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At What Point Is An Tax Numer Needed When Selling Ones Art.


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#1 Mark369

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Posted 02 June 2014 - 07:38 AM

When does a hobby become a business needing a tax number?


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#2 GEP

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Posted 02 June 2014 - 08:24 AM

In the US, you need a Sales Tax license from your state as soon as you start. You must collect and file Sales Tax whether you consider yourself a hobby or a business.

As for filing income taxes, you can still file under your personal Social Security number for as long as you want. There are some reasons you might want a separate EIN (Employer Identification Number, basically a separate tax id number for your business) but it's not required.
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#3 JBaymore

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Posted 02 June 2014 - 08:39 AM

In some states you need a business permit or license also.  Often called "registration of business or trade".

 

And in some states (NH....yippee) there is NO SALES TAX...... so no tax number for NH sales needed.

 

If you travel into other states that DO have sales taxes... then you need tax numbers for those states too.  If you sell thru GALLEIES / shops located in those states, you don't need the tax numbers for them.

 

Internet sales is a whole "can o worms" coming up.

 

best,

 

........................john


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#4 Mark C.

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Posted 02 June 2014 - 03:08 PM

In our state our board of equalization (sales tax folks) cancelled all small sellers permits(reseller) long ago as it was not worth it for them if you made under $500  to 1,000 per year. I knew many small pottery folks who lost the permit

Check with your states tax board on what the threshold amount may be 1st?

I have tax permits for a few states and get temporary ones for others.

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#5 Mark C.

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Posted 02 June 2014 - 03:12 PM

In some states you need a business permit or license also.  Often called "registration of business or trade".

 

And in some states (NH....yippee) there is NO SALES TAX...... so no tax number for NH sales needed.

 

If you travel into other states that DO have sales taxes... then you need tax numbers for those states too.  If you sell thru GALLEIES / shops located in those states, you don't need the tax numbers for them.

 

Internet sales is a whole "can o worms" coming up.

 

best,

 

........................john

Is that part of live tax free or die motto??for NH

I have a NH soc security # for what its worth as my 1st job was in that state at a cemetery.

I still recall all the granit headstones

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#6 Mark C.

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Posted 02 June 2014 - 08:18 PM

Its a business when the tax cops show up with handcuffs.

its a business when your tax preparer asks where is all this $$$ coming from

Its a business when the shoe box will not fit any more cash.

Mark


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#7 JBaymore

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Posted 02 June 2014 - 08:22 PM

 

Is that part of live tax free or die motto??for NH

 

 

We say " Live, Freeze, and Die " these days.  :)

 

best,

 

..................john


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#8 DirtRoads

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Posted 02 June 2014 - 11:51 PM

If you have credit card processing, your processor will report a 1099 for your business.    So you would mostly likely need to report & pay sales tax.

 

Many shows require you to fill out a sales tax report before you leave and pay sales tax on your reported sales.  In my state (MS) if you do not fill one out, you will not be invited back to the show.   AND the shows are somehow connected.  Failure to non report at one show may ban you from other shows. (I was told this by the director of a show).    There are no exceptions for being a hobby.  You do not have to have a sales tax number, the shows/events just collect.   I know this is true in Louisiana, Texas, Tennessee and Alabama as well.  (have done shows in those states)

 

According to my accountant, a hobby becomes a business when you start taking deductions to off set other income.  IRS has an explicit guideline for hobby vs business.  

 

http://www.irs.gov/u...-for-Deductions

 

Now, if you sell items in an occasional "garage" type sale, in my state you are not required to pay sales tax.   MS sales tax follows IRS accounting standards.  If you have no tax/business record of inventory, such items can be sold without collection of sales tax.  Example would be if you sell pottery that you have taken no deductions on, or not on a tax inventory list, the pottery is not part of a business.   Such pottery is considered personal items, just like clothes or other used household items.

 

Check to see what your state requires.   

 

Personally, if I was putting more than $1000 from pottery sales in a bank account, I would be reporting sales tax.  Especially if you deposit on a regular basis.  One thing you do not want is some sort of sales tax audit.   I have been through quite a few of those in different states and they are exacting.  I wouldn't risk not paying on anything that is deposited or done with a credit card.



#9 DirtRoads

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Posted 02 June 2014 - 11:57 PM


And in some states (NH....yippee) there is NO SALES TAX...... so no tax number for NH sales needed.

 

 

........................john

 

Oh my.  Never heard of a state with no sales tax.   Learned something important.  Thank you.



#10 JBaymore

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Posted 03 June 2014 - 07:32 AM

 


And in some states (NH....yippee) there is NO SALES TAX...... so no tax number for NH sales needed.

 

 

........................john

 

Oh my.  Never heard of a state with no sales tax.   Learned something important.  Thank you.

 

 

Our lack of a sales tax drives our neighbor Massachusetts nuts.  People come up here to buy stuff.  The slang name for MASS up here in the northeast is often "Taxachusetts".

 

While we don't have a sales tax or a State income tax... and that often gets (rightly) touted..... we do have stuff like "Rooms and Meals Tax" (hotels and restaraunts). And "Business Profits Tax" for businesses.  And there are few "social services" since there is a low tax revenue base.

 

best,

 

..................john


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

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#11 Rebekah Krieger

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Posted 04 June 2014 - 01:05 PM

I believe there is a dollar amount that if you make over $ per year in income it no longer is a hobby and becomes a business. I thought it was $500 but this was many years ago ...


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