Running a computer refurbishing/repair business

[LupusOssorum]

Recently, I had a very poor experience with a computer refurbisher that I bought a computer from. I was talking to my brother and we thought “if that bozo can do computer refurbishing, why can’t we?”

So my question is how does that type of business happen?
If we sell used computers, where does our supply come from?
How does it get setup legally and what legal stuff do we need? (Insurance?)
Do we need a lawyer or accountant, if so, how?
What other stuff do we need to know, that we don’t know we need to know?

If you could answer any of these we’d be thankful. Frankly, right now we’re at the point we don’t really know what we need to know. Me and my brother do know how to repair/build computers and stuff, in both hardware and software, but never thought about doing it professionally, until now. BTW we are both collage aged, and this is going to be more of a hobby, so we don’t have to live off of it.

Thanks,
Jonathan

 

[Ralston18]

My thoughts:

1)So my question is how does that type of business happen?

Basically a business happens because someone sees ( or thinks they see) a need for the product and services they wish to or can offer. Generally, and hopefully, for a profit.

2) If we sell used computers, where does our supply come from?

You will have to buy them = expenses. Maybe via auctions, advertising, companies going out of business. You might be able to get donations but most people take a dim view of a donation being sold for profit.

Plus you will need to buy individually parts, software (OS, apps), and accessories. Your time and effort is also an expense. Remember that.

3) How does it get setup legally and what legal stuff do we need? (Insurance?)

Depends a great deal on where you live. In the US there are multiple choices: sole proprietorship, partnership, Sub-chapter S, or Incorporation. Sole proprietorship is generally the simplest. You start the business and file the appropriate tax forms - bit oversimplified but that is the jist of it. Insurance - yes. In many cases small business owners are personally liable with respect to any offered products or services. And that could be the case even if incorporated. People sue for almost anything these days. If they fall asleep gaming on the computer you sold them you may get hit with a lawsuit.....

4) Do we need a lawyer or accountant, if so, how?

In reverse order: accountant probably not. Very unlikely that you will have complicated financial transactions beyond income and expenses. There are any number of software applications that will manage the numbers for you. Even a basic spreadsheet will work. Your business checking account might even handle some of it. After income - expenses = profit there will be taxes on the profit. Most people get into trouble trying to game that. I.e., paying themselves a big salary as an expense and then no profit or taxes. Or so they think.... that big salary is considered income and taxes will be due. Another common mistake is mixing personal and business expenses.

As for a lawyer that is probably not immediately necessary. Hopefully any small business permits and approvals needed will just be a matter of completing the necessary forms and paying the fees. Those things due tend to come out of the woodwork. Some neighbor gets upset about trucks on the street and you find yourself in zoning trouble for running a home business.....

5) What other stuff do we need to know, that we don’t know we need to know?

Answering that would quickly become TLDR. My recommendation is to go to a library or book store and look for some books about starting your own small business. In many areas local colleges, Chambers of Commerce, etc. offer or sponsor small business workshops. Go online and google "how to start a small business". The US Small Business Administration offers counseling programs (SCORE/ACE).

The good thing is that if it is going to be more of a hobby business then things will be simpler (but not simple).

Specific recommendations:

Start with some of these free publications:

https://www.irs.gov/businesses/small-businesses-self-employed/recommended-reading-for-small-businesses

Download the .pdfs or go online to request hard copies.

Pub 334 and Pub 538 would be a good start if you are in the US. If not - check with your government organizations. (By the way, even if not in the US the publications will be conceptually helpful.)

Last comment. Starting a business is an investment. Do not invest more than you can afford to lose. Watch out for those who make their living preying on small businesses. They offer promise much, take much ($), and deliver little.