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Sales Tax ID, Federal Tax ID, OR


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#1 Mudslayer

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Posted 20 August 2012 - 08:52 AM

Posted ImageHmmm, let's see, big question, one I don't want to ask, but am
afraid not to, so here goes.


Selling pottery + sales tax = HAVING A BUSINESS! OK, I sell pottery, so far, to be honest it has been what I consider a hobby, because I am one of those potters who is continually buying
supplies, glazes, clay, etc, so in my mind, all of the money I do make selling
goes right back into buying new stuff.

I have not thought about collecting sales tax, because again, to me, it is a hobby. Yes, I know,
the IRS considers hobbies that produce money are considered a "business".
woo hoo. Not to diss the IRS, but come on, until I actually start making
more money than I am putting back into buying stuff I have to wonder if it is
worth doing all the paperwork to get a SALES TAX ID, A BUSINESS ID, A FED TAX
ID, (No one works for me except my husband and he gets perks instead of
cash ;)), so that being said, how many out there do have sales tax ID's along with Tax ID numbers to purchase your supplies at wholesale? And should I get one? Now that my shop is only 2 weeks away from opening, I know I have to have a business license, at least I think I do, here in North Carolina you would be surprised how many home businesses don't.

Filing taxes: If I do a Schedule C, I know that I can use my social if I am the only person working for me. The only good thing about doing this is that I can take off my "losses" on my taxes.

I want to know basically about business license, as you know my studio/gallery is in my backyard, and I still do some of my work in my house, so that is another issue. But for simplicity sake, the work inside house is just while I am watching tv or something, not actually "working".

Do any of you have licenses and do you have your booklets to send in quarterly with your sales tax checks? Or do you just wing it, and hope that no one decides to get in your "business" and turn you in for not doing what we are according to IRS supposed to be doing, and that is give IRS a cut of the sale.

Do not want to be nosy at all, just want to make up my mind about what I should do, (morally I already know the answer), but dang, a hobby is a hobby is a hobby......if i were making a living off of doing this I could understand IRS point, but to have to go thru tons of paperwork to prove I AIN'T MAKING A LIVING, I AM JUST HAVING FUN SPENDING MONEY AND SELLING A LITTLE SLICE OF HEAVEN...

Make sense???

any info appreciated!


#2 GEP

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Posted 20 August 2012 - 09:28 AM

Mudslayer,

The only things here that you need to do are to get a Sales Tax License, and start filing a Schedule C with your tax return.

Don't be intimidated, Sales Tax is pretty easy to deal with. I'm in Maryland but I am guessing things are equally simple in other states. Here, one can apply for a Sales Tax License online in about 15 minutes. Then I have to file a return twice a year. We used to to get paper forms in the mail to return but now everything is done online. The learning curve is very easy.

You can't avoid the Schedule C anymore! But look at the bright side, everything you spend on pottery is now a deduction.

There's another tax form that you might want to file ... it's up to you ... the Business Use of Your Home form. This can result in some great deductions, but it is complicated. I don't quite feel comfortable doing it myself, so I let my accountant handle it. You can deduct for your studio space and your showroom, but the spot in front of the TV doesn't count :-)

As for a Business License, because you are opening a storefront, you might need one, but this depends on your local laws. If someone on this forum doesn't have the answer, you can probably find it online. In terms of "winging" this part for a home-based storefront ... honestly if I was opening a small permanent showroom in my house, I would skip this until somebody tells me otherwise. Unless you think the crowds of people will create a nuisance for your neighbors, or their cars will be clogging up your street. Just be a good neighbor about it.

Mea
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#3 Chris Campbell

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Posted 20 August 2012 - 09:37 AM

If you are opening a shop you need to get legal. It's not as bad as our artist soul thinks it is ...honest! It's better than worrying about being caught.
If you sell to the public you need to collect sales tax, if you collect it you can't keep it so you have to report it.
If you report sales you get to deduct expenses and depreciate equipment. Bonus!
I have an EIN number and am an LLC registered in North Carolina.
Disclaimer***
my husband is a tax professional so we follow the rules tax wise.

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#4 Mudslayer

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Posted 20 August 2012 - 09:40 AM

The showroom and studio where I work are in a separate building in my backyard, not inside my home. I will have a small sign that will hang under my mailbox (15 X 18) that will have my business name, etc, anc call for hours, with phone number. THere is a privacy gate around back yard, so unless people call, they won't be able to get in the shop. I won't have any set hours for now, until I can get an idea of the traffic that the sign gets me. That sign may mean the difference in getting a business license vs not getting one. Nosy neighbors which are definitely not potential customers will go straight to town hall and question the sign. But, I have to have one, otherwise people will be knocking on my door all the time, and the sign will say that store is in backyard, not in home, lol.

I will go ahead and get a sales tax license number and will file a schedule C. We here in NC have to file sales tax forms quarterly.

#5 Mudslayer

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Posted 20 August 2012 - 09:44 AM

Chris,

Since I am the only person in the business, I can use Social Security number instead of getting a EIN. I dont have any employees nor payroll.

I had thought about LLC, but until I get things going in the right direction, SP will work for me.
I may be able to use SS number instead of getting a sales tax number, have to find out for sure. that is my next step.


Mudslayer

#6 Chris Campbell

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Posted 20 August 2012 - 09:47 AM

The sign on your mailbox changes the whole game ... it is an open for business announcement and some neighborhoods do not allow them so check first. A neighborhood near ours went to court and forced one off a mailbox since it was zoned as residential. Those signs are magnets for your area " Keepers of the RULES".

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#7 Mudslayer

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Posted 20 August 2012 - 09:54 AM

There is a house that had a garage that was turned into a beauty salon down the street from me, there are cars in her driveway and on the street most days, and a sign above the door to the salon. She is about 7 houses down from me. While there is no sign on the mailbox that I can remember, there is a pretty nice size one above her door. Does that make things better for me?

#8 GEP

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Posted 20 August 2012 - 09:56 AM

The showroom and studio where I work are in a separate building in my backyard, not inside my home. I will have a small sign that will hang under my mailbox (15 X 18) that will have my business name, etc, anc call for hours, with phone number. THere is a privacy gate around back yard, so unless people call, they won't be able to get in the shop. I won't have any set hours for now, until I can get an idea of the traffic that the sign gets me. That sign may mean the difference in getting a business license vs not getting one. Nosy neighbors which are definitely not potential customers will go straight to town hall and question the sign. But, I have to have one, otherwise people will be knocking on my door all the time, and the sign will say that store is in backyard, not in home, lol.

I will go ahead and get a sales tax license number and will file a schedule C. We here in NC have to file sales tax forms quarterly.



Even if your studio and showroom are separate buildings from your home, if you pay for those structures under the same mortgage and utility bills as your home, you can file a Business Use of Your Home form. Again, this is optional, only do it if you want.

I agree with Chris, the sign on your mailbox changes things, it is a red flag for those who can't help themselves from being nosy.

And yes in your case you don't need an EIN, you can file everything under your own social security number.

Mea
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#9 GEP

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Posted 20 August 2012 - 09:58 AM

There is a house that had a garage that was turned into a beauty salon down the street from me, there are cars in her driveway and on the street most days, and a sign above the door to the salon. She is about 7 houses down from me. While there is no sign on the mailbox that I can remember, there is a pretty nice size one above her door. Does that make things better for me?


Why don't you walk down there and ask what kind of licenses they got in order to open the beauty shop with a sign in reidential neighborhood?

Mea
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#10 JBaymore

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Posted 20 August 2012 - 11:17 AM

There is a house that had a garage that was turned into a beauty salon down the street from me, there are cars in her driveway and on the street most days, and a sign above the door to the salon. She is about 7 houses down from me. While there is no sign on the mailbox that I can remember, there is a pretty nice size one above her door. Does that make things better for me?


Nope. Check your local zoning laws at the town hall or on the towns website. It may be that beauty salons are specifiicaly permitted, but retail establishments are not. It may be that craft production is permitted, but selling is not. It may be that NO use of anything except primary residence (usually something like "Residential A" designation) is allowed. Maybe the beauty salon is actually illegal. Or the people that run that shop may have applied to the Zoning Board of Adjustment and the Town to get a Special Exception to the various zoning laws.

Remember that your homeowners insurance likely is not covering you in this endeavor either... and in fact doing this might void that normal homeowners insurance coverage anyway. Your property is now at least partially a business. So call your agent ASAP. If you are doing ANYTHING illegally on your property..... usually most insurance policies have a clause that gets the company off the hook for anything.

Many states require a business license for sell stuff as a business wheterh that is from your home or selling to galleries. In either case, you are a business. Check with the state. And this covers the sales tax thing also.

There is more to this than meets the eye. Maybe take a small business workshop someplace.

best,


.......................john
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Immediate Past President; Potters Council
Professor of Ceramics; New Hampshire Insitute of Art

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#11 Mudslayer

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Posted 20 August 2012 - 11:56 AM

already talked to insurance co. that part will be taken care of once shop is open. good idea about asking salon owner what she had to do. have called our town manager REPEATEDLY over the last few weeks, trying to find out any info, left voice messages, talked to staff, no one knows anything about this part of the situation, and I cannot get him to return calls. I go up there, he is not there, this is one of those places where only ONE person knows all the stuff, and all others only know what they do there.

very frustrating to say the least.

while i may sound childish, my thoughts are, after leaving detailed voice mails explaining when opening day is, over and over, talking to staff about this over and over, if they were concerned about a sign going under my mailbox, they would have made an effort to contact me. We are all on a first name basis in this town, so it isn't as if they don't know who we are. I will make one more effort to contact him, and if no reply, then sign goes up. If they have a problem, I will take it to our Board Meeting and nicely say that I have been trying for over 3 weeks to get an answer from our Town Manager, have gotten all of my other documents, and since no one could tell me anything, including website, I felt that since I had not recieved ANY contact, answers, NOTHING, that meant it was fine. If I need to ask for a rezoning permit for a sign, then so be it.
If i sound irritated, then that is because I am. Small towns can be great, and then they can be handled on a "sometimes" basis. "sometimes we answer you, help you, work with you, and then sometimes we just don't."

Husband grew up here, we have lived here almost 20 years, and it has always been this way.

But I will try one more time, that is all. :unsure:

also, all over town you see handmade signs with this and that for sale, big signs, little signs, nice looking ones, not so nice looking. You think they got a permit??? Or got an answer when and if they called? Doubt it very seriously. Doubt VERY seriously they even called. I took the good girl approach and called, and called and called. If he is unavailable, and he does know what I want, he could simply tell someone in that office what to tell me. :angry:



Frustrated, panicky, irritated, overworked, no sleep,

Mudslayer

#12 GEP

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Posted 20 August 2012 - 12:45 PM

If the town manager does not get back to you before your opening, I think you can go ahead with your opening. And your sign. If problems arise later, just explain how you have been trying to get official permission. I would still walk down to the beauty salon just to ask.

It sounds exciting despite all the stress. Good luck!

Mea
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#13 Mudslayer

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Posted 20 August 2012 - 01:05 PM

Thanks! will do!

#14 JBaymore

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Posted 20 August 2012 - 01:22 PM

If you decide to do this, make sure you have good formal and enforceable documentation of the efforts you made with the town officials. Not just an "I did this" statement.

The potential problems will likely come from townspeople complaining not from the town office itself. But politics being politics....... if there is a complaint to the town, the town will be looking for someone else to blame. You will be the convenient target of opportunity.

I've lived in a 2000-ish person "small town" for 35+ years now.

Yes, it can be frustrating.......


best,

.......................john
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#15 Chris Campbell

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Posted 20 August 2012 - 02:51 PM

As awful as this is for me to say .... a feminist from 70's when it was not cool ... (hmmm is it ever gonna be cool?) ... anyhow, I find in situations like this when a person of the male persuasion does not call you back after repeated efforts .... you sometimes have to send in the big dog .... yup, he might answer hubby's call ... then he passes the phone to you. Not starting anything controversial ... just mentioning a strategy that sometimes works in tricky situations.B)

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#16 JBaymore

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Posted 20 August 2012 - 03:46 PM

As awful as this is for me to say .... a feminist from 70's when it was not cool ... (hmmm is it ever gonna be cool?) ... anyhow, I find in situations like this when a person of the male persuasion does not call you back after repeated efforts .... you sometimes have to send in the big dog .... yup, he might answer hubby's call ... then he passes the phone to you. Not starting anything controversial ... just mentioning a strategy that sometimes works in tricky situations.B)


Unfortunately all too true still. Very sad to say. It's not controversial... it is simply stating the truth.

best,

......................john
John Baymore
Immediate Past President; Potters Council
Professor of Ceramics; New Hampshire Insitute of Art

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#17 Matt Oz

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Posted 20 August 2012 - 05:40 PM

I knew someone who legally changed their last name to potter, just so they could put a sign up.

Now that’s going to extremes.



#18 JBaymore

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Posted 20 August 2012 - 06:39 PM

I knew someone who legally changed their last name to potter, just so they could put a sign up.
Now that’s going to extremes.


Creative solution. :)

best,

.....................john
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#19 Red Rocks

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Posted 20 August 2012 - 07:59 PM

I agree with John's comments and would take it to this step - I would start using email as your method of communication with the city manager and other officials. That way you have an audit trail THAT IS TIME AND DATE STAMPED. It is accepted in a court if it ever came to that. You can't do that if you just leave voice mails or even messages.

Reading over all of the comments, I would agree with the overwhelming sentiment here - do it above board as much as possible. If you have lived there 20+ years, communicate with you neighbors who are affected directly - even consider giving them a pot or a major discount before big events to soften the impact.

#20 Mudslayer

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Posted 21 August 2012 - 11:18 AM

I simply cannot help myself....so here goes EMAIL!!!!:lol: :lol: :lol: :lol:

THEY DON'T HAVE IT!! The Reason???? THIS!!!!! Too many residents call to find out this and that, only ONE person knows the answer....... Can you even IMAGINE the number of emails that person would receive????? He ain't gonna (sorry, but again, can't help myself) want to even look at an email account much less ANSWER it....going to upload a pic of 2 different signs and see what you think in a few minutes.




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