Home Built Boats, MIC Numbers, Manufacturer Statement Of Origin And Business

[zstine]

I’m preparing to build a boat for my own use and am trying to weigh the pros and cons from just doing a ‘home built’ titled by the state of NJ, or to becoming a ‘boat building business’. While I’m not planning to build to sell now, I would welcome a contract build offer if other’s want me to build them one after seeing mine. I have read newboatbuilders.com page and the uscg boat builders handbook.

For my home-built, I could have NJ inspect the boat, provide a HIN (NJ Police to do their “HIN Investigation Report” form OS/SS-10A) and get an NJ title. But my understanding is that I can send an email to MICAPP@uscg.mil requesting a MIC number registration and that alone allows me to create HIN to apply to my boat..? It sounds too easy. To title a new boat, NJ also requires a “Manufactures Statement of Origin”. I’m not clear if getting a MIC number is sufficient for me to be a “manufacture” in the eyes of NJ. Do I need to have a business registration and additional compliance to generate an MSO and be a boat manufacturer?

If I do need to register a business, that's likely a show stopper b/c I assume that opens me up to more regulation and inspections, like Permits and EPA compliance inspections for example. Obviously, a business has to file taxes and there’s start-up time and costs just to register and I’m building in a residential garage, so that wouldn't fly as for 'manufacturing'. ... So, I would forgo the whole business thing…. But then I guess I can’t sell any more copies, right?

[coopec43]

In Australia it wouldn't work as you most certainly could buy a new or used production yacht cheaper than you could build one for a client.

Production people are already setup with molds, jigs, patterns etc. Of course they would buy there materials and parts at "trade" price. In Australia you'd only get trade prices if you had a Registered Business Name (I assume it would be the same in the United States of America)

[Spot]

MJ Sailing posted some of their thoughts about this not too long ago on a video.
You may want to be a manufacturer with some insurance so you can cover any potential loss during the build without personal liability. The discount to the trades would also be nice too.

[zstine]

Originally Posted by coopec43

In Australia it wouldn't work as you most certainly could buy a new or used production yacht cheaper than you could build one for a client.
....

That assumes I'm building a boat that you can buy from a production yacht manufacturer, which I'm not.

[tkeithlu]

Are you ready for years of work? I built mine, and it took me twelve years, one of them full time and the rest 10 weeks plus weekends per year. It's a much bigger job than it appears. I also didn't want what I could find in production boats, and I'm happy with the outcome, if not with the process. Renovation of an existing hull would have been more practical.

I got my HIN from the CG while documenting the boat. Being a documented vessel means that no state can title it, although that does not stop them from charging registration each year.

Remember that if you use foreign materials (steel, in my case) the boat cannot be put into commercial service in the US, with some exceptions.

Save your receipts, even if you don't really want to know how much your cheap boat is costing you. Tennessee tried to charge me $34,500 in sales tax based on the surveyed value when I went to register the boat. Inexplicably the boat disappeared and was next seen in Florida, which charged $140.

Good luck with it.

[44'cruisingcat]

Originally Posted by coopec43

In Australia it wouldn't work as you most certainly could buy a new or used production yacht cheaper than you could build one for a client.

Production people are already setup with molds, jigs, patterns etc. Of course they would buy there materials and parts at "trade" price. In Australia you'd only get trade prices if you had a Registered Business Name (I assume it would be the same in the United States of America)

I got trade prices for most of the equipment I bought. Explain to the supplier that you're building a boat. Many will treat you as an Original Equipment Manufacturer.

Jotun paints, ATL composites, Blue Wave Rigging, Sam Allen Wholesale, to name the first few to come to mind, all gave me OEM discounts.

[zstine]

Originally Posted by tkeithlu

Are you ready for years of work? I built mine, and it took me twelve years, one of them full time and the rest 10 weeks plus weekends per year. It's a much bigger job than it appears. I also didn't want what I could find in production boats, and I'm happy with the outcome, if not with the process. Renovation of an existing hull would have been more practical.

I got my HIN from the CG while documenting the boat. Being a documented vessel means that no state can title it, although that does not stop them from charging registration each year.

Remember that if you use foreign materials (steel, in my case) the boat cannot be put into commercial service in the US, with some exceptions.

Save your receipts, even if you don't really want to know how much your cheap boat is costing you. Tennessee tried to charge me $34,500 in sales tax based on the surveyed value when I went to register the boat. Inexplicably the boat disappeared and was next seen in Florida, which charged $140.

Good luck with it.

12 yrs wow! Well, If I were building a floating home I could see spending a decade. But I plan to build a 25ft performance dinghy essentially. No accommodations below deck. just painted fiberglass.... so I sure hope it doesn't take 12 years!
keep Receipts, Noted.

Thanks!

[zstine]

Originally Posted by 44'cruisingcat

I got trade prices for most of the equipment I bought. Explain to the supplier that you're building a boat. Many will treat you as an Original Equipment Manufacturer.

Jotun paints, ATL composites, Blue Wave Rigging, Sam Allen Wholesale, to name the first few to come to mind, all gave me OEM discounts.

Thanks for dropping those names. I'll be sure to check with them about an OEM discount. I'm still on the fence if I should register even a sole-proprietorship and keep the boat build separate from personal finances or just go the 'home-build' route. Some distributors may provide OEM pricing to a registered business easier than an individual builder.

[tkeithlu]

I've forgotten the minimum size for Federal documentation, but I suspect that the boat you envision is too small to go that route. My monster is 44' long, 15' beam, 5' draft, and 65,000 lb.

[RaymondR]

I had my hull and deck built by a professional boat builder and hired a cabinet maker to assist with the fit out. All the electrical, mechanical and rigging I did myself. I took the view that this made me the manufacturer and just assigned it a hull number myself. Supporting documentation for the claim being the invoices and receipts for the materials and services I had purchased in the building and the vessel plans.

In the twenty eight years I had the boat I used the hull number I had assigned as the "hull identity number" on all sorts of official documentation and never had it challenged. Might have just been luck but the boat changed identification a number of times via state and national registration and no official ever challenged the HIN I had assigned.

[Cheechako]

Another thought:
Home built = low selling price, possibly lower taxed value though.
Manufactured boat = may be viewed better/higher value?

[fourlyons]

I've built two cruising boats for myself. If you just get a simple business license as a sole proprietor you can get the discounts, I use Fisheries Supply in Seattle and Fawcett in Annapolis. Challenger, for sail fabric and related. You can always build another for someone else. But pay the sales tax on materials and keep the receipts.

With each boat, in two different states I had to prove I had already paid sales tax (on the materials) to avoid paying again when registering. Washington wanted to charge tax on my labor too. We found some sales comparables on sold used boats that would have yielded a lower tax than what we had paid so they relented. Both states asked me for the HIN number, so I made one up.

In some states, you can avoid all of this if you don't put an engine on it and it's below a certain length. I mention this because you said it's a high performance dinghy.

My cold molded, 40' cat ketch took 4800 hours over four years.

[Benz]

It's a lot of paperwork, but getting accounts with commercial suppliers is worth it, IMO. All the ones I buy from require a resale cert., which means you have to register as a business (sole proprietor works for me). But I can buy tax-free, resin/glass/carbon/whatever at wholesale, rope, sailmaking supplies, boat hardware...an pay a use tax on what I use for myself (I collect sales tax from customers).
As for getting a HIN, here in RI you just need receipts for all materials, to prove use tax paid, and have some pictures of the process. Dunno if they issue a HIN, but they'll register it anyway, which is enough for local purposes.

[coopec43]

Originally Posted by 44'cruisingcat

I got trade prices for most of the equipment I bought. Explain to the supplier that you're building a boat. Many will treat you as an Original Equipment Manufacturer.

Jotun paints, ATL composites, Blue Wave Rigging, Sam Allen Wholesale, to name the first few to come to mind, all gave me OEM discounts.

In Australia we have a GST (Goods and services tax) which is 10% on everything. Everyone has to pay it but only manufacturers can recover it by passing it on when they sell the item. So a SS fabricator has to pay GST on the materials used but they can pass it on to the boatbuilder who can then pass it on to the person buying the yacht. Ultimately the consumer ends up paying it but they can't pass it on.

I get a trade discount on the resin I buy but that price wouldn't compare with the price a fiberglass boat builder would pay. (They would get a quantity discount under a sales agreement contract)