??Business tax, & Assessor

[nay2120]

Wondering if there might be some thoughts on this.

I started making candles about 1yr ago, and have just been doing a couple of craft fairs, but mostly sell to friends & family.

Just received a letter from my local town Assessor's office regarding paying business tax.:undecided

I have never met another local crafter that has had to register as a business, and pay excise tax. When I have done local craft shows, or even gone to them as a customer, I have never dealt with tax.

I obviously didnt do research on this,:tiptoe: so now I am concerned that I have been selling and I shouldnt have been. I guess I didnt realize that even at a craft fair level you need to pay a tax???

I am going on Tues. morn. 1st thing to the Assessor's office to get more info, but was hoping for some insight here.

Thanks so much!!

Renee

[lindsaycb]

I'm assuming all they want you to pay is the sales tax that is collected in your area. Everytime you go to a craft show (well most of them report) they send in a report to the state/county that you were there selling. You sell a tangible good that should be taxed...that tax needs to be submitted to the state. If you've only done a few shows, you shouldn't really owe a huge amount.

Right?

[LynnS]

Well I just do a craft shows too.Not many and make very little and a few times only made $80.00 or less.Now let me tell you I paid for the booth.So see not alot.I just want to get out there.I did a big show (don't make but maybe $250.00 but it cost $150.00 So no money there with supplies i buy.

I sell to one person in particular.About every month or 2 so not much there and a friend.Another friend wants my candles but she does not want to pay for them.So I give her a few here and there.She loves them.Time

to start paying for them now.

For the sales tax ID I haven't got mine yet.I did ask if it was needed at a show I did and she said it doesn't matter we do not expect or ask for it.I am mostly just doing it and alot of it is a hobby.Not making gobs of money.For me though this year I want to get off to doing a website so within a month I will get my Tax ID.I want to advertise(can't without that) and want to do some parties and Open Houses.So that will take alot of advertising and know I have to get a tax ID.For the craft shows I didn't have one and no one ever asked.

Sounds like someone may have said you are doing a business.Do you have competition?I know what I made at shows this year and to tell you the truth I spent 5 times more for supplies.So if I did my taxes I would be owed alot of money for what I spent.I have all those bills to prove it.:smiley2:

LynnS

I don't know what kind of money you made at the shows but if it was what I did that would be terrible.I was there to meet people and get my products out there.I did not make money.In fact sold some of the candles I had from last year for not much more than I made them for.

[lindsaycb]

You may actually get money back from state tax paid for some of your supplies that you actually paid sales tax on. It should offset what you sold & taxed...I believe.

[nay2120]

Thanks so much for the input.

I really should have been smarter and checked about tax laws etc...

I did 2 craft shows this year. One was a local community one, and I know for a fact that most of the crafters there do not do anything special other than sell their handcrafted items.

The 2nd show was very upscale. It was a school run event, but table cost $75.00 for 3hrs, plus a donation to be raffled off. I made a little extra, but not much. I was concerned about looking professional and made sure I purchased nice linens, carry bags and such. I am guessing that the school submitted a list of vendors.

I am embarrassed now bx I really didnt think that there was anything to just doing some craft fairs. Now I realize how silly that sounds!!!

Thanks again for your great responses!!!

Renee

[LynnS]

nay2120,

You still do not sound BIG.I bet you did not sell much.Yes I am getting a Tax ID in the next week.I don't understand this because alot do just sell to family and friends and kinda a hobby."MAYBE the school but maybe not".I have done shows where people come from all over the US.In fact the one show is when the lady told me she did not ask for tax ID.So I assume it wasn't a big matter.I guess it is up to us but when I see a few making thousands I know they have one but really us who are just doing it and not making a dime but spending I don't see it.I know someone who works in the tax office and she knows what little I do.I do not have business cards out or do any advertising.I am gettng things lined up for a OPEN HOUSE so will have my taxID by then.

LynnS

LAst night a friend and I were talking about the taxID thing.She went over with me what all I need to keep track of.I knew most but she said get a log book and whenever you pick up supplies put that down.Have things shipped etc.Going to and from craft shows etc.I do volunteer work and keep account of some of the traveling I do. I have only been charging 10 cents per mile.Found out I cheated myself(our tax guy said nothing).My friend said it was 21 cents a mile.

I did do a couple shows at schools.Not where I live but neighboring county. That was last year.

[Carrie]

Found out I cheated myself(our tax guy said nothing).My friend said it was 21 cents a mile.

I did do a couple shows at schools.Not where I live but neighboring county. That was last year.

The government is paying me $.43 cents a mile for work I do for them in my other job. I'd ask your accountant exactly what you can claim.

[Carol M]

I realize that things differ from state to state, but here (NC), a letter from the Assessor would not be in relation to a sales tax. Anything relative to sales tax would come from the state Department of Revenue; even though they rebate a portion of that tax to the county/city, it is administered by the state. Anything from the Assessor would be related to a business personal property tax, or possibly a business license. I work in local tax collections and our county does not issue priviledge licenses, but some of the cities/towns within our county do, so that could be what it is. In that case, it would more than likely be just a permit fee of a flat dollar amount per year to operate within their boundaries. If it is in relation to business personal property taxes, they are trying to find out if you have business fixtures and equipment, which would be taxed yearly based upon value. If they got your business name off a list from the craft show, they have no idea if you are really a "company" or not. Therefore, when you explain your situation, you may end up not owing anything. But I would definitely get a state tax i.d. number to protect myself in the future; I know that here, even at flea markets, the state sends people around just browsing and checking booths at random to make sure the operators have the proper documentation to file state sales tax reports.

[LynnS]

CarolM

This may be something different.You seem to know more than we may know.What I did a couple weeks ago called my county(office) and said I want to start a small home based business and want to get a TAX ID.I asked where do I go?The lady said to the Auditors office.So is that it?I thought I would go to the state for a sales tax license.You seem to say get it through the state and they take care of city and county?Maybe I should go state and not to my county auditor.My plans are a website, candle parties and Open Houses this year.Maybe a few wholesale accounts.I'm confused???

LynnS

[TerriWV]

I was told by the State Revenue (WV) that if you sell anything, you have to have a business license, and it needs to be posted where ever you are selling. If you are caught selling without a license, you can be fined up to $1000.00 every day you sell without a license. And he even included Home Interiors, Party Lite, Tupperwere, Avon, that if they wanted to push the issue, these would be included as well, since it is independent reps that are selling.

As for the Assessor, that for me is personal property tax on how much my business is worth.

[Carol M]

Sounds like we do things here similar to WV. You have to get a license from the state to sell things, and then are required to file quarterly sales tax reports, and remit monies on your sales (if any). This is where you would recieve your tax I.D. number, which would enable you to purchase your supplies tax free. Here, the local/county thing is totally separate. The county Tax Assessor levies taxes on real and personal property, which are paid annually based upon value. Some states include in this the value of any product inventory you may have on hand; our state abolished inventory tax about 15 years ago. So, making candles in my home, I would have almost no liability for these taxes. The only 'fixtures and equipment' I would have would be like presto pots, heat gun, impulse sealer, etc. Since I'm using my home, I haven't purchased any additional appliances or fixtures for this business. In addition, some counties/cities may require that you purchase a local business license to operate in their jurisdiction (but our particular county does not do this). I hope I have helped some; I know it's confusing trying to figure out what to do on a state, county and town level, and every place is different.

[sharyl55]

You really need to find out what the regs are for your state. In VA if you sell something you are expected to get a State ID, collect State Sales Tax, report the income and submit to the Dept. of Treasury the sale tax on all sales i.e. sales to friends, craft shows, farmers markets. In my county a home based craft business needs a county business license that costs $10. Each State, county and city will have different requirements. If you don't sell much, you won't owe much in State sales tax. Do you have an accountant you can talk to?

[Tess]

I am actually quite surprised how many people dont pay sales tax. I know in TX you have no choice. It does not matter if you are selling a "hobby". If you are collecting money from people (it does not matter whom), you MUST collect sales tax. I am sure most other states are the same.

[SatinDucky]

There may be a lot of people out there at craft shows selling and paying/collecting no taxes, even if they should be. Just like there are many people who get paid "under the table" for working and pay no tax. Just because some do it one way, doesn't make it legal.

Now, having said that...it all boils down to checking your local city, county and state laws. Here in AL I have 3 parts to my business license, all required. One for mfg the candles, a storefront license to sell from my home, and a transient vendors license in case I ever get around to doing a craft show. These were issued through the county. I still have to get my sales tax license, it's through the state. Then separate, I still need to apply for my tax ID number. Some other states require no license at all and collect no tax. You just have to research what all, if any, is required in your area.

[nay2120]

Sounds like we do things here similar to WV. You have to get a license from the state to sell things, and then are required to file quarterly sales tax reports, and remit monies on your sales (if any). This is where you would recieve your tax I.D. number, which would enable you to purchase your supplies tax free. Here, the local/county thing is totally separate. The county Tax Assessor levies taxes on real and personal property, which are paid annually based upon value. Some states include in this the value of any product inventory you may have on hand; our state abolished inventory tax about 15 years ago. So, making candles in my home, I would have almost no liability for these taxes. The only 'fixtures and equipment' I would have would be like presto pots, heat gun, impulse sealer, etc. Since I'm using my home, I haven't purchased any additional appliances or fixtures for this business. In addition, some counties/cities may require that you purchase a local business license to operate in their jurisdiction (but our particular county does not do this). I hope I have helped some; I know it's confusing trying to figure out what to do on a state, county and town level, and every place is different.

Thanks so much Carol for this info!!

My DH and I were laughing, just thinking about paying tax on the Presto pot, or scale.

I live in Ma, and they dont call it "Taxachusetts " for nothing.

If you sell something, you need to collect tax. Makes sense to me.

I really didnt know that even at small craft shows, the vendors are required to have a license, and collect tax. I guess I just thought on a small level like that it would be thought of as a yard sale type event. I realize now how silly that sounds.:embarasse

I have been doing a little more research, and I am hoping to start to become "legal" LOL!!!

I will go to the Assessor's office tomorrow, and I am hoping that they will be able to give me more info to get this straightend out.

Thanks again to everyone with this valuable info.

Still feeling silly, Renee