It is interesting to see new business models emerge. I am a fan of smart business models that change the way things are done – when done for the better. Recently there has been a focus on mens clothing in the start-up world. In particular being able to order men’s clothing online with the help of a stylist. Because I am a fan of new business models, I decided to give it a try and see if there was substance to the model. While there are several new concepts out there, I opted to try the one that I have seen the most press surrounding – Trunk Club.
Trunk Club is based in Chicago, Il (directly downtown in a 30,000 square foot facility). While anyone is allowed to come to the facility and work with a stylist directly, the majority of the interaction is online. You can go to their website and put in some pertinent size and contact information. A personal stylist then reaches out by e-mail and phone to start a relationship. When talking to the stylist on the phone, you are asked what styles of clothing you like, what you wear to work, what you wear on the weekends, what you aspire to wear and your credit card information. From that, the stylist goes to the warehouse and pulls a selection of clothing he/she recommends based on the brief interaction. The items are boxed in a nice cardboard trunk and shipped. Shipping (via Fedex) is paid by Trunk Club.
Upon arrival, recipients open the trunk to see a selection of shirts, pants, sweaters, etc. A note from the stylist encourages trying on everything; mixing and matching to get accustomed. Along with the paperwork is an invoice with the price of each item (at full – off the shelf – non-discounted – retail price). Whatever you do not like or want can be put back in the trunk and shipped back to Trunk Club. They pay the shipping back, too. Whatever you keep is charged to your credit card at the full retail price. Within a short period of time another trunk will be sent by your stylist to keep building your wardrobe. …and so on until you decide to opt out.
Generally, that is a great concept and one that has already garnered a nice little business for the company. So, why would I title this post “Junk in Your Trunk Club”…tune in to part II.
Being an entrepreneur that has started a few businesses, I am often asked “What are the things that need to be done when starting a business?” Obviously that is a pretty broad question – many answers on which I will not elaborate now. However, in this time of focus on taxes, it is important to make sure that things are correctly set up for the benefit of not giving the IRS reason to come knocking. Here is a brief, high level list that I know of. Be sure to consult a tax professional when starting a company –
- Decide what type of business entity you want to establish. The type your business takes will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation (and LLC).
- The type of business helps determine what taxes are to be paid and how they are paid. The five general types of business taxes are income tax, self-employment tax, employment tax, sales and excise tax.
- An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.govfor more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.
- Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes. Usually, Quikbooks is a pretty good choice.
- Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.
- Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.
- Visit the Business section of IRS.gov for resources to assist entrepreneurs with starting and operating a new business.