I see that Linda makes and sell a few things while traveling. My wife Donna, sews quite a bit and makes a variety of things. We would like to put on our web site and do some selling. My questions are.. What about the need for a business license? How about taxes (State & Federal)?
And, What if some wonderful soul bought a ton of stuff via your link as a Amazon Affiliate advertizer? Is that something the IRS needs to know about?
I am re-doing my web pages and thinking about methods to make money on the road. Just trying to think it all through.
See you in September.
Technomadia said
10:20 PM Apr 2, 2012
Hi Allen & Donna..
I'm not Howard, but thought I'd chime in.
A lot your questions depend upon the state and locality that you are domiciled in and/or register your business in. Some require licensing, some don't. As an individual, Donna can probably be a sole proprietor and just report the income/expenses on her individual tax form (federal and state, if you have to file) as self employment income on Schedule C. You can also register as a LLC if you feel you want a bit more protection. A small business attorney and/or tax advisor can assist you in deciding what is right for your situation.
We have an Amazon affiliate link on our blog, and do report the income through our business taxes. Amazon does have our EIN, after all.. which means they report it to the IRS, so we have to as well. (Required if you earn over $600/yr from any single source).
For selling crafts, check out www.etsy.com - it's a storefront for folks like your wife. Takes a lot of the web design elements, ecommerce and marketing off your chore list. A lot of my crafty friends use it sell their wares, and have great success with it. They might also have tips on how to handle the business logistics on your side too.
Best wishes, - Cherie
Fergizmo said
12:07 AM Apr 3, 2012
Thanks for the good info. I'll check out Etsy.
Learning..Learning...Learning...
waltben said
04:15 PM Apr 3, 2012
My wife and I have been selling at art & craft fairs for over ten years throughout the Mid-Atlantic area, and through our web site as well (http://www.abhats.com). If you're selling over the internet and shipping out of state, there is no sales tax. If you sell person to person at some sort of event, then you've got to collect & send in state sales tax for wherever you are. Problem is that every state is different - some have 'temporary' licenses, others insist you obtain a full-blown one, and there's all kinds of in-between. At one time I was trying to keep four different state's licenses straight, each with different reporting periods and requirements. Not fun.
The issue of a business license really varies by state and county to county. In Virginia, a husband and wife can be sole proprietors of their business, but that's not allowed by the Feds for an EIN. In our county, we'd have to sell over $30,000 gross yearly from our home to need a license and it's expensive. We sell very little here, so that's not a problem. We did have to register our business name ('alias') with the clerk of the county court though. If we were in any neighboring county it would most likely all be different.
If you're selling through someone/thing else, you might not need one, but having a merchant account can really boost sales. The best account I've found these days for those with seasonal or periodic sales is through Square, but you need a smart phone and data plan for it. They've been so successful that I understand some equivalent ones will be coming out soon.
Finally, something to consider is that etsey, eBay (and all the other auction places), as well as trying to sell a specific thing on your own web site mean you've got to keep whatever you put on the site on-hand so you can ship it when it sells. This can get to be a problem if you've dozens of items (unless their really small!) and you've limited space.
Howard said
05:27 PM Apr 3, 2012
Hi Allen & Donna,
As usual, great advice so far.
Licensing does vary greatly from state to state and county to county. If you can avoid getting a license and the hassles that comes with it, that's the way to go.
You usually have to collect and remit sales taxes if you are selling to folks in the state where your business is "registered" or "domiciled". If you sell to folks in other states, you usually don't have to collect sales taxes and those buyers are supposed to report those sales and remit a "use" tax (sometimes called something else), but we all know most buyers never do that reporting.
HOWEVER, if you set up at various art shows, craft shows, flea markets, RV shows, RV rallies, etc., usually the show promoters require you to get a sales tax permit and collect and remit. This is often a requirement of the show even if legally you wouldn't otherwise have to do it. And you may have to get a local business license as well.
Online selling usually does not require collection of sales taxes, HOWEVER you are supposed to charge it for sales in some states and more states are pushing to require remission of sales taxes on internet sales due to the need for more revenue.
If you become a business entity like a corporation or a limited liability company, you can get an employer identification number (EIN). Those business models provide some liability protection, but for small businesses it may not be worth the extra administrative work, accounting, and taxation especially when the liability risk is low. An umbrella policy or inexpensive business insurance may be better.
We remain a sole proprietorship and use our social security numbers to report income and expenses via Schedule C on our personal returns.
Yes, to be an advertiser for Amazon, Google, Commission Junction, and other affiliate web advertising programs, you have to provide a tax identification number and they will send a 1099 for earnings over $600 per year.
Not only that, but as of 2012 there is a new tax form that eBay, PayPal, etsy, etc. have to provide - 1099-K - which shows your total sales IF you have over $20,000 in sales or over 200 transactions. It's another way for the IRS to identify revenue and get you to report. The form doesn't take into account returns, refunds, chargebacks, etc. and you have to do the accounting for expenses to offset those reported sales so you don't end up paying taxes on total sales.
Etsy and eBay can be great ways to sell online, but there are downsides. The administrative fees can be high making it necessary to sell higher volumes of low-profit margin items.
In order make low volume, low margin sales profitable, you have to keep costs low. We know lots of folks selling on the road and making good cash flow for living expenses, but very little profit when all their costs are considered.
And in the craft/art area, there are very, very few that can get the prices to cover their time for creating their items. But, if it's a fun hobby and you make enough to cover supplies and get a little spending money, then it can still be worthwhile.
Selling on the road certainly isn't as easy as it used to be. Selling via a website has much less overhead and, therefore, profit margin, BUT you have to drive lots of traffic to the website and that's a whole different issue requiring lots of time.
A good supplemental income can be made, but there are certainly some challenges until you can perfect your own system that provides a good balance of cash flow, profit, and return on time invested.
We discuss a lot of this and more during our "Working On The Road" seminar at our Rallies. So we'll see you at the 2012 RV-Dreams Rally in Oregon where we'll try to answer all your questions.
Fergizmo said
09:04 PM Apr 3, 2012
Great information guys. Thanks to Howard for starting such a wonderful forum. And thanks to all who responded. I've found out much more than I had imagined.
Cheers
fleamarketeer said
08:39 AM Apr 8, 2012
Fergizmo,
Sorry I'm late to the party but I don't stop by much.
I sell on the road full time- no retirement income. As others have mentioned your location makes a big difference. The particular venue you choose for direct sales and it's location is even more important. For instance, Michigan venues are supposed to provide unlicensed vendors the needed form required to pay sales tax. Smaller places don't worry about it. TN venues "sell" tax permits of different types.
In the past two months I've sold in seven states without problem. A couple of places who offer spots for one of the several "World's Longest Yard Sales" only request to see a tax ID for those events. Others always check. If you can work a calender, you can figure out sales tax reporting for where ever you sell. I usually file sales tax online as most states require it.
Craft shows are more expensive but are often, but not always, more lucrative. Many require a nonrefundable reservation well in advance of the event but some are more reasonable. Festivals and concerts can also be profitable but the rent is usually steep too. Many "county" fair vendors with whom I've spoken won't be returning. Last year was pretty bad. The good thing about that is there will be spots open this year if you've got a winning product.
The new $20,000 dollar reporting floor for ebay and paypal is seen by many as the camel's nose under the tent. They might be correct and that floor could drop in the future. Records of your past sales don't ever go away. Say the reporting minimum drops to $600- the level you must report to the IRS. A whole lot of people are going to be hurting IF their sales records from previous years are turned over. Penalties and interest are killers. I would really advise anyone to stay within the law when reporting income to the IRS whether or not some online entity is currently telling on you. Personally, I stay away from online sales. Of course, your mileage may vary.
The number of transient vendors seems to be dropping. One southern operator had 2 of us in one day and was so happy he lowered our rent! All he asked was that we remind our fellows of his market. He used to have about 10 "gypsy" vendors per selling day in the winter.
If you decide to sell on the road, welcome to the "club". Some of us are a little hard to get to know but only a few bite. Heck, I haven't paid for a campground site in almost a year. Driveways, often with water and power, are offered frequently.
fleamarketeer
edited to correct time since I've paid for a campground.
-- Edited by fleamarketeer on Sunday 8th of April 2012 09:28:25 AM
NWescapee said
11:07 PM Apr 19, 2012
For what it's worth, we sell on the road frequently, in fact, that's my husband's full time job as an artist. Looking at your website it appears as though you spend your time primarily in the Western US. We aren't full time RVer's yet, but do 18-25 art shows a year, many of them requiring travel and we will be on the road for 3 different long road trips this year, in fact we leave for OR next week.
Here's what we know about taxes / licenses, etc. in a few of the Western most states:
Washington - have to have the State UBI number, free to obtain, annual tax reporting is required and their website for reporting taxes collected if you are a retailer and manufacturer, which if you make and sell your own items you have to report in both categories, is a pain in the neck. Very user unfriendly website IMO and as someone with an accounting background, I always want to pull my hair out when dealing with their website. Seattle has it's own specific license as well if you sell anything within the city and there's an annual filing process for the city of Seattle. Some of the other local cities, Bellevue, Langley, Kirkland and a few others will also have city licenses, some of which you can obtain as part of the fees for the one time event.
Oregon - no issues, no taxes to collect and report since they don't have a sales tax and no state license to obtain
Idaho - if you are out of state resident, you are given a form at the art or craft fair, you collect the 6% sales tax, fill in the form and mail it with the tax collected within 14 after the end of the event. Very simple form to complete.
California - requires a state license and remittance of all taxes collected. State License (called a BOE certificate) was easy to obtain, took a few weeks. Will be doing our first art show in CA in September so have not yet had the pleasure of seeing how easy it is to remit the taxes but our art show friends tell us it is easier than WA.
If you're looking for art / craft shows to participate in, I'd recommend www.festivalsdirectory.com (Festivals directory NW) covers WA/OR/ID/MT. Artfairinsiders.com and Artfairsourcebook.com have national listings that are more art show than craft show oriented. Festivalnet.com lists both art and craft shows online.
Howard,
I see that Linda makes and sell a few things while traveling. My wife Donna, sews quite a bit and makes a variety of things. We would like to put on our web site and do some selling. My questions are.. What about the need for a business license? How about taxes (State & Federal)?
And, What if some wonderful soul bought a ton of stuff via your link as a Amazon Affiliate advertizer? Is that something the IRS needs to know about?
I am re-doing my web pages and thinking about methods to make money on the road. Just trying to think it all through.
See you in September.
I'm not Howard, but thought I'd chime in.
A lot your questions depend upon the state and locality that you are domiciled in and/or register your business in. Some require licensing, some don't. As an individual, Donna can probably be a sole proprietor and just report the income/expenses on her individual tax form (federal and state, if you have to file) as self employment income on Schedule C. You can also register as a LLC if you feel you want a bit more protection. A small business attorney and/or tax advisor can assist you in deciding what is right for your situation.
We have an Amazon affiliate link on our blog, and do report the income through our business taxes. Amazon does have our EIN, after all.. which means they report it to the IRS, so we have to as well. (Required if you earn over $600/yr from any single source).
For selling crafts, check out www.etsy.com - it's a storefront for folks like your wife. Takes a lot of the web design elements, ecommerce and marketing off your chore list. A lot of my crafty friends use it sell their wares, and have great success with it. They might also have tips on how to handle the business logistics on your side too.
Best wishes,
- Cherie
Learning..Learning...Learning...
The issue of a business license really varies by state and county to county. In Virginia, a husband and wife can be sole proprietors of their business, but that's not allowed by the Feds for an EIN. In our county, we'd have to sell over $30,000 gross yearly from our home to need a license and it's expensive. We sell very little here, so that's not a problem. We did have to register our business name ('alias') with the clerk of the county court though. If we were in any neighboring county it would most likely all be different.
If you're selling through someone/thing else, you might not need one, but having a merchant account can really boost sales. The best account I've found these days for those with seasonal or periodic sales is through Square, but you need a smart phone and data plan for it. They've been so successful that I understand some equivalent ones will be coming out soon.
Finally, something to consider is that etsey, eBay (and all the other auction places), as well as trying to sell a specific thing on your own web site mean you've got to keep whatever you put on the site on-hand so you can ship it when it sells. This can get to be a problem if you've dozens of items (unless their really small!) and you've limited space.
Hi Allen & Donna,
As usual, great advice so far.
Licensing does vary greatly from state to state and county to county. If you can avoid getting a license and the hassles that comes with it, that's the way to go.
You usually have to collect and remit sales taxes if you are selling to folks in the state where your business is "registered" or "domiciled". If you sell to folks in other states, you usually don't have to collect sales taxes and those buyers are supposed to report those sales and remit a "use" tax (sometimes called something else), but we all know most buyers never do that reporting.
HOWEVER, if you set up at various art shows, craft shows, flea markets, RV shows, RV rallies, etc., usually the show promoters require you to get a sales tax permit and collect and remit. This is often a requirement of the show even if legally you wouldn't otherwise have to do it. And you may have to get a local business license as well.
Online selling usually does not require collection of sales taxes, HOWEVER you are supposed to charge it for sales in some states and more states are pushing to require remission of sales taxes on internet sales due to the need for more revenue.
If you become a business entity like a corporation or a limited liability company, you can get an employer identification number (EIN). Those business models provide some liability protection, but for small businesses it may not be worth the extra administrative work, accounting, and taxation especially when the liability risk is low. An umbrella policy or inexpensive business insurance may be better.
We remain a sole proprietorship and use our social security numbers to report income and expenses via Schedule C on our personal returns.
Yes, to be an advertiser for Amazon, Google, Commission Junction, and other affiliate web advertising programs, you have to provide a tax identification number and they will send a 1099 for earnings over $600 per year.
Not only that, but as of 2012 there is a new tax form that eBay, PayPal, etsy, etc. have to provide - 1099-K - which shows your total sales IF you have over $20,000 in sales or over 200 transactions. It's another way for the IRS to identify revenue and get you to report. The form doesn't take into account returns, refunds, chargebacks, etc. and you have to do the accounting for expenses to offset those reported sales so you don't end up paying taxes on total sales.
Etsy and eBay can be great ways to sell online, but there are downsides. The administrative fees can be high making it necessary to sell higher volumes of low-profit margin items.
In order make low volume, low margin sales profitable, you have to keep costs low. We know lots of folks selling on the road and making good cash flow for living expenses, but very little profit when all their costs are considered.
And in the craft/art area, there are very, very few that can get the prices to cover their time for creating their items. But, if it's a fun hobby and you make enough to cover supplies and get a little spending money, then it can still be worthwhile.
Selling on the road certainly isn't as easy as it used to be. Selling via a website has much less overhead and, therefore, profit margin, BUT you have to drive lots of traffic to the website and that's a whole different issue requiring lots of time.
A good supplemental income can be made, but there are certainly some challenges until you can perfect your own system that provides a good balance of cash flow, profit, and return on time invested.
We discuss a lot of this and more during our "Working On The Road" seminar at our Rallies. So we'll see you at the 2012 RV-Dreams Rally in Oregon where we'll try to answer all your questions.
Cheers
Fergizmo,
Sorry I'm late to the party but I don't stop by much.
I sell on the road full time- no retirement income. As others have mentioned your location makes a big difference. The particular venue you choose for direct sales and it's location is even more important. For instance, Michigan venues are supposed to provide unlicensed vendors the needed form required to pay sales tax. Smaller places don't worry about it. TN venues "sell" tax permits of different types.
In the past two months I've sold in seven states without problem. A couple of places who offer spots for one of the several "World's Longest Yard Sales" only request to see a tax ID for those events. Others always check. If you can work a calender, you can figure out sales tax reporting for where ever you sell. I usually file sales tax online as most states require it.
Craft shows are more expensive but are often, but not always, more lucrative. Many require a nonrefundable reservation well in advance of the event but some are more reasonable. Festivals and concerts can also be profitable but the rent is usually steep too. Many "county" fair vendors with whom I've spoken won't be returning. Last year was pretty bad. The good thing about that is there will be spots open this year if you've got a winning product.
The new $20,000 dollar reporting floor for ebay and paypal is seen by many as the camel's nose under the tent. They might be correct and that floor could drop in the future. Records of your past sales don't ever go away. Say the reporting minimum drops to $600- the level you must report to the IRS. A whole lot of people are going to be hurting IF their sales records from previous years are turned over. Penalties and interest are killers. I would really advise anyone to stay within the law when reporting income to the IRS whether or not some online entity is currently telling on you. Personally, I stay away from online sales. Of course, your mileage may vary.
The number of transient vendors seems to be dropping. One southern operator had 2 of us in one day and was so happy he lowered our rent! All he asked was that we remind our fellows of his market. He used to have about 10 "gypsy" vendors per selling day in the winter.
If you decide to sell on the road, welcome to the "club". Some of us are a little hard to get to know but only a few bite. Heck, I haven't paid for a campground site in almost a year. Driveways, often with water and power, are offered frequently.
fleamarketeer
edited to correct time since I've paid for a campground.
-- Edited by fleamarketeer on Sunday 8th of April 2012 09:28:25 AM
For what it's worth, we sell on the road frequently, in fact, that's my husband's full time job as an artist. Looking at your website it appears as though you spend your time primarily in the Western US. We aren't full time RVer's yet, but do 18-25 art shows a year, many of them requiring travel and we will be on the road for 3 different long road trips this year, in fact we leave for OR next week.
Here's what we know about taxes / licenses, etc. in a few of the Western most states:
If you're looking for art / craft shows to participate in, I'd recommend www.festivalsdirectory.com (Festivals directory NW) covers WA/OR/ID/MT. Artfairinsiders.com and Artfairsourcebook.com have national listings that are more art show than craft show oriented. Festivalnet.com lists both art and craft shows online.