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You add the tax like all other merchants do ... a percentage based on the retail price and added to the retail price.

 

Generally speaking, you are responsible for collecting taxes in your state. You apply for a liscence to do this and submit taxes collected to the state. Check with your state tax bureau for details. They can also advise you on collecting taxes in other states. Again, generally speaking, you only have to collect if you have a physical presence in the state. Again, check with your State tax office to be sure since many are trying to change this.

 

A lot of potters freak out at the thought of dealing with this and getting buried in red tape but it is a very simple process. Once you are on the books as a real business that collects and pays taxes you get wonderful bonuses called deductions, depreciation and expenses on your tax return. If you work from your home you can get a deduction for a percentage of those bills too.

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You add the tax like all other merchants do ... a percentage based on the retail price and added to the retail price.

 

Generally speaking, you are responsible for collecting taxes in your state. You apply for a liscence to do this and submit taxes collected to the state. Check with your state tax bureau for details. They can also advise you on collecting taxes in other states. Again, generally speaking, you only have to collect if you have a physical presence in the state. Again, check with your State tax office to be sure since many are trying to change this.

 

A lot of potters freak out at the thought of dealing with this and getting buried in red tape but it is a very simple process. Once you are on the books as a real business that collects and pays taxes you get wonderful bonuses called deductions, depreciation and expenses on your tax return. If you work from your home you can get a deduction for a percentage of those bills too.

 

 

 

Thanks Chris, I do get a freaked thinking about taxes and the "business" aspects of it all. I just want to make and not have to worry about manageing, but since I can't afford an accountant all I can say is, Thank you so so much. :D

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Both of the Summer-long local Art/Craft/Farmer's markets here allow vendors who participate at their market to settle up with the taxman by using the market's tax ID#.

 

This is what I plan to do in an attempt to test the waters a bit. Fortunately for me, it's a tourist-based town with a revolving door of new customers each week from >>>all over the country<<< who are here on vacation. (and who like nice things)

 

If sales warrant it and I take this farther and form an LLC...I'll simply have to >>>hire<<< the wife (Master's in Accountancy/CPA/30 years of tax/investment experience) to keep track of the books/taxes/blahdeeblah.

 

good luck, all

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If you are brand new to collecting sales tax, I would start by googling the term "[your state] sales tax license" and you will probably have it all figured out shortly. Like Chris said, it's not that complicated so don't be intimidated!

When I first starting selling my pots years ago, my policy was "sales tax is included in price," thinking this would make more people buy my pots. Soon I realized how much I was subtracting from my sales total to pay the sales tax, so I changed my policy to "no sales tax on cash purchases" and I began collecting sales tax on top of all the check and credit card sales. But still I was bothered by the amount of subtracting involved, so now I collect sales tax on top of all sales. And guess what, it has no bearing whatsoever on whether people will buy your pots! So my advice is to add it on top of your sales, because there's no reason to sell yourself short for this reason.

 

I do make one small tweak when it comes to cash sales ... I add the sales tax, then round the total DOWN to the nearest whole number. That way I don't have to deal with coins at an art festival.

 

Every once in a while, I'll use sales tax for leverage. Say if it's the last hour of a festival, a customer is looking longingly at a large and pricey piece, but they are on the fence. I might offer to pay their sales tax for the piece, and sometimes that's all the justification they need.

 

As for collecting sales tax for online sales, that depends on how you are receiving payments online. Are you using PayPal? Within your PayPal account, you can setup which states you are collecting sales tax for, and the percentage. When a customer provides their shipping address, the sales tax automatically computes for the relevant states. If you are using something other than PayPal, I'm sure the setup for sales tax is equally straightforward.

 

Mea

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So does Paypal submit the funds to those other states or are you filling out the tax forms for all those states?

 

 

PayPal doesn't submit funds to the sales tax collectors for you, or even force you to collect sales tax for any state. It only makes it easy for you to collect it for whatever states you feel like you need to. It's still up to you to report and pay your sales tax yourself.

 

I think the law right now is you only are required to collect sales tax for states where your business has a physical address. But lawmakers are busy trying to change that for online sellers, but it hasn't happened yet. (someone please correct me if I'm wrong about that)

 

Mea

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