Video: How to Fund a Startup

Sent in by Amy Clark, a great video on how to fund a startup business.

Click here to see it.

Self Employment and Social Security

Social Security benefits are available to owners and workers in the small-business sector. Self-employed sole proprietors are required to pay Social Security and Medicare taxes in addition to federal tax on their income. Sole proprietors file Schedule SE, Self Employment Tax as part of their annual federal tax return, paying into the Social Security and Medicare systems. Both incorporated and sole proprietor-owned small businesses use IRS form 941 for paying payroll and Social Security taxes for their employees, but in this case the Social Security tax is based on payroll amounts rather than business income.

Sole Proprietors

Sole proprietors file a Schedule C, Profit or Loss from Business along with their form 1040 each year with the IRS. Business income and expenses are reconciled on Schedule C to calculate net profit for the year. The net profit is entered on Schedule SE. The sole proprietor figures out their self employment tax using this form. This tax consists of Social Security and Medicare taxes for those who run businesses as sole proprietors.

Schedule SE

Sole Proprietors earning more than $400 annually in net earnings from their business as figured on Schedule C must file the Schedule SE. Church employees who had income of $108.28 or more must also file Schedule SE. Self employed individuals receiving social security or medicare are required to file a Schedule SE regardless of age.

Self Employment Tax Deduction

Self employed sole proprietors can deduct a portion of their self employment tax on form 1040 in calculating their adjusted gross income. The deduction is equivalent to an employer contribution to social security that regular payroll employees are entitled to. The deduction affects only income tax, not self employment earnings or tax. The self employed are also eligible to take a deduction for health insurance costs. The instructions for form 1040 and schedule SE include information on claiming this deduction.

A Self Employed T-Shirt Geek

Self Employment Tax Rate

The Self Employment Tax Rate for 2011 and 2012 is 13.3 percent, with just over ten percent of it earmarked for social security. Income earned after $106,800 is not subject to the social security tax. The rate of self employment tax is subject to acts of congress and can change.

Form 941

Small business employers use IRS form 941, Employer’s Quarterly Federal Tax Return to remit payroll taxes to the IRS. They report and pay Social Security and Medicare taxes along with federal income tax withheld.

How To Start a Custom T-Shirt Printing Business

This is an updated version of this article I first ran a few years back. Now, as then, I think a custom T-Shirt printing business is a great small business. Who doesn't wear T-shirts? It's a multi-billion dollar business that can be tapped into with a commitment to hard work, quality and attention to detail. Here we go:

In these times of economic uncertainty, there are lots of unemployed people with little prospect for getting a job, and plenty of young people starting out in similar straights. The current economic mess is pretty rotten, but I believe it is possible to start a successful T Shirt printing business in times like these, because I did it myself!

When I graduated college in 1980, we were in the midst of a deepening recession. It was a cyclical downturn, not as bad as today, but wait! I was living in Eugene, Oregon. The lumber industry was really in the dumps, making the Eugene economy really dreadful. Unable to find work, I began freelancing T Shirt jobs while searching for a more secure position. When I sold my first shirt job, I simply got a down payment from the client to buy the blank shirts with, and I was off and running (lucky for me, it was an easy one color print!). Here we are 32 years and several economic downturns later. Sure I did great in the boom times, but my T Shirt printing business always put burritos on the table in the down cycles too.

 We printed this Robot design for Sarah's Science

If you have a garage, basement or spare room you can use, you're ready to go. We'll look at screen printing 101 in a minute. First, I will make a radical claim. After investing just a couple to a few hundred bucks in basic tools and equipment, you will be ready to print your first job. I believe a profit can be made from the get go in the Custom Screen Printing business. I direct your attention to my blog entry, The Zero Overhead Model for a description of my business model. Be sure to take a peek also at The Win – Win Deal, a sort of philosophical underpinning to how I conduct my business relationships.

A business is nothing but a web of relationships. I have a business because I have healthy relationships with my clients. They talk, I listen. Sure, you should do lots of marketing, study the various techniques and theories, but I guarantee if you circulate and talk up your business day in, day out, you will attract clients. Be sure to pass out business cards left and right!

I recommend studying the book Guerrilla Marketing by Jay Conrad Levinson. He's developed a philosophy of small business marketing based on creating and maintaining good client relationships.

Here is a sampling of marketing techniques that helped me build a clientele. First, figure out who you want to print shirts for. Call them, write them, drop in and pitch them. In the spring of 1981, I approached the EMU Cultural Forum at the University of Oregon in Eugene and told them I wanted to print their T-Shirts. They sponsored concerts on campus. We hit it off, and I went on to print shirts for them for a great sting of shows including the Ramones, Frank Zappa, Iggy Pop and Willie Nelson.

Another marketing technique that works is direct mail postcards. Design a postcard announcing that you print T-Shirts. Tell the reader to call or email you (include a call to action). Create a mailing list of companies, schools, bands, bars, restaurants, etc., that you would like to print for. Mail a new bunch of cards at least four times per year.

Start a Google Adwords account. Create a short ad and select keywords to target your prospects. Choose the city or town where you want your ads to appear. Google plunks your ad into search results and on webpages. You pay only when a prospect clicks on your ad and lands on your website. You control the budget by setting cost per click and daily maximum budget.

Consider using the mobile advertising functions of Google Adwords and Facebook advertising. Mobile is growing very fast as of 2012. Half of U.S. adults have smartphones and they expect marketers to create interesting advertising experiences in the mobile environment.

Now let's dig into the screen printing overview. Whether you are an out of work fancy pants graphic designer or a DIY punk rocker, one of the best small scale entrepreneurial businesses to start is a T-Shirt printing business. The initial investment can be modest, and a profit can be realized quickly with proper care to details. A screen print on a T-Shirt looks great – screen printing ink is bright and dynamic. I'll mention ink jet printing and digital imaging later, but the thrust of this piece is screen printing (a.k.a. Silkscreen).

Here is a list of materials you will need for your first project: Wood (or metal) frame stretched with screen mesh, piece of foam rubber to fit inside frame for exposure process, screen printing ink (Union water base in is good to start with, or Speedball brand can be found in some art supply stores), squeegee, light sensitive emulsion, Light source (a halide work light is good), glass 1/4" thick, weights to hold the glass down on the frame, and your design on transparency or film positive (the design should be positive, not negative on the transparency). Oh, and T Shirts to print on.

A well stocked art supply store can sell you all the basic screen print materials listed above. It is recommended to comparison shop, as the prices may vary dramatically. Also check with your local industrial screen print supplier (under “screen printing/supplies” in the yellow pages or online). If you are serious about setting up a shop, you want to buy from an industrial supplier like Midwest Sign and Screen.

Here are the steps to produce your first screen print project. Clean your stretched frame with mild soap, rinse and let dry for at least an hour. Coat the screen with light sensitive emulsion (check instructions for mixing sensitizer into emulsion). Coat both sides then scrape away excess emulsion. Let dry overnight. If you didn't buy a pre-stretched screen, you will need to put your screen fabric on the wooden frame, so taut that you can bounce a coin on it. You can use a staple gun, but take care not to rip the screen mesh with the staples.

Put your art/design on a transparency. Print the design on vellum or other heavy transparent paper on a laser printer. Inkjet printers often do not create an opaque enough image for burning a screen. Warning: Some laser printers are too hot, and will melt vellum!!! I successfully used a HP laserjet for years to create transparencies. It was necessary to use the HP brand cartridges; the generic/refilled ones did not make a dark enough film to successfully burn a screen. You can also send your graphic file to a film output service bureau for your film positive.

Burning the screen: SEE DIAGRAM three paragraphs back. You need to do this step in the dark. I used Ulano Fotocoat TZ, an emulsion you can use in low light. Check the instructions for your emulsion. Put your foam rubber on the floor or a table. Put your coated screen frame over it on the inside side of the frame (leaving the flat side of the frame pointing up). Put your transparency upside down on top of the screen. Put your piece of glass over the transparency, and weight it at the edges with books or some other heavy objects. If you have ink cans, they will do fine because they are heavy. Hang your light source about 18” above your screen and turn on for recommended exposure time. Develop with warm water. Spray the screen until the image area is free of emulsion. If your screen doesn't develop, use more water pressure. Blot both sides with newspaper when done developing, to remove excess emulsion. If your emulsion comes off too easily, ruining your image, increase your exposure time. For years I used a tanning bulb to burn screens, it had the power necessary to burn a fine screen, including halftone dots! Later I used two halide work lights, those suckers are pretty hot so use caution!

Let the screen dry. Put over T Shirt and add ink to one side of the screen, creating an “ink reservoir”. Holding the screen frame down firmly, pull 2 – 3 strokes and lift to check your print. Clean screen immediately when finished. You can do multiple prints. If your print smudges, try a finer screen mesh. If insufficient ink gets on the T Shirt, use thinner ink or a more open screen mesh. I used to print one color jobs in my dorm room with no press, just the screen frame and a squeegee, it kept me in beer money and date money when I was an undergraduate.

A word about inks, for years I used a homemade press and waterbase inks (Union brand is good). Most commercial T Shirts are printed with plastisol, a plastic base ink. You will need a dryer to cure plastisol. I recommend an entry level spot dryer, it maybe runs 5 – 600 bucks. Shop around. I was in the biz for a decade before I got one! If your business takes off, you will eventually want a spot dryer and a conveyor dryer.

Injets and digital technology. Yes, you can print backwards on “T shirt transfer paper” with an inkjet printer and iron the design on a shirt. It's a cool way to go for short run, full color. Also, there are now machines from that do digital imaging direct on shirts. They are great machines but start at 15K or so, we are talking serious capital. Sure, I want one, but it just ain't in the cards for me at present. By contrast, my 6 color, 6 station Workhorse manual printer was a marvel, and it cost only $3600.00 brand new. Paid for itself in a couple months, and it's still running today 13 years later in my buddy David's shop.

This next diagram is for a home made three color T-Shir press. It's made from 3/4" plywood, masonite, screws, nails, sawhorses, and screen frame clamps. It's funky, but you can print tight register three color jobs on this rig with practice. You may want to sell only 1 color jobs until your level of craft improves, and you can confidently handle multi-color work.

So let's build a press—start with a 4' X 4' piece of 3/4” thick plywood. Cut the shirtboard area away with a jigsaw. This is a lot of jigsawing, start with a fresh blade. The channels should be 2.5 – 3”. The indents at the back of the shirt board are for the material at the bottom of the T Shirt to to fall as to not interfere with the print. Round the corners at the front of the shirt board so as not to catch the shirts as you load them onto the press. Run a 3' long piece of 2” X 2” under the shirt board /press table for support. Bevel the front of the support board, cutting it at a 45 degree angle so it doesn't catch shirts as you load them on the press.

Top the shirt board area with a piece of 1/4” masonite or pressed board to create a smooth printing surface. Nail down with brads at the edges, out of the live print area. Buy 3 sets of screen clamps from a screen print supply house and mount them on 1/4” masonite too, so they are at the same level as the shirt board area. With this homemade press, you will be making your own screen frames to fit the peculiar size of the press. Painting stretcher bars work pretty good, or just buy 1” x 2” or 2” x 2” wood to make your frames.

There are many fine rotary manual presses for T Shirt printing available, both new and used. I recommend searching for used presses, dryers, shirts and equipment. Ask to test/demo any used press or dryer before buying! Inspect it carefully for functionality and wear. Workhorse is a good brand for new manual presses. Ranar has decent conveyor dryers at a good price. Remember too, all the suppliers want to sell you as much stuff as they can. It's fun to get all the latest gear and equipment, but experience tells me that a profitable shop buys only what it needs to produce the work it has.

A note about pricing jobs. I started out as a hungry student who needed to learn how to make a decent print, so naturally I came in at the low end of the price scale in the shirt biz. Once I got the quality thing down, I charged a higher than average fee. There is always a market for quality. Most buyers are looking to push your price down, especially after years of low cost Walmart stuff from China!

Don't work cheap, it will just piss you off. Talk to people in the field to see what the going rates are. A screen printing press should generate at the very least $60 per production hour for a small scale shop, $100 is do-able per press per production hour in an experienced small shop. If you can put together 10 - 20 production hours per week you will be fine. There are lots of other business tasks to eat up the rest of your time, believe me.

Good Luck! Remember that it will take some time to build a client base, so work hard, be patient, and maybe keep a part time job in your back pocket while you build your shop.

Steve Lafler

Manx Media Custom Screen Printing
503-213-3671
We want to quote on your custom screen printing job. Email Steve with your job specs for a price.
Copyright 2012

Start that T-Shirt Business This Afternoon

A guy named Russell just wrote for advice on starting a T-Shirt biz. Here's my reply. I hope it helps!

Hi Russell,

Sounds like you have some great ideas and could really make a go of a t-shirt biz.
If I was starting as you are, perhaps I'd get into screen printing, setting up a shirt shop, and creating a focused marketing program, pushing Tshirt printing to a targeted group of markets in your area -- restaurants, schools, service businesses, retailers, government and university/college markets. Try google adwords and monthly postcard mailings to a list of 1000 or more. Network and hand out your card, talking up your biz, etc.

The inkjet transfer is a winning idea. Get one of those Epson printiers that can handle an 11 x 17 sheet.

Embroidery is a lucrative market. At first, it would be better to send the embroidery jobs out to a shop in your area, or maybe one that sells on the web. You can take a good markup, I've done a lot of outsourcing embroidery.
Maybe get a machine later as you add staff.

Good luck -- if you want to succeed, and are willing to put everything you have on the line, from smarts, guts, determination, ingenuity and capital, you will.

STEVE

Self Employment For Bohemians: The Book

I've compiled a collection of the most pertinent and pithy entries on this blog and published it as a book. Part entrepreneurial primer and part swashbuckling memoir with lots of hilarious anecdotes, Self Employment For Bohemians is available for $12.00 plus shipping.
The book offers a lot of nut & bolts advice for freelancers, wound up with tales of my adventures in cartooning, publishing and running a wholesale custom T Shirt shop.
Just like the header on this blog says, if having a regular 9 to 5 job is your idea of a living death, this is the book for you!

Stupid Tourist Tricks

Wow, what a crazy March it's been! I've seen three sets of visitors from the U.S., and I"ve happily turned into a tourist in my own back yard.
We're talking visits to the ruins at Mitla, Yagul, & Monte Alban (the latter at night by special arrangement!), country Mezcal factories, and of course the Silent Procession on good Friday in Oaxaca, mentioned in my last post. Wait, there's more, including visits to the "figuras de madura" (wooden animals) village of Arrazola, and the Rodolfo Morales museum in the town of Ocotlan.

We've also haunted plenty of great restaurants in Oaxaca, soaking up the local color & great food. My kids have been on a two week school break at the same time, so we've kicked back and soaked up the good vibes and good cheer. My birthday came in the middle of all this, and my friends Mats!? and Peri presented me with a GIANT CAKE from one of Oaxaca's finest bakeries, making it a memorable fifty one for this geezer boho.

It reminds me of something good that entrepreneurs often forget completely -- Vacations are good for you! I'm not quite the hard driving workaholic I was in my 20s, but I still forget to take time out. Thanks to all my great friends for the visits, (hugs & kisses to Carrie, Mats!?, Peri, Mikey and Marcia) forcing me to step out of my routine and have a ball.

During all of this, I've managed to pump out several jobs including a big order for a new client, so all remains covered in the world of this self employed Bohemian.

Comic Book Entrepreneur at the Dawn of the Indie Age

As the Seventies stumbled to a close, I found myself at a Ramones concert just before Christmas with an ascendant case of the flu, which my girlfriend attempted to nurse with a few tiny tiny spoonfuls of cocaine. Never liked that awful stuff too much, the flu had it's way with me, yet somehow I survived the show and made it through the next week and a half to the Eighties with my newly minted Bachelor of Fine Arts degree (and perhaps enough money to last two weeks if I stuck to beans & rice).

This was something of a comedown from where I'd parked my psychological living space for my undergraduate years. Fact is, getting my art degree (with a focus on painting) was a bit of a dodge, a pleasant enough way to be “going to college” while I pursued my real education, which was comprised of writing & drawing a daily comic strip for the school newspaper. The Massachusetts Daily Collegian offered four or five much coveted slots to students to work out their chops on the comics page. By my second semester, I talked my way into grabbing a spot there, and held it for the next four years until graduating.

Luckily, my strip Aluminum Foil captured the zeitgeist of the moment, and the strip was widely appreciated at the University of Massachusetts, Amherst, a diploma factory of gargantuan proportions, that once earned the dubious distinction of being Playboy magazine's party school of the year. Aluminum Foil chronicled the adventures of Gerald (a stoner foilhead/everyman) and his sidekick Benb (a dapper, overweight, mute smiling scarecrow).

The highlight of the UMass social calendar was of course Halloween. At UMass in the late Seventies, Halloween was nothing less than a weekend long, full on psychedelic pagan bacchanal. Hordes of tripping, costumed students would converge on the concourse of the campus center building for a convivial mass celebration of All Hallows Eve. It was something to behold, especially for me, as many of the party goers would be dressed as Benb & Gerald (Gerald in particular being the easy costume—just fashion a helmet of Aluminum Foil, poke some eye holes in it, roll a fat doobie for a prop, and there you are!).

Which brings us back to January 1980. There I am, ego inflated beyond all reasonable proportion after four years of basking in the glow of the successful run of comics, with barely enough money for a six pack of beer. What to do? I tried a standard forty hour job for all of six weeks, working on the loading dock of a down market department store for minimum wage. This was depressing (in the dead of a freezing ass cold western Massachusetts winter, no less), and the final straw came when the boss instructed me to drown a cute little mole that had invaded the warm store during one particularly nasty freeze. Not willing to whack a mole for minimum wage, I released the little guy into the frozen tundra and resigned.

Having some experience with screen printing T Shirts, I started freelancing wholesale shirt jobs (always a popular product when it's twenty degrees outside!). This took care of keeping food in my belly and a roof overhead, but how to sweep the world of cartooning with my (obviously) unparalleled genius?!

In retrospect, it's clear to me now that I came pre-installed with the “publishing gene”. This is a genetic quirk whereby an artist or writer can (by some mysterious alchemy) justify shoveling pots and pots of money into the never ending project of publishing their precious works. To say I was burning up to get started in the field is an understatement. It was pretty much all I could think about.

I'd managed to save $150.00 from my heroic efforts on the loading dock. Armed with the idea of collecting the best of my college strips into a one hundred page volume, I dropped by a local printer to get an estimate on having books produced. Turns out they wanted nine hundred bucks to do a run of five hundred, a bit beyond my means. Just about then, an important adjunct to the publisher gene kicked in, and I became a financier as well.

Turns out one of my housemates, Betsy Hilborn, an amiable, fun loving & somewhat cynical nursing student, has been listening to me chatter about my plans and offered to pony up most of the funds for my initial publishing effort. So with $600.00 from Betsy, my paltry $150.00 is savings and another $150.00 coaxed out of my dubious parents, I threw my hat into the ring as a comics publisher.

I had penned some four hundred plus daily strips during the run of Aluminum Foil. I figured I'd publish them over two volumes, with the first one hundred page volume featuring two strips per page. I hauled my strips down to the print shop, and within a couple weeks I had five hundred copies of Benb & Gerald in hand!

Although I was a completely naive amateur, I left no stone unturned over the next several weeks in an effort to sell the books. As I'd promised Betsy that I would pay her back within a couple months, I sprung into action like a man sitting on a hot stove—I was determined to be as good as my word.

The first step was to stage a publishing party. It was my good fortune to be friends with Carl Mayfield, lead guitarist and vocalist for Martian Highway, a local party band with a strong following. Carl was an accomplished illustrator as well, and we jammed on an 11” x 17” poster for a Martian Highway gig that would double as a costume ball / publishing party.

Given the tenor of the times, Carl hit on the clever idea that we would print the poster in silver ink on black paper. Why? To make it look like a giant hit of blotter acid, of course! Sitting down with our drawing gear and a stack of late Seventies punk rock and Grateful Dead records (go figure), we created a gorgeous drawing featuring Benb & Gerald driving a late model Ford with an electric, glowing Martian in the back seat. Carl added the requisite typography, and we scribbled a manic cast of characters over every square inch of the art, including the first image of my future lead character, Dog Boy (although I did not name him in this drawing, the fully formed image was there).

One wag suggested that we were quite bold to produce a silver on black poster that was “virtually unreadable”; I had no problem reading the poster myself! We papered the UMass campus and local towns with the poster. It stood out like a beacon to those in the know, and the party was well attended by costumed, tripping revelers.

Green kid that I was, I felt disappointment with selling 33 books at the party, and another 40 or so from my prepublication advertising and marketing. In retrospect, I recognize that it was a pretty good first day as a small time publisher, making a nice dent in the money I owed Betsy. The following month saw me hawking books in front of the UMass campus center building dressed as Gerald, replete with Aluminum Foil mask (but only once—too embarrassing!), making a critical connection with the book buyer at the campus bookstore, and placing books in every local book & record shop that would take a few.

With the unrelenting verve & energy of youth, I managed to make the whole thing work and somehow sold enough copies to pay back the loan to Betsy ahead of time. Other key breaks came along, for example I received a positive review from cartoonist Jay Kinney in a column he was then writing about underground comix for Heavy Metal magazine—this one review alone sold a good thirty books via mail order.

By the time mid summer rolled around, I'd sold all but a handful of my run of five hundred books, turning a modest profit. Considering I'd had a near captive audience of 20,000 daily for four years in the Amherst – Northampton area, it wasn't unreasonable for me to assume I could pull it off. In any case, it was a remarkable initiation into the rough & tumble world of comics publishing for me, making a profit my first time out despite being almost completely ignorant of the biz. It whetted my taste for further adventures into the world of indie comics publishing at the dawn of the Eighties.