Taxes How To
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Hi everyone, I have a question about taxes,
Do you guys add it to the price? Does the 7 % tax apply to everyone including international clients and out of state clients?
Is there a way to add the tax when the client is at checkout, instead of adding it to the listing price? Just because prices like 74.54 might seem odd or not attractive...
How do you guys work it out?
Posted at 9:00 am May 9, 2012 EDT
At this time, you only need to collect sales tax from sales within your own state. Actually, you don't have to collect it, but your state expects you to pay sales tax on every sale within your own state. You might want to discuss with a tax professional the details, as it can differ for counties, cities, etc. You can set up taxes only on customers you specify by going to Shop Settings and Shipping & Payment in Your Shop.
Posted at 9:27 am May 9, 2012 EDT
In the end, it may only matter if you are making a profit in the eyes of the IRS. Wouldn't hurt to start tracking your costs including internet, mileage etc. I've been using a site and app done by Outright which helps small businesses track income and expenses. It will import your data from Etsy and PayPal.
Posted at 11:04 am May 9, 2012 EDT
I believe carolinabenoit is asking about state sales tax which most US sellers should be registered with their state for and collecting/remitting on in-state orders.
It is totally separate from income taxes and is controlled at the state level, not by the IRS and rarely has anything to do with income reporting or profit.
You would need to set up your Etsy account to tax in-state orders as ToosDetectiveAgency described, though I think Florida has county-based destination sales tax and Etsy can't be used to set that up accurately.
Learn more about your sales tax responsibilities, see this thread:
US: Sales Tax & Business Registration--links to official state websites
and about destination-based sales tax here on Etsy:
Have Trouble with Destination-based Sales Tax on Etsy? We do too.
Posted at 2:26 pm May 9, 2012 EDT
Oh--and some states do require you to collect it from the buyer and some require that the payment receipt--like in Paypal--show the accurately collected sales tax so you can't just pay it for the buyer in several states.
Every state sets its own rules regarding sales tax, so getting the info about what you should do straight from the state is the best way to go.
Posted at 2:34 pm May 9, 2012 EDT