Invoicing Customers and collecting Payment?

[rwest]

Hello,

I had a part-time small business opportunity pretty much just given to me; I’ll be repairing small hand tools and charging an hourly rate plus parts.

People would email me with pictures and descriptions and then if I can repair it, I would give them an estimate and they would ship it to me.

My question is what would be the best way to bill them and collect payment? Any services or website add ons that people have had good results with?

Thanks,
Rutager

[legion]

I would say that you need to collect payment to ship it back.

[Alan A]

Originally Posted by rwest

Hello,

I had a part-time small business opportunity pretty much just given to me; I’ll be repairing small hand tools and charging an hourly rate plus parts.

People would email me with pictures and descriptions and then if I can repair it, I would give them an estimate and they would ship it to me.

My question is what would be the best way to bill them and collect payment? Any services or website add ons that people have had good results with?

Thanks,
Rutager

Put check in box.
Cash check when returned.

[wdfifteen]

Have them ship it with a 50% down payment. Include a paper invoice when you ship it back. You will probably have to accept paypal at a minimum, but if you're good, you can demand a check.

[rwest]

These would be people I don’t have a relationship with and might only do business with once, so I’m thinking it might be best to get paid before shipping the tool back? Not talking much money though; probably less than $100 in most cases.

I see PayPal has a business invoicing service that allows people to pay with cards or PayPal for about 3%. Anyone use them?

They’re woodworking tools and usually owned by a more “senior” population, so they still have checkbooks and are probably pretty trustworthy.

[Baz]

Good evening Rutager,

Based on what you have posted, I'm thinking set up Paypal for payment and also accept payment in check or money order by mail. You could of course also accept cash as long as the sender understands there's no guarantee if the cash never shows up.

Requiring a deposit can be determined on a case by case basis. For example, if you had to send off for parts - I would ask for a deposit. If it's only labor, no deposit needed. Something like that. And you don't have to share with anyone your criteria for determining if a deposit is needed. Just state that "a deposit might be necessary - and that info with be provided along with the quote."

I'd also use the USPS Priority Mail for shipping - especially if it has any weight to it - their flat rate boxes might be the easiest system to use.

BTW, my oldest brother in Virginia is a machinist and just retired. He used to do small tool repairs on the side and kept pretty busy with it.

Congrats on the new endeavour and best of luck to you, sir!

[red-beard]

Since it is a business, I suggest Intuit Quickbooks. There is an online version which is easy to setup and run. you can generate estimates and mail them directly. And when ready, you can invoice them and collect the money through Quickbooks. It even operates on iPhones and Android phones.

[Seahawk]

The company I own, among many other things, does repair work for composite parts on aircraft...we have an FAA certification to do so.

You must establish a consistent paperwork trail, from receipt of request for proposal, response to request for proposal (including price and terms and conditions) receipt of item, condition of item on receipt, status of repair, bill of materials, etc.

Sounds onerous but it really isn’t and will prevent many, many headaches. You are essentially entering into a contract with your customer. Also, the taxman will want the details as well.

We request full funding prior to shipment based on purchase order from the customer.

Everybody is you buddy until they aren’t.

[Zeke]

Make it easy to take the work in. Don't quote your final price until you see the item. At that time request a 50% deposit. Best to work with CC's so you can automatically bill the final amount at the time you ship. That's the legal way to do it.

[rwest]

Thanks for the good information everyone.

James,

I think you might be the “winner” on this one, Quickbooks has been recommended to be by many small business people, but I didn’t realize they had a money collecting feature- thanks for the tip.

Baz,

This tool fixing deal is pretty sweet; I been buying tools from them for around twenty years, helped them at trade shows and have become good friends with them, so they just sold the business to another company who won’t be servicing the old tools, so the past president approached me as he has a ton of loyalty to all the customers that kept him in business for 35 years and will be getting me set up with all the old stock of parts.

The new company is thrilled that previous customers who they want to keep as their new customers and keep them happy, will give out my contact information to those that need service.

So, I have parts and don’t need to market myself!

P.S. off topic on my own thread- will be sitting a paralyzed dog this weekend, so look for a post on the dog thread.

Paul,

Great advice, yup just don’t want to get involved in chasing down owed money and it will be nice to have proper records done automatically.

Best,
Rutager

[Seahawk]

A few more things.

Form an LLC, which is very easy and will give you a layer of protection against your non business related assets.

There are dozens of places to get everything you need for all your business related templates, etc.

I use Rocket Lawyer for specific legal documents since you can order specific form and pay a one time fee.

I like Business-in-a-Box for routine stuff that is essential to running an audit proof LLC...and will give your files, records and correspondence a consistent, professional feel.

One time fee, unlimited lifetime access.

Also, have you though about a website? Very easy to do.

This is one from a guy that is re-redoing my Browning Hi-Power. The website his how I found him. He works full time and this is his side business.

Fletcher Custom Pistols

Best of luck!

[rwest]

Thanks Paul!

I do have all the paperwork needed for an LLC, just got to fill it out this weekend and mail it in.

Lots of good ideas for verbiage on that custom pistol website- luckily, I won’t need to deal with the extra layers of laws that firearms need.

My biggest issue will be finding space for all the spare parts that are going to show up- living room may become a stock room for a bit!

Best,
Rutager

[Norm K]

Originally Posted by rwest

I do have all the paperwork needed for an LLC, just got to fill it out this weekend and mail it in.

Check your Secretary of State's website, as many states make it pretty darned easy to set up an LLC. Here, for example, it takes just a few minutes and costs right around fifty dollars and you're incorporated.

_

[Shaun @ Tru6]

Single member LLCs are treated as sole proprietorships by the IRS, which is to say you file personal tax returns. They don't offer much legal protection as the legal community may as well. Single member LLCs are not a replacement for a corporation with S election status.

Will this matter for Rutager? Probably not. My only concern is someone getting hurt using a tool he has repaired. As we all know, it will not matter if the repair was responsible for the injury.

[rwest]

Originally Posted by Norm K

Check your Secretary of State's website, as many states make it pretty darned easy to set up an LLC. Here, for example, it takes just a few minutes and costs right around fifty dollars and you're incorporated.

_

MN makes it real easy as well; they get a few more bucks as ours is $135.

[rwest]

Originally Posted by Shaun @ Tru6

Single member LLCs are treated as sole proprietorships by the IRS, which is to say you file personal tax returns. They don't offer much legal protection as the legal community may as well. Single member LLCs are not a replacement for a corporation with S election status.

Will this matter for Rutager? Probably not. My only concern is someone getting hurt using a tool he has repaired. As we all know, it will not matter if the repair was responsible for the injury.

I was hoping you would chime in Shaun, as you now have, what, like a trillion different businesses going on? Still wanting to see that 928 on the road.

I really feel like my risk is pretty minimized as none of the tools have a power cord, I’ll be dealing with things like squares, bevel gauges and maybe handplanes, so yes injury could occur, but minimal chance. I’m getting a quote from my insurance company to get proper insurance as well.

Talked with a small business consultant and he stressed that in order to protect yourself as best as possible, you need to make sure you actually run it as a company and completely separate from your private life. Apparently the first thing an attorney does if they are trying to take all your worldly possessions is try and show that your LLC is just on paper and you are actually just behaving like a sole proprietor and therefore your personal property should be up for grabs as well.

Thanks,
Rutager

[stealthn]

Originally Posted by red-beard

Since it is a business, I suggest Intuit Quickbooks. There is an online version which is easy to setup and run. you can generate estimates and mail them directly. And when ready, you can invoice them and collect the money through Quickbooks. It even operates on iPhones and Android phones.

Second this

[Seahawk]

Originally Posted by rwest

Talked with a small business consultant and he stressed that in order to protect yourself as best as possible, you need to make sure you actually run it as a company and completely separate from your private life. Apparently the first thing an attorney does if they are trying to take all your worldly possessions is try and show that your LLC is just on paper and you are actually just behaving like a sole proprietor and therefore your personal property should be up for grabs as well.

All of that is true. We have an LLC for our farm that includes horse boarding and use of our riding ring by the boarders.

We have complete and separate books and accounting methods for the LLC and our personal finances.

We hold meetings, take minutes, have business plans, etc. All LLC correspondence is on company letterhead, company email accounts, etc.

I also do all LLC business on one older computer dedicated to nothing but LLC business. I actually find it easier to do business that way: There is no commingling the personal and LLC business. For instance, for Business-in-a-Box, which I use for the LLC, my S Corp and personal issues, I have three seat licenses and the LLC computer never accesses the S Corp or personal files. East day.

We also use Quickbooks.

Enjoy - I may have some business for you!

[Shaun @ Tru6]

Originally Posted by rwest

I was hoping you would chime in Shaun, as you now have, what, like a trillion different businesses going on? Still wanting to see that 928 on the road.

I really feel like my risk is pretty minimized as none of the tools have a power cord, I’ll be dealing with things like squares, bevel gauges and maybe handplanes, so yes injury could occur, but minimal chance. I’m getting a quote from my insurance company to get proper insurance as well.

Talked with a small business consultant and he stressed that in order to protect yourself as best as possible, you need to make sure you actually run it as a company and completely separate from your private life. Apparently the first thing an attorney does if they are trying to take all your worldly possessions is try and show that your LLC is just on paper and you are actually just behaving like a sole proprietor and therefore your personal property should be up for grabs as well.

Thanks,
Rutager

I've certainly made my share of mistakes Rutager, glad to have learned a little along the way of successes and failures alike. You've asked all the right questions of the right people, I hope this works out well for you! My only advice is to think long and hard about what can go wrong and shape your company around that. And revisit those as you go.

On invoicing, I would like to use QuickBooks to invoice customers but it would actually take too long to set up vs. Excel invoices that I save as PDFs and email customers. They are quick, flexible (critical for me) and professional. Nothing gets shipped until paid except for Ferrari stuff (they want to see it first, in their hands) and 95% of payments are via Paypal, other 5% they send a check. In 3 years I've never had a problem. It's simple, it works.

Make sure you charge for handling and shipping supplies when you ship.

Above all, have fun with it. Seems like a great opportunity and I'm not surprised it was given to you.

928 is way back burner. Right now I have flares in clay that I'm shaping (so fun!) and working on a 4.0 MFI motor, both for a car I'll launch in 2019.

[wdfifteen]

Originally Posted by rwest

Thanks Paul!

I do have all the paperwork needed for an LLC, just got to fill it out this weekend and mail it in.

You may want to look into forming a C Corp, if not now keep it in mind if your business takes off. C corps have a tax advantage over LLCs and other pass through entities. It’s not a big deal unless you start making a lot of money. It’s also handy to have a W2 income from your C Corp “employer” if you ever want to borrow money.