10 Steps to Starting a Woodworking Business

Learn the steps to take woodworking from a hobby to a thriving business.

Woman sanding wood
Updated May 13, 2024
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Woodworking can be a rewarding hobby that allows you to use your creativity and work with your hands. But, if you are hoping to make a living at it, you may need to learn how to start a woodworking business.

This step-by-step guide will explain what’s necessary to open your own woodworking business, including deciding on a specialty, creating a business plan, and a marketing strategy for your new business.

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In this article

Key takeaways

  • Starting a woodworking business allows you to turn a hobby into a career.
  • There may be high start-up costs, but woodworking tools could become business expenses and thus tax deductible.
  • You will need to decide what area of woodworking to specialize in.
  • You should create a business plan and market your business to become a successful woodworking business owner.

Pros and cons of starting a woodworking business

  • You may be able to turn a woodworking hobby into a successful career
  • Your woodworking tools may become tax deductible if you meet IRS requirements
  • You can become your own boss
  • Start-up costs could be substantial
  • Earning a high income could be a challenge
  • Your income may fluctuate from month to month

Most people who are interested in starting a woodworking business are motivated by their passion for this creative art. As a result, one of the biggest benefits is that you can make a career out of a hobby that you love. You can also be your own boss, set your own hours, and work from the comfort of your woodworking shop at home or your chosen location. These are major advantages.

However, there are also some downsides to the woodworking industry. One of the biggest disadvantages is that you may need many tools to be a successful woodworker, including chisels, saws, sanders, files, hammers, drills, mallets, screw guns, and other power tools. If you do not have many of these tools, you may need to incur high start-up costs to acquire them.

The annual income for a woodworker is also below the national median, according to the Bureau of Labor Statistics. And demand for woodworkers is expected to increase slower than the average. So, it may be difficult to earn a substantial income in this field, and you may experience fluctuations in income as demand for products rises and falls throughout the year.

How to start a woodworking business

Becoming a professional woodworker requires you to take many steps to get your company off the ground. You'll need to know how to start a business the right way, including checking these tasks off your to-do list.

Develop your woodworking skills

Woodworkers do not necessarily need a college education, but they do need to have strong skills in their field. So, if you want to start a woodworking business, you will need to make sure you develop your carpentry and other woodworking skills so you can produce professional-quality products that people will pay money for.

There are a number of ways to develop your woodworking skill set, including:

  • Taking courses: There are both paid and free classes available in person and online. For example, HomeDepot offers some introductory instruction for woodworkers, or you can find courses through professional organizations like the Home Builders Institute or the Woodworkers Guild of America.
  • Finding a mentor: Local woodworking clubs and guilds can be a great place to connect with professional woodworkers. Since woodworking is hands-on, it's often best to find someone in person who can help you to develop your talent.
  • Practice: Ultimately, the best way to become more skilled at woodworking is to do as many projects as you can. There are many resources online where you can find projects of varying complexities to help you develop your skills, including free websites like Pinterest.

Decide on a specialty

There are many different specializations within the field of woodworking, and you will likely want to focus on a particular type of woodworking to get your business off the ground. Some possible options include:

  • Boat building
  • Wood carving
  • Creating musical instruments
  • Woodturning
  • Cabinet making
  • Wood crafting
  • Custom furniture making

Consider where your talents and interests are, as well as the start-up costs. For example, if you want to become a professional cabinetmaker, you may need more tools and a larger space than if you hope to become a professional crafter.

Create a business plan

A business plan is a key part of starting any type of company, including a woodworking business. Your business plan will allow you to create a roadmap for how to make money once your company has gotten off the ground.

There are different kinds of business plans, including a lean business plan for start-ups that takes a high-level focus, as well as a traditional business plan that drills down into the details. With a traditional format, your business plan would include:

  • A description of your woodworking business
  • An analysis of the market
  • An outline of how your business will be organized
  • Details about your product line and the services you provide
  • A marketing plan with details on how to reach your target market
  • Information about how you will sell your product
  • Financial projections related to start-up costs, operating expenses, and potential income sources

Choose a business name

You will need to select a name for your woodworking business. The name should be unique so that new customers can easily identify your small business and its products.

Depending on where you live, you may need to register your woodworking business name with the state, county, or city where your business will operate. If you wish to sell products online, you may also want to register a domain name to establish an Internet presence.

If you want to protect your business brand on a national level, you could even consider trademarking your company name. This would prohibit others from selling products with your name or distinctive marks on them, as they could be sued for trademark infringement if they do.

Decide on a business structure

There are different ways you could organize your woodworking business, and you'll need to choose the right one. Options include the following:

  • Sole proprietorship: This business structure is the simplest, as you and your woodworking business are one and the same in the eyes of the law. You claim profits and losses on your own tax returns and don't get any protection from liability, but you also don't have to file any special paperwork to get started.
  • Partnership: If you plan to start a woodworking business with others, a partnership allows you to do that. You can create a general partnership, where all partners share profits and liabilities, or a limited partnership where some partners aren't actively involved in day-to-day operations and don't share liability. Like a sole proprietorship, you would just declare profits and losses on your personal tax returns, when you form a partnership. This type of business is a pass-through entity, because of the fact that those profits and losses pass through to partners.
  • Limited Liability Company. An LLC is simpler to form than a corporation, although there are more restrictions on ownership. LLCs are also pass-through businesses, and they provide liability protection for owners (who are called members).
  • S corporations. S corporations are pass-through businesses, but the corporation has to file its own tax return. There are more restrictions on ownership than in a C corporation, and there's more paperwork required to form an S corp than a partnership or LLC. S corp owners are protected from liability.
  • C corporation. C corps don't have the ownership restrictions other business entities do, but there is much more paperwork. C corps are not pass-through entities. The business pays taxes on profits and declares losses. When profits are distributed to owners through dividend payments, owners are taxed too, so there's a potential for double taxation. C corps offer strong liability protections, which is a major benefit.

Register your business for taxes

You can register your small woodworking business with the IRS and apply for an Employee Identification Number (EIN). This will be important if you plan to hire employees for your woodworking business.

The IRS website allows you to apply online for an EIN and your EIN will become available immediately upon successful completion of the application process.

If you plan to sell your wood products, you may also need to register with your state to pay sales taxes or apply taxes to your goods. This process can also typically be completed online as well.

Get licenses, permits, and insurance

You will also need business insurance for your woodworking business, including general liability insurance in case anyone should be hurt while visiting your woodshop or using your products. If you plan to hire workers to help you, you will also need workers' compensation and unemployment insurance.

Your state may also require you to obtain a business license and/or permit to operate a woodworking business. For example, many states require you to have a carpenter license if you will be doing certain types of woodworking projects in people's homes. Your Department of Labor and Industry or the Department of State where you live can provide details on what types of licensing, permitting, and registration are required.

Fund and budget for your woodworking business

You will likely need at least some money to get your woodworking business off the ground. This could come from many different sources including:

  • Personal savings
  • A business loan
  • Investors who often become entitled to a share of the profits

You will want to create a separate business bank account for your company, especially if you plan to operate your business as a partnership, LLC, or corporation. You should also determine what business expenses are tax deductible, including woodworking tools. An accountant can help with this process if you aren't sure what the rules are. 

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Market your business

Finally, you will need to market your business. Depending on the type of woodworking you are doing and your target audience, you can sell products using online stores for crafters such as Etsy, or can take advantage of social media to develop a following.

You can also advertise in industry-specific publications, design a showroom where people can see your products, reach out to local home builders or retailers, rent space at trade shows or craft shows, start a YouTube channel to show your work and your products, or reward people for referring others to you.


How profitable is a woodworking business?

The Bureau of Labor Statistics reports the median annual salary for woodworkers at $36,710. However, your business may be more or less profitable depending on the type of woodworking you are doing and your skills as a craftsman.

What tools do I need to start a woodworking business?

The tools you will need to start a woodworking business depend on the type of woodworking you plan to do. You may require various types of saws, files, sanders, planes, hammers, mallets, drills, and other specialized tools.

Is it possible to make a living woodworking?

It may be possible to make a living woodworking if you are a talented craftsman and you have a plan to market your product and reach potential customers. You should create a detailed business plan, estimate start-up costs, and research the market for your products to determine if you can start a profitable woodworking business.

Bottom line

Knowing how to start a woodworking business is just the first step. Think carefully about whether becoming an entrepreneur in this field is right for you or whether woodworking should remain a fun hobby. Developing a detailed business plan can help you determine if a woodworking business is likely to be profitable and a good source of financial support for you and your loved ones.

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Christy Rakoczy

Christy Rakoczy has a Juris Doctorate from UCLA Law School with a focus in Business Law, and a Certificate in Business Marketing with an English Degree from The University of Rochester. As a full-time personal finance writer, she writes about all things money-related but her special areas of focus are credit cards, personal loans, student loans, mortgages, smart debt payoff strategies, and retirement and Social Security. Her work has been featured by USA Today, MSN Money, CNN Money and more, and you can learn more at her LinkedIn profile.