Wednesday, July 13, 2011

Need a business licence???

Yesterday I started researching how to sell your homemade goods, with a view to making some extra cash for the adoption. Anybody would think this should be easy, right? After all, most of us know someone who does something on the side without too many issues.


I bought the book entitled "The Complete Idiots Guide to Selling Your Crafts" (not that I think I'm an idiot, but I like to keep things as simple as possible!) and spent much of yesterday drinking in the information contained within.

Most of it was pretty simplistic: Keep good records of expenses, so you can work out what each of your crafty items costs to make, then price accordingly allowing for profit; designate a 'work space' within your home, so you don't have to keep packing everything away, just to set it all back up again two days later; decide on how to advertise (word of mouth, blog, web page, flyers, etc..); make sure you have a 'returns' policy in place and if working from home, invest in a mail box ( so as not to disclose your home address. All easy enough so far.......I do have some business sense, at least.

Then things got a little more complicated......

"make sure you have the correct business licence to operate from home". Wow......I wasn't aware that I needed one!
Apparently if you are operating any kind of selling venture, you are liable to pay 'State and local business taxes", regardless of whether you make a profit or not. Such taxes are collected via the licence fee each time you renew, and the licence itself also has a fee attached.

Also, federal and state income taxes must also be paid if your income exceeds a certain amount, but there is no information on how much that amount may be. I am guessing this differs from state to state?. You may also be allowed to reduce these taxes if you make enough sales over time, by deducting the business expenses. (Isn't that generous!)

Finally, you must pay sales tax. This is usually collected by the state tax agency, but if you make money from home, you probably need a 'seller's permit' (also called 're-sale permit"), again depending on the amount you make. guessed it.....these also cost money!!!!

And there was me thinking this would be simple!!!

I spoke to a few people at work about this. Every single one said they avoided all of this by only selling to friends and friends of friends, to completely avoid the paperwork...... and the taxes!
However, I really don't know that many people in this country and being a 'foreigner' here on a green card, I am pretty sure I will be the one person who gets reported, taken to Court, then thrown out of this 'land of not so many opportunities' in some disgracefully, humiliating fashion.

I guess it's time to get on the phone to the tax office.......

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