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Setting up GWG to accept sales at shows -

Does this have merit? 

Initial Issues

DJH

12 Feb 01

            At the January, 2001 meeting of the GWG, a suggestion was made that we explore the advantages and disadvantages of setting up GWG to enable it to make sales at craft/trade shows on behalf of its members.  From time to time, GWG sets up a booth at a craft or trade show (such as at the recent Pasadena SummerFest Show).  At such Shows, people come in to look, and a few express interest in a piece on display.  With GWG’s present organization we have to tell them that if they’d like the piece, to contact the artist off line to make arrangements.  The reality is that these situations seldom lead to a sale- such purchases tend to be impulsive.  So having such capability would help improve opportunities to sell members’ work by having the infrastructure ready to support such shows.  In order to benefit from the effort to set up the necessary infrastructure, GWG may need to increase Club participation in area shows.  In addition, there may need to be more individual member participation in those Shows.  Presumably, GWG would benefit by taking a commission on those sales. 

This paper is to summarize the initially apparent issues that will need to be navigated if GWG is going to do this.  In considering this, we should keep in mind that GWG operates exclusively on voluntary effort, and so be realistic about whether assuming the added administrative complexity to achieve the intended goal is a favorable tradeoff.

 

How does GWG run its finances now?

            GWG’s finances are (and have been for the life of the Club) run almost completely through the personal banking and good will of our Treasurer.  The reasoning in the past has been to keep the Club’s finances simple and so avoid administrative complexities of getting business/resale licenses, tax withholding, having a Club bank account, etc.  It also avoided issues of income and taxation and risk of showing up on the radar screen of State or Federal tax authorities.

 

How have other woodturning clubs addressed this?

Officials of the following woodturning clubs have been contacted for their views on this issue:

·         Bay Area Woodturners

·         Inland Woodturners

·         San Diego Woodturners

All have considered the idea of setting up infrastructure to do sales at shows, and all have decided against doing it.  In all cases, they “borrow” the capability from individual members who are properly set up and willing to assume the task.  The Clubs all reimburse such members for costs.  The San Diego Woodturners, decided to set themselves up as a non-profit, tax-exempt corporation but it was done for reasons unrelated to this subject (they decided they wanted to buy liability insurance above that provided by AAW).  Also, the Bay Area Woodturners, in contrast, are now setting up their website (www.bayareawoodturners.org) to allow them to do sales of members’ work on-line.  They say they expect to have the website up and running in the next couple of months.

 

Initially apparent issues to resolve are summarized in the following table.

Issues:

Advantages

Issues to Resolve

Administrative / Procedural Matter for GWG to Assume & Resolve

General

Allows GWG to do sales at shows

 

 

 

Allows GWG to make money by taking a commission

 

 

 

Helps provide members with an avenue for developing a market for their work.

 

Need to get & maintain a business and resale licenses, and register GWG as a fictitious name

Yes

 

Who's name will these be held in? - if a Club Officer, then it may change with new elections.  There may be a small fee for annual updates.

Yes

 

GWG will need to understand and choose a business filing type -  a non-profit, tax exempt corporation, or?

 

Some business types may involve cost to GWG to properly set up & maintain.

Yes

 

Set up procedures for ensuring sales tax is properly withheld and reported annually.

Yes

 

Prepare and file annual Fed & State tax forms along with sales tax moneys withheld.

Yes

 

Need to decide if GWG will take a commission on sales & how much

Yes

 

If a member is willing to assume these responsibilities, should GWG compensate him (e.g., with part of the commission)?

Yes

 

Need prompt disbursement procedure(s) to forward the correct money to individual artists afterwards

Yes

 

Having members’ pieces at shows requires inventory control and management.  What if a piece is lost or damaged?  Policy matter for GWG to decide.

Yes

Taking cash

Club Treasurer needs to coordinate with the cash holder to transfer cash.

Yes

Cash holder must be one person responsible to the Club (Treasurer) to ensure a clean line of responsibility.

Yes

 

Cash holder must keep exact records of receipts/expenses.

Yes

 

For security, GWG may want to insist on always having at least one other member present

Yes

 

Should GWG have a locking cash box available for loan?  Who will keep it?  How will it be transferred to/from the cash holder?

Yes

 

What to do if returned cash comes up short?

Yes

Taking checks

 

Need a GWG bank account to receive checks

Yes

 

 

Transfer authorized signer(s) with elections

Yes

 

 

One-time task to get endorsement stamp made, & then always know where it is.

Yes

 

 

Risk of a bad check- does GWG own that, or individuals?    Policy matter for GWG to decide.

Yes

 

 

Administrative task of getting secondary check ID at the point of sale

Yes

Taking credit cards

GWG must have a card machine and sales slips- who keeps these?  How do they get to the shows?

Yes

 

Submittal task to send credit slips to the company for payment.  Who will own that task?

Yes

 

Fees to the card company- MasterCard, Visa, Discover typically charge 3% of gross sale (AmEx is more).

Yes

 

There may be an initial set up fee.

Yes

 

Record keeping tasks

Yes