Etsy U.S. Tax, Bookkeeping, and Business License Topics
I want to start selling on Etsy and at Craft shows but I need help with knowing when to become a business.
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I want to start selling on Etsy and at Craft shows but don't what steps to take and if it is worth it ( like with taxes and license.)
I am concerned that if I take this step to start selling baby/ kids items I make, it will become to much. I don't know if their is an amount per year I'm allowed to sell in Maryland without having to report taxes or apply for a permit? If I am going to put myself out there on etsy and craft fairs do I need to legalize it before I start? If I do take the jump what taxes or other fee will I have to pay out yearly monthly. I have a full time job and love making things and would enjoy selling them vs giving them away to friends and family but is it all too much? I'm not sure!
Please help me out and let me know what steps I need to take to make this passion a success! When do I have to become a business vs a just a crafty lady?
Posted at 11:33 pm May 17, 2012 EDT
If you want to do craft shows, you will likely have to have a sales tax certificate or license. Many show organizers require it for acceptance. Etsy does not require that license, but officially any income you generate, no matter how small is supposed to be acknowledged for taxes. But there are likely many folks on Etsy who don't have a license or sales tax certificate from their state. There is no limit or minimum for income you generate. You should contact other local crafters as each state has different requirements, or join a local Etsy team. Also do some searching on Etsy forums for this information. Its a common question. Good luck!
Posted at 11:46 am May 18, 2012 EDT
I agree with Sara, check out some of the discussions going on in Etsy Teams that are from your region/area. They may have a better idea of specific guidelines for your state or local area.
I also work full time (as do a lot of people on Etsy) and selling here is something that can be done on the side and to your own liking. For example, it's best to have a lot of things in your shop for sale because that increases the number of people who will stumble across your shop. But, it also allows you to control quantities... if you only want to make one sweater at a time, then just list one, and don't relist the item until you make a new one. Etsy gives you that freedom, unlike a craft show where you need to have a stock of inventory ready to sell... Etsy, instead, is an evolving process, where if you feel extremely enthusiastic for a period of time you can crank out items sometimes and hold off other times. Do look into the fees though, which are very low and reasonable for being a part of this community! 20 cents to list an item? Awesome :)
I should note, though, that if you do plan to make this a business you have to treat it like one, and like a full time job. If, however, you're interested in doing this on the side to share your craft with the world, then it's up to you how to proceed. :) Best of luck to you in whatever you choose to do! I hope this helps!
Posted at 12:55 pm May 18, 2012 EDT
It's really best to get your answers straight from the authorities. For some background info on how starting up works in general & links to your state's website where you can find the rules that apply for selling from your state:
US: Sales Tax & Business Registration--Links to Official Government Websites
Most sellers just need to:
~~register for (and collect/remit) sales tax and
~~get a DBA and then pay income taxes (federal & state if you state has taxes)
A few states have additional taxes on businesses or local registrations in addition to the ones at the state level.
Posted at 2:43 am May 19, 2012 EDT
in addition to the tax issue, baby/kid items have other laws that restrict the items you can use. check out the cpsia site
there is an etsy team for this as well i think.
look into crafters insurance to provide you w/ liability insurance. i have state farm.
personally i'd sell anything else before i'd make products for children. etsy is an international sales site if you set your shop up to sell to other countries they most likely have children laws ( and the defined age of a child is different in different countryies.)
i discovered it is much different to make and sell than just making :>), big learning curve plus you need shipping containers, shopping for wholesale supplies so your pricing formula makes more sense. its insane the none crafting time running the business takes.
i'd strongly suggest making items you can 're-list' so you have the photos and descriptions. it is very time consuming to list new product
alittle bit off track from your business question, hope i've been helpful
Posted at 12:52 am May 23, 2012 EDT