For those of you with websites and/or etsy sites, how do you handle the "business end" of your business? Does selling on a website require having a sales tax ID number? Do you collect sales tax, and then report it quarterly, annually, etc?
I have gone that route - separate books, tax ID number, separate checking account....big headache, lots of work. I would like to offer some of my finished pieces, but not sure which is the best way to market them.
Really would appreciate any input!
I'm heading south for the winter. Some parts of my body already have a head start!
Sandy -- speaking from a bookkeeper's standpoint -- you should have a Tax ID if you have a business. One of the benefits is that it will allow you to purchase supplies for resale and not have to pay sales tax. When I sell online I only collect tax from those that live in WA. Everyone else is considered out of state. You will still have to report those sales in your total sale amount but then can deduct the out of state amount so you don't have to pay business tax on it. I'm not sure what your state laws are but in WA how often you file is determined by the amount of retail sales your business generates. You would probably file annually.
The other advantage of keeping separate books and having a business license is the tax advantages on your federal tax. If you have a separate area set up for your craft room you can deduct a portion of the utilities, etc on your taxes as a business expense. There are many other things that you could deduct for business too but you should check with your CPA.
I'm sure many people sell without a business license or reporting the income if they do exclusively online sales because those sales are not regulated for now. I'm sure that will come soon enough. It's up to you how you want to handle that.
Robin
An organic farm in the forest in
Maine
USA
705 Posts
Posted - Jan 23 2007 : 12:27:15 PM
If you're selling something the gov't wants to know. Laws vary from state to state. Unless you sell a certain dollar amount in Maine you have to pay the sales tax on supplies. You keep track of that and deduct it from what you owe the state when you file your report. A website is a legitimate business so you do need the appropriate licenses and permits.
Taking care of business
Posted - Jan 23 2007 : 08:36:05 AM
