Estimated Taxes
Self-employed people have to pay “double” the medicare and social security tax because usually your employer pays half. Many also have to make quarterly estimated tax payments. When you tax your company separately and issue yourself payroll checks, all the tax withdrawals are taken care of automatically by your payroll outsourcing company. It’s just like having a job somewhere, no surprises.

Save for Retirement
When you form a business to govern your projects and websites, you can create a a 401k program. Sharebuilder is one place that comes to mind where you can create a 1-person 401k program. Not only does this allow you to save for your retirement tax-deferred, but you dictate the program specifics and employer match levels, something any other 401k can’t offer.

Access to Dropship Suppliers and Wholesale Prices
Most dropshippers, like those found in the Drop Ship Source Directory and other wholesalers won’t even talk to you without a state tax ID number. When you create a company, you can sign up for a sales tax license. This opens a lot of doors to some valuable business relationships that would otherwise be unavailable to you.

Keep Your SSN Private
For anyone to send you a check online, they need to know your contact and tax information. There is always a field for your social security number. Every business should have a federal EIN, which acts as your company’s social security number. Since my company has accounts with CafePress and Google and the like, rather than me, they all have the company’s federal EIN instead of my personal SSN.

Once BKE was created, I just went around and changed all the account names and SSN information to reflect the company rather than myself.

I wasn’t completely idle over my Christmas break, and was able to launch tshirtreviewblog.com today. It feels good to have accomplished that before heading back to work tomorrow, that was really my only BKE-related goal over this break. I didn’t have that much left to do, with most of the work finished in mid-December.

Instead of verbally telling someone “I saw the coolest shirt the other day…” and not being able to tell them where I found it, I can now document all the unique designs I come across and hopefully help someone find their next favorite tee in the process. If you have a chance, take a look and let me know what you think.

As always, this is an experiment and could fall flat on its face, but if it does, you’ve got a front-row seat. I noticed there were several tshirt blogs out there, but many don’t seem to be monetizing their traffic like they could. Some others used affiliate links so heavily that you can’t trust anything the writer has to say. Down the road, tshirtreviewblog.com will make use of affiliate traffic, but I think maintaining editorial integrity is important. I’ll try a number of methods to generate income with tshirtreviewblog.com, and I’ll report what works and what doesn’t.

The most important thing, I think, is that this is something I’m genuinely interested in, and would do for reasons other than money. I think that’s an important test that a lot of people don’t put their projects through. It’s not going to be fun, and it’s going to seem like a chore if you’re writing about something just because it’s a popular or profitable topic.

In the past, BKE has made all its income from eBay, and this will be the first step in diversifying that a bit. Stay tuned.

Happy new year! Hopefully everybody had a restful Christmas season and safe new year’s celebrations. I’ve been off work since the Friday before xmas, and have been fortunate to have the opportunity to spend a lot of time with family and friends. I think this time of year brings the opportunity to examine your work-life balance and set goals to improve it over the next year.

With all the free time, it was awfully tempting to sit in front of the computer for hours on end working on various BKE projects, but what opportunities would I have lost with family doing that? I think I made the right decision to completely abstain from the computer for a little while.

I’ll admit, I couldn’t resist checking in from time to time, but I’ve got quite a bit of feed reading and whatnot to catch up on now. I’ve had the opportunity to rediscover some things that get neglected when you spend all day on the computer (including Seinfeld seasons 8 and 9) and other offline activities that I can share with family and friends.

How do you balance time working on your projects and business ventures with home and family life?

Last week I wrote about using CafePress for Passive Income. I wanted to share a few things I’ve learned that can help keep your sales on track. These are written as they apply directly to CafePress, but you could interpret them for really anything you’re selling online.

Inside Jokes Don’t Sell
While it could be fun to make up a shirt using a catchphrase from work, nobody else will get the joke, and you’ll be the only one wearing it. One-off shirts are easy to do for yourself or as gifts, and I’ve given custom shirts as gifts before. We’re looking for some income though, and unless it’s universally funny or has some other broad appeal, anything you make for personal use probably won’t cut it.

Aim Low
Look at your competition on CafePress. Some categories are chock full of poorly-made shirts that looks like they were slapped together in MS Paint. Other categories may have fewer shirts, but you can tell they were put together by someone thinking about what they were doing. It’s better to set yourself up as the only option for a good shirt on a particular topic, than as one of a few good options for another topic.

If you drop a few killer shirts into a sea of mediocrity, you’re really going to stand out. We’re not here to make The Best Shirt of All Time™, just a few good shirts that can make some money. If you’re going to actively manage your tshirt sales day to day, then you have the time to take on some of the competition that you’ll see with better designs and categories. If you’re looking for minimal upkeep, you can maximize your chances of making a sale by minimizing your competition.

Do Your Research
What’s popular on CafePress right now? What’s popular in the media? Search through your prospective categories and see what kind of shirts other people are making, and more importantly, buying. Search for your prospective keywords and see what comes up. Those are the shirts you’ll be sitting next to. Would yours pop out? Check out other apparel sites and see what’s “in” right now. Vintage designs? Smartass slogans? When I made my shirt, poker was an extremely popular niche. Tournaments were featured on television on at least a handful of channels, and CafePress was full of crappy poker shirts that were easy to try to outshine.

Do What You Know
While your research may tell you what’s popular, it’s not always the best idea to jump on the hottest idea right now. There’s a lot of competition at the top, for one. More importantly though, you should choose a niche that you’re familiar and comfortable with. Nobody will buy a poker shirt from someone who makes it obvious they’re not a poker player. You’ll also come up with dozens more ideas for designs when it’s something you’re at least mildly interested in. You are your own audience, and you know what a poker player (for example) would be looking for in a shirt. It’s better to be the best person for the #3 or #4 niche than to be an also-ran for a popular topic.

Of course, that being said, don’t do anything so ‘out there’ that you’re limiting your audience. Underwater basket weaving, while it may be fascinating, and may be something you know a lot about, won’t have the draw that some other categories might have.

Be Careful with Time-Sensitive Designs
Halloween shirts are only going to sell in October. Christmas apparel is only going to sell after Thansksgiving. Presidential candidate shirts aren’t good for anything after Election Day. If you’re going to offer something seasonal or time-sensitive, stay on top of it. Get ready to take your designs down after the big day has gone by, and have your next design ready to go up ahead of time. It looks crappy and unkept to still have your Christmas shirts up in February. Keep in mind that time-sensitive designs require the maintenance mentioned above. Choosing something timeless lets you keep it up year-round, minimizing upkeep and broadening appeal.

Don’t Infringe Copyright
After Napoleon Dynamite came out, CafePress had to spend a bunch of time taking down Vote for Pedro shirts and slapping all the infringing shopkeepers on the wrist. Keep away from designs you’ve seen before on shirts, hats, bumper stickers, anywhere. If you didn’t think of it, think twice before trying to profit from it: you can get yourself shut down pretty quickly. Popular quotes from movies and TV shows that have entered the realm of pop culture (Pulp Fiction comes to mind) are a sort of grey area. It’s probably not right, but a lot of people get away with it.

Play the Margin Game
On CafePress, they set a base price for every item you want to put your design on, and you decide how much to mark the item up. When the item sells, you keep the markup and they keep the base. A regular white t-shirt is $13.99 at base price. If you price the white t-shirt at $16.99, you stand to make $3 on every sale.

A value t-shirt, which is similar, but thinner and lighter, is $8.99 at base price. Try putting the same design on the value t-shirt, and price it at $14.99. You stand to make $6 on every sale of a value t-shirt. There’s nothing deceptive about this, as the site labels each shirt for what it is, and clicking on either shirt will tell the shopper details about the shirt’s construction. Place a value t-shirt next to a regular t-shirt with the value t-shirt priced cheaper, and the shopper will choose the cheaper (but higher margin) item most of the time.

I thought it would be nice to sort of detail what I’ve done with Brad Kelly Enterprises since starting the company this past July. This will give you a better idea of where I’m coming from…it’s always nice to have the backstory, right?

The initial goal of Brad Kelly Enterprises when I filed the necessary papers with the state of Michigan was to separate eBay consignment (which I was already doing on a small scale) from my personal finances. Once you’re selling with some level of frequency and volume, it’s difficult to do your taxes and tell them it’s still just a hobby. I’m also fairly close to moving from one tax bracket to another as well. A few thousand dollars of extra income this year would be enough to push me into a fairly sizeable tax increase.

I’ve since moved away from small-scale consignment for individuals and turned my attention toward companies looking to clear out old merchandise. I still do some consignment for individuals, but really just friends and family. The advantages of dealing B2B merit their own post, and are outside the scope of this article; but it would suffice to say that it was a good move. This has allowed me to become a silver-level Powerseller in just a few months, and has comprised the bulk of BKE’s income to date.

While it is “active income,” that is, it requires a considerable amount of ongoing work, it can still be a fairly reliable way to generate some funds without much costs, either up front or ongoing. Currently, I’m just stockpiling that money in a high-yield account. Should I need it for any startup or project going forward, it’s there. By keeping it in the business, there’s no temptation to personally spend it (and have it count as income for me). That’s about where I’m at right now. If you’ve got any questions, please feel free to ask, as I’m sure I’ve glossed over a few details. Where do we go from here? I’ll cover that a little later.