How to set up biz to rent out equipment?
 

Say, does anyone know how to set up a business to rent out equipment? I'm thinking about renting out my entire video setup to students for them to film their short-subjects - thinking of charging $150/first day and $50 each additional day - since it includes both video AND audio equipment AND lighting... I'm thinking that's a fair price.

But here's the question: How do I go about getting a deposit? Do I just write down the credit card numbers? Do I need to have insurance or a licence -- anyone ever done anything like this before?

There are insurance issues you'll need to address. Before you rent anything out make sure you have it all insured. Also make sure the insurance you buy includes renting it out. You will also need a contract and liability for renting gear that the clients must sign.

Sales / Use Tax ID
 

And since you are in the US, you will need to apply for a Texas Sales/Use tax ID. All money taken in from rental of equipment is subject to a use tax (usually). Use tax is pretty much just like sales tax except they get to take it from you again, and again, and again.....

So what you're saying is that I can lose money on this just by doing nothing?

Eh... I think I'll just -lend- the video equipment to my friends when I don't need it.

Not at all
 

Remember, the taxes are paid by your customers not you. You itemize them out on the rental receipt.

In Idaho you have to file every quarter (probably also the case in Tx) and all you have to do is fill out $0.00 if you didn't sell any physical items or rent any equipment.

It isn't that big a deal. 5 days before the end of the quarter you get the nifty mailer reminding you to send in your payment, but I always did it online with my biz debit card (and only when I had any physical DVD sales that I collected sales tax for).

It is pretty simple and nothing big to sweat about. The insurance issues would be a MUCH bigger concern to me than the taxes.

Brian, I think the real point is that the rental business - or any business - may be more complex that it initially appears. DVinfo is a great place to learn from others and get started in the right direction. But if you're serious about starting a business then you should consider getting a couple pro's in your corner to advise you on tax and legal matters.

Unless you have someone in your family who will do this for free, it will probably cost you a few dollars. But you'll get someone who will stand by you if there's a problem. As usual, you get what you pay for...

Brian, just two cents I'll throw in without knowing anything about your background experience... are you sure you want to lend or rent equipment? I've been through a two year film school program, and worked as a volunteer for 2 public access TV stations, and have seen what students can do to equipment. I actually run into this dilema all the time, as I now have such a complete package that I get requests from people to borrow stuff, which I usually turn down. The biggest problem is that damage to equipment can be hard to attribute to one person. You can't check every single function of every thing that you lend or rent out, and the one time you miss something is the next time you realize its broken. Not trying to rain on your good intentions though.

That's not a fair price - it's an absurdly LOW price for all that gear. Check the rate cards at rental houses in your area and I think you'll find you're thinking of chanrging only a small fraction of what others do.

Ouch. That's what I would call a "trash my gear" price. For that kind of very small money, you're going to attract a certain element of renters guaranteed to misuse and abuse your equipment. The amount you're talking about is not what I would call a serious rate. Check with other Austin renters such as ProTape and Mopac Media and price your gear to match.

Craig Chartier of GEAR Austin is a contributing member here at DV Info Net and he's made a career of managing film and video equipment rental operations. From what little I know of his business, it takes some serious back-end investing to make a go of it.

Not to waste time reitterating what others have already said, but to give some context, at those rates you couldn't rent a prosumer 3ccd camera. If you decide to follow through with this business (and I wish you the best of luck either way) you are better off raising your prices.

I second what a lot of others have said. But it all depends on what the equipment is and whether you're thinking of this as a serious business or as a casual thing where you only rent to those you know pretty well. (And even people you know well can "surprise" you and not in such a pleasant way!)

In rough terms, you need to think about your costs, such as

1) What you paid for the equipment
2) Increased maintenance and repairs on the equipment
3) Insurance (business insurance, liability if the equipment catches fire and burns down someone's building and you get sued for renting faulty equipment etc etc etc)
4) Your time
5) Depreciation

Generally speaking, instead of deducting the cost of your equipment when you buy it, you have to spread the cost over several years of "useful life" - and when you sell your old equipment you have to pay tax on anything you get in excess of the remaining undepreciated value as this is considered a profit. Very complex and definitely need an accountant to help out on this one. A lot of lease and rental businesses are actually sort of in the business of "manufacturing" used equipment by buying new equipment and re-selling it on the used market a year or so later and there are zillions of tax and accounting wrinkles here. You can indeed buy something for $10, sell it for $5 a year later and have a taxable profit as a result.

Not to mention taxes (state, local, sales/use)

Your rental rates need to consider all of the above and more - much more. The price of the equipment may be the least of your expenses.

Talk to an accountant - they don't charge so much for a consultation. They won't tell you how to run your business (and I wouldn't pay much attention if they did) but they can tell you a lot about your options for structuring the financial side of things and the pros and cons of various options.

Also rummage through a business school library if you can get access to one and read up on rental business. There are professors who spend their lives writing books on the ins and outs of such things. I'm sure there are dozens if not hundreds of Harvard Business School case studies available on various aspects of the rental business and these studies tend to be quite readable as they put things in the context of real companies faced with real decisions.

Might it be possible to set up a system where I offer my equip to a local rental house to rent out, and they go 50/50 on it? Basically, I'd be renting only to them, and they'd re-rent on a markup to their customers? Something like that?

Brian,

Anything is possible, but I suspect they'd rather own the stuff they rent as if they don't own it the tax treatment of their income would be different - theyd have no depreciation to offset the rental income as well as all kinds of insurance hassles.

But it wouldn't hurt to ask. In fact if you're interested in the rental business it wouldn't hurt for you to work there for a while.

I guess what I'm wondering is whether you really want to be in the business or if you just have some equipment that you don't use all that often and would like to generate some revenue from it while it's idle.

If its the later, then forget most of what I said before - except that insurance and potential damage to your stuff might be a big issue.

Let me try to figure this stuff out. I'm just in a -bad- place... with $2000 of credit card debt, I am officially tapped out.

I have rented out sound equipment in the past, my advice is to not have to count on the equipment you rent out. I did profit from rentals, I did have equipment damaged/lost/stolen. your rental costs must account for damages, and its a good idea to have insurance. If your reason to attempt a rental business is due to a shortage of funds on your part, and trying to fill the gap, I would suggest to not rent it out. you could very likely end up with no money as well as no equipment. the rental business is a business like any other, and subject to a lot of pitfalls. If you recently upgraded to new equipment, and the old stuff is working good, and just laying around, by all means try renting it out. just be prepared to hand over the equipment, and never see or hear from them again. it does happen. This is strictly my opinion based on my experiences.