Business Records

You are probably the world’s best gunsmith but likely to be the worst record keeper in that same world. Should you ever be audited (heaven forbid) you are going to be hard put to prove your position. Most of the gunsmith types that will be reading this will fall into the category of small business. The Annual Survey of Entrepreneurs (ASE) by the U. S. Census Bureau puts the median U. S. small business having receipts of about $390,000 a year. I’m guessing most of you gross less than that.

You all should keep records for two reasons. One, obviously, is to pull the teeth of any IRS auditor. The other, and actually the most important to you, is that good records tell you whether or not it is steak or hamburger at the end of each month. History sustains the fact that most artists, technical people, inventors, and gunsmiths think first of their work and last of record keeping. A month of $10,000 worth of business tells them (you) that they are making money. Sure about that?

If so, I hope you are, but you don’t know just how much and you certainly don’t want to scratch around with the tax man or your spouse trying to figure out just how much money you made. With all that you have on your mind you cannot accurately recall all your income and expenditures if you don’t keep proper records. The average gunsmith does not need an accountant other than setting up an amortization schedule for capital investments, lathes, mills, bluing tanks, etc.

Once this is done your tax preparer or tax software can use it without costing you additional money. It should be of primary interest to know what our take home or net income is. To know exactly what this is each week or month is a relatively simple matter for the smaller shop, especially a one man shop. Let’s stay with this one man shop for awhile. What I found to be the easiest way to keep books and know where I was going was to do the following.

First, add up the monthly costs, listing them out as rent, utilities, phone, etc. Multiply by 12 for an annual estimate or just keep it monthly. This can include range fees and shooting when you are promoting your business. Take your year’s cost for memberships, insurance, licenses, etc. or any other item that you pay for a year. Add all this up and divide by 12 and add that to your monthly overhead for a true monthly cost. With that handled, keep track on your repair cards of labor, parts, and sales tax.

This is of course the income you receive. If you have gun or retail sales, add these to the pile. Keep all your tickets by the month. Be sure to keep every cash receipt for items that you buy during the month. I create a tab in a spreadsheet (Excel, Open Office Calc, Google Sheets, or similar all work fine) for each month, entering all purchases, adding in my monthly fixed costs including any sales tax, and sum it to find my total purchases plus expenses or general cost of doing business.

I then enter all my labor, parts, gun sales and tax collected. Simple subtraction of your costs from income shows your gross profit picture. For a simple example, let’s use $5,000 monthly income which includes all of the above and comes to $1,500. You have obviously grossed $3,500. I say grossed because there is always something else that comes up and it is a cost to you. If the $3,500 were a true net income, 12 months of that earns $42,000 a year. You at least know where you are and if you can better it, go ahead.

If you left a job at $35,000 per year you’d be losing money! Why? Well, for one thing you have lost any employer-provided benefits and retirement program. You probably are not paying yourself any withholding and file as self-employed which costs you. Plus, your retirement savings such as a Roth and SEP-IRA (you are putting money into a tax-advantaged interest-bearing retirement account, right?) is straight out of pocket with no matching provided.

There are no guarantees in this business except to guarantee you that you are your own boss. Rich you won’t get. I am for being my own boss for richer or poorer and besides, I don’t fit into the "corporate structure" nor am Ia first class "team player" so I like it my way regardless. After you have made out your P&L (Profit and Loss) for the month, file all this information, receipts, tickets, etc. into a folder or large envelope, mark the date on it and file it.

Your records are good, accurate, and above all, easy to find should the need arise. Hiring Help Let’s talk a minute about your growing business that makes you think you need to hire a helper. Now the fun begins. Hiring a person to help is fraught with many pitfalls. Please note, I’m using masculine pronouns

here only for convenience. Obviously, women can be great gunsmiths as well. First is the possibility of having to carry workman’s compensation insurance by law. Your state may not require it but an injured helper can sue you and if you have no protective insurance, you are in the soup. The second, and the most important thing is, can an employee make you money? If you pay him a salary you have to file and collect withholding, more bookkeeping and costs to you. If hourly, you have to keep track of his hours.

So, you think, easy way out, I’ll hire him as an independent contractor… who do you think you are kidding? I’ll tell you, no one! What to do? Here’s what. You have your attorney (more cost to you) draw up an agreement between you that either qualifies him as an apprentice or a contract labor supplier that acknowledges that he will pay his own social security, holds you harmless as to accidents, and is to receive remuneration for his services on the following basis.

In the agreement it should state that should he void the agreement (leave) within a given number of months for any reason, that any and all claims against you are null and void and that he is prohibited from discussing any business policies or methods of yours forever. Failure to comply which necessitates litigation by you against him requires that he pay all legal and court costs. Now you will think this is severe. Not so! This is C. Y.

A. and you better realize that old Billy Bob is in your shop for only the following reasons, pick any you like: 1. Likes guns. 2. Likes you? 3. Likes to work? 4. Wants to stay with you forever. 5. Wants to learn the business so he can build his own. 6. Is honest (won’t make it as a gunsmith). 7. Is trustworthy, so you can leave the shop for 2-3 weeks on a hunting trip (ha!) 8. Likes your dog. 9. Doesn’t chew tobacco. 10. Really, only wants to help you. If you picked one out of the ten above, you are probably wrong.

Anyone you get into your shop and train over a period of time will go into business for himself sooner or later. That is the American way— just count on it. Remember, gunsmiths aren’t born, you make them! So get a contract drawn. Pay your assistant gunsmith half of all billed labor. Give him jobs that he can do but only pay him for what he does. Sure, if he is really going to help you, then you have to teach him. While this may payoff for you later on it will slow down your output and cost you in the beginning.

Now, let’s look at what this man can do for you (I keep saying "man" but applies equally to all women gunsmiths as well). If you are grossing $5,000 a month and he adds $2,000 to it and you reach $7,000, you are ahead. So the rule is that he has to be able to produce more than you alone could do. If not, the deal is no good and you will have to do something about it. One of the more difficult problems with an arrangement of this type is when do you start giving him work?

You know you can turn out the $5,000 worth but let’s assume that you start the first of the month. You give him work to do and you do yours. The month ends and you total up your work as well as his. You find that your work brought in $4,000 and he did $2,000. You actually increased your business by $1,000 as you normally would do $5,000. So you gained but it could go the other way. Business could falloff which would affect the amount you give him. This of course could lead to dissension and problems.

It’s tricky hiring or getting another person in the shop. I am only trying to point out some of the problems before they happen so that you are better prepared to handle them. So, let’s review things. We realize we should keep enough records so that we know if we are making a profit. We have to consider the fact that by going into our own business we lose all the health, paid vacations, and retirement programs that the old job gave us. Thus the question arises, can we make enough money to equal these advantages?

Can we afford replacements for these benefits by buying insurance and IRAs to equal or better what we had? Can we afford to equally insure our new help? Can I stay well and not get sick for a prolonged period because once we stop or become incapacitated the income stops. Whatever you decide, please play the "what if" game and, like the Boy Scouts, be prepared! Your Most Valuable Tools You have two of them. You can’t buy them and they are not guaranteed. You use them for every job you do.

Without either one you would be out of business. They are the most expensive in the world and are one of a kind. No one has a set like them. You can’t replace them. They wear out and when they are gone, you’ll have to close up shop. They break but sometimes they can be repaired. They have feelings, they get sore and tired but with a little care and rest they are ready to go again. They get damaged from use. They have a memory and a lot of know how, though, at times, they need a little coaxing.

Coffee helps lubricate them; no oil is necessary. Money makes them work even better. Wipe them down with $100.00 bills. You ask, naturally, what are they? Your hands and brains—a gunsmith’s hands and brains. Either or both tell you what to do and how to do it. They are partners, one would not work without the other. These are your most valuable tools and assets. Use them well and often. They will reward you and, like a good dog, they don’t talk back. Your success (if any) depends on them.

Keep them in check, keep good records, and you’ll tip the odds in your favor. AG