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More Taxing Matters

Licensing & Taxing a Small Crafts Business

I loved reading your For Profit section. It has given me some encouragement and some ideas as well for my new crafting for profit venture.

But I was hoping there would be more information regarding licensing and tax requirements. I'm curious because my business would be very small, not much in the way of profit, and links to sites that would tell people how much profit they have to make to bother declaring the income, etc, would be helpful.

You give a great definition of what "income" is, but if it's under a certain amount do you have to declare it? Some links to tax advice would be a great addition.

Thanks,

Alissa

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I don’t know if you saw my answer to a similar question that I posted on the “Your Letters” page several days ago. If you haven’t seen it yet, read Taxing Matters.

These are very difficult questions for me to answer. I am not an accountant, so I am not qualified to give tax advice.

Also, in the USA alone there are 50 states, some cities and innumerable counties, in addition to the Federal Government, that have a hand in levying and collecting taxes. Since I have readers in over 60 countries, you can see the task is impossible for one person.

It is true that if you make very little money, generally below whatever the going poverty level is, you don’t owe taxes for Federal purposes. Whether your state follows the same guideline is problematical.

Some states do, others don’t.

But for most small home businesses, income from your crafts is lumped together with all other household income, so you would have to be making very little indeed to be totally exempt from taxation.

This is not necessarily bad, since if you are running a real, for-profit crafts business, you might be able to shelter some of your other household income by your business expenses. However, if you are planning to do this, you MUST consult an accountant.

Sources for tax and licensing information are: First Gov, the official US Federal Government site; the Internal Revenue site: and your own local state web site, plus your City Hall.

I’m sorry I couldn’t be of more help.

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