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Taxing Matters

Taxing Your Craft Business

I am going to sell some handmade items at my first craft show in Oct. A portion of the profits will be donated to the ACS Relay for Life.

If my items sell well, I would like to pursue other craft shows.

Can you tell me if I need a vendor's license or Tax ID? I can't find any info that tells me which one is required.

I would also like to take advantage of wholesale buying but they require one or the other. Which one do I need?

Thanks,

Robin

This is a difficult question to answer, mainly because you have 50 states and many other jurisdictions, such as New York City, that each have their own taxing requirements.

I would not think you would need a vendor's license in most jurisdictions. However, if you live in a big city, this might not be true.

You probably know the sales tax rate in the area where you live and also if there are any items exempt from sales tax. You might be able to collect and pay the tax using your individual tax ID, usually your social security number. There might be a minimum under which you don't have to pay.

Because a portion of your proceeds are going to charity, another problem arises. You most likely will have to pay sales taxes on your gross sales, but maybe not. It all depends on your local laws. (You can deduct the charitable contributions from your gross sales for income tax purposes.)

If you don't have an accountant friend you can ask, you should try to get the information either online or by a phone call to your State's tax department. They will be more than willing to tell you what you need. You might get better advice on the website, since even the tax collectors seem to have problems figuring out what's right.

I'm sorry I can't be more specific. I'm not an accountant and am not qualified to give you advice in this area.

As far as wholesalers are concerned, you might not need anything if the size of your order meets their minimums. Some might require a Tax ID or Resellers license. I'm sure they'll tell you what they need when you go to place an order.

When you approach a wholesaler it will help if you present yourself properly with a business name, address and phone number and such accessories as a quality business card and stationery.

Most wholesalers only want to do business with legimate buyers. They prefer that you present yourself as a corporation or partnership, rather than as an individual. A proper tax ID or reseller's license will ease the way for you and probably mean the wholesaler will not have to charge sales tax on your order.

I hope this is of some help.