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Begining on Etsy and tax help!

Hello all,

I took the plunge and opened a shop today. (eep!) I've yet to list an item though...

Anyway, after I saw the sales tax page on my shop settings, I started looking into this more in depth. I had heard that you have to deal with tax stuff on etsy, but I never got a clear picture through all of the forums on exactly what had to be done.

So, here are my questions. Is all that MUST be done just to reigster for a sales tax license and fill out the correct paperwork for your state and remit the taxes you collect to them? I'm only in high school, and I'm having trouble understanding all of this and what exactly I need to do.

Is there anything else that relates to any taxes/licenses/regulations that must be done to have a shop? (I don't even plan on selling much and I don't classify this as a "business" persay, I just like to draw!)

Do I need to register for that license BEFORE I start selling? Or is it safe to list some items and give it a little time until I actually sell a few or one to someone from my state (which is Missouri)? I don't want to do anything illegal!!!


THANK YOU for any and all help you're able to give this newcomer. It's much appreciated.


(P.S. - In case I was confusing, I have not done anything tax/business related up to this point...)

Thanks!

29 Responses

Sales tax info is different for each state and you need to ask MO to be sure. In general, you should register (if they require it) before you sell (or before you sell over the minimum MO allows). After you register, you set up the tax collection on Etsy for customers in your state only, not for goods shipped elsewhere. MO will tell you how often to report and remit collected taxes.

Other business licenses and requirements are either state or local issues as well. Income taxes from selling profits may be both federal and state.

Here's a good reference for sales tax info: www.etsy.com/teams/7722/business-topics/discuss/9799713 Use the first link in it to help you find sources for MO info online.
The best thing to do is contact your state's tax board. I did that in my state, actually called them and they were very helpful.
Looks like you're in Missouri:

dor.mo.gov/faq/business/sales.php
As far as I know, you dont need any license if it's just a casual hobby that your selling, not a full time business.
I don't have a tax ID number. I am a sole proprietor, but I just did that this year. My understanding is that you if you make over $600 a year in extra income, you claim it with a 1099 form.
Any time you are selling to the public; you are considered a business and need to have the proper documentation. If you want to be considered a hobby; that increases your tax liability at the end of the year because you can't deduct business expenses. You can't have it both ways. ALL income must be claimed on a tax return; that would be the case even if you sold some things on ebay or had a yard sale. It's best to get all this squared away sooner rather than later.
Every state is different - some don't even have sales tax. But for the majority of states that do, you should be licensed/registered to collect sales tax, and collect it & remit it. It does NOT matter if you define it as "a casual hobby" - or how much you sell or earn. If you sell to the public in a state that collects tax, then you must collect tax. (And likewise report your income to the IRS).
Thank you everyone! So I think I'll list a few items and then try to figure this all out over the next few weeks. Does that sound ok?
aspentale from twolittlejays says

I don't have a tax ID number. I am a sole proprietor, but I just did that this year. My understanding is that you if you make over $600 a year in extra income, you claim it with a 1099 form.
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A 1099 form goes the opposite direction - you use that when you've given income to someone else (my boss gets one every time he gives a paid lecture, and I get one every year on interest earned).

When it comes to U.S. income tax, you need to declare all income, assuming you make enough to be required to fill out an income tax form. There's no lower limit.

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MCSart -- You really shouldn't need several weeks to find out what you need to do about sales tax. You can set it up on Etsy so that it's automatically collected from people in your state. But you do need to register with your state first.

ETA: I just reread your original post. Remember that if you're under 18, a parent or guardian needs to legally be in charge of any money dealings because you can't legally enter into contracts on your own (that's not just an Etsy thing). But if you are at least 18 and are starting out on trying to figure all this out, your state's tax department's website should be very helpful. Mine even answered emails when I had specific questions.

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