So, etsy

[feuervogel]

I'm thinking of starting an etsy shop to sell crocheted things and quilted things and whatnot, but I have no idea about the tax implications of it. If I sell to people *in* NC, I have to collect sales tax (or take it out of the sale price); if I sell to people *outside* NC, I don't.

Do I have to register as a business so I can send the state what meager sales taxes I collect? (I'm assuming I won't sell more than $100/mo.) What's the cutoff for hobby vs business, anyway? The IRS says it has to do with the intent to make a profit. Well, sonny, I wouldn't be selling shit if I didn't want to make money off it. Here is a more plain-English discussion of that.

I don't know, y'all. I just want to make some stuff and sell it to people at more than it cost me to make it.

Does anyone have experience with this sort of thing?

Comments

[feuervogel]

So, NC only has county-level boards of equalization. Here is mine: http://www.co.orange.nc.us/assessor/BoardsPurpose.asp Note that everything in their list regards property taxes.

http://www.dornc.com/practitioner/sales/bulletins/section1.pdf is the relevant section of the NCGS regarding sellers. (Scroll past all the definitions.) The form NC-BR is here: http://www.dor.state.nc.us/downloads/fillin/NCBR_webfill.pdf Only wholesalers have to get wholesaler numbers. Otherwise you just tick the "retail" box.

I do not plan to do this any more than hobby-level time. I don't expect that I'll make more than a few hundred dollars of sales (gross) in a year. (And since only sales in-state require me to pay sales tax, only some small fraction of that would go to the state, probably.) If I were filing singly, my income wouldn't meet the threshold for reporting at all.

If they (the IRS) really want 15% of $200, they can have my $30. It's not going to make a difference, really.

The town's business license form requires an EIN, which I will not have, because I don't have employees, and I'm not paying myself a salary. This is a hobby. I do not plan to open a shop or whatever, and I'm not going to pay a fee for a HOBBY. It will likely be more than my expected income. http://www.ci.hillsborough.nc.us/content/business-license (The link to the town code is broken for me.)

Also, technically, my HOA forbids running a business out of my home. They don't say anything about hobbies.

[beth_leonard]

An EIN is really easy to get, doesn't cost anything, and you don't have to use it. We have one for our sole proprietorships so we could open an individual 401K on the tutoring income. There's a form on the federal IRS website to get it.

I can tell you're upset about all the paperwork you have to fill out for a hobby. It drives me nuts too, but if you want to be legal about it, that's what you have to do. I really hate government regulations and how they make things harder for small businesses in order to "protect" people from shoddy goods and services. It kills innovation because big business can start out as hobbies and small businesses.

--Beth

[feuervogel]

Yes, I know, you hate the government.

I am saying that the business license forms most likely do not apply to me, therefore I will not be filling them out.

[beth_leonard]

I don't hate government. I hate it when government over-regulates things in ways that are not good for growth and economic development. I'm perfectly happy that we have laws like "don't kill people" and appropriate punishments and court systems for enforcing them.

--Beth

[feuervogel]

Hillsborough Town Code, chapter 8, article 1.

Sec. 8-1. - Definitions.

The following words, terms and phrases, when used in this chapter, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Business includes any trade, occupation, profession or other activity engaged in by any person or caused to be engaged in by any person or caused to be engaged in by him with the object of gain, profit, benefit, or advantage either direct or indirect, except that the term business does not include occasional and isolated sales or transactions by a person who does not hold himself out as engaged in business.

Conducts a business. A person conducts a business when he engages in one act of any business. If a person is listed in the yellow pages of the telephone directory issued by the telephone system serving that town that shall be prima facie evidence that the person is conducting a business.

Within the town. A person conducts a business "within the town" when he maintains a business location within the town or when, either personally or through agents, solicits business within the town, or picks up or delivers goods or services within the town.

-----
See the italicized section under "business".

[beth_leonard]

So it sounds like in your local town you don't need to register as a business. That's a relief at least. It will also help you with the HOA. In some towns people aren't so lucky.

--Beth