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Go Back   Hip Girl Boutique Free Hair Bow Instructions--Learn how to make hairbows and hair clips, FREE! > Business Issues > Etsy Tips

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Old 09-18-2010, 09:55
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Default For those who sell on Etsy, do you have a tax ID and legit set up?

Started 2 years ago on Etsy and hoped to sell a few bows. I never set up a DBA or anything. Basically I am not a legit business. But sales have increased and I'm wondering if I need to do this. How many of you have a tax ID and everything. Sorry if this sounds ignorant. Just wondering at what point I should do all this. Thanks.
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Old 09-18-2010, 10:14
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

I think THINK you can make 599.99 without paying taxes on it. I think THINK that that is after your expenses as well. My mom is a retired accountant and does ALL of my book/taxes, etc. and so I will admit, I don't know all the answers either. She also does my husband's company's books and my bow business is SMALL time compared to his company. But when I started doing local shows she insisted that I get a tax ID, because I believe if you are selling (in your state, city,etc.) - most shows I do require a tax ID to participate -you need to collect state/city tax.

Online sale are different. When I have an out of state sale - no tax collected. In state sale, I have it set up to collect our state tax. When I sell locally (show,etc.) I charge state AND city tax

Just my 0.02 - like I said, my mother is a genius with taxes, accounting, etc. so I am very lucky to have her so I can continue to be ignorant and let her deal with it
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Old 09-18-2010, 10:28
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

Not sure about the about $599.00, I was under the understanding as long as you have a business, tax id ect. that you have to pay taxes on what you sale. I pay taxes on the backside. Which mean when i do a show or sale something that the sales tax is included in the price. I wish i know more about this $599.00 amount, because the first time I paid my taxes I had to write a check for $13.00..ughhh.

I am almost positive when you are doing show and selling on the internet you have to report that and pay taxes on it.

I will also add if you do take the plunge and get your tax id it is more involved, but if you are serious about your business and know you are in it for the long haul its a step you need to take.
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Old 09-18-2010, 10:33
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

Quote:
Originally Posted by kclements73 View Post
Not sure about the about $599.00, I was under the understanding as long as you have a business, tax id ect. that you have to pay taxes on what you sale. I pay taxes on the backside. Which mean when i do a show or sale something that the sales tax is included in the price. I wish i know more about this $599.00 amount, because the first time I paid my taxes I had to write a check for $13.00..ughhh.

I am almost positive when you are doing show and selling on the internet you have to report that and pay taxes on it.

I will also add if you do take the plunge and get your tax id it is more involved, but if you are serious about your business and know you are in it for the long haul its a step you need to take.

I can check into that, but I think you can technically make 599.99 in a year with out paying income tax on that money. So if your bow business only made, say $400 last year, you wouldn't have to pay uncle Sam income tax on that amount. I'll check with mamma to see if I'm saying that right....
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Old 09-18-2010, 10:34
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

Quote:
Originally Posted by kclements73 View Post
Not sure about the about $599.00, I was under the understanding as long as you have a business, tax id ect. that you have to pay taxes on what you sale. I pay taxes on the backside. Which mean when i do a show or sale something that the sales tax is included in the price. I wish i know more about this $599.00 amount, because the first time I paid my taxes I had to write a check for $13.00..ughhh.

I am almost positive when you are doing show and selling on the internet you have to report that and pay taxes on it.

I will also add if you do take the plunge and get your tax id it is more involved, but if you are serious about your business and know you are in it for the long haul its a step you need to take.
yes and you have to pay income tax (over the 599.99?) but she wouldn't have to collect SALES tax on those sales I believe....
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Old 09-18-2010, 10:43
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

Hmmm, now you have my wheels turning. So I have to pay taxes quarterly, and my total sales for my first quarter was like about $200 and i paid taxes on that. I need to look more into this, maybe its different if you have to pay quarterly. Ughhh, the whole tax thing just confuses me anyhow. I HATE that part of it, I mean HATE! I will continue to watch this, wish i had a close relative that could do my taxes. Lucky duck! LOL

Oh did I mention I hate the taxes....LOL
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Old 09-18-2010, 10:46
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

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Originally Posted by kclements73 View Post
Hmmm, now you have my wheels turning. So I have to pay taxes quarterly, and my total sales for my first quarter was like about $200 and i paid taxes on that. I need to look more into this, maybe its different if you have to pay quarterly. Ughhh, the whole tax thing just confuses me anyhow. I HATE that part of it, I mean HATE! I will continue to watch this, wish i had a close relative that could do my taxes. Lucky duck! LOL

Oh did I mention I hate the taxes....LOL
I know I'm lucky - I can't even balance a check book. She is putting all my sales in quickbooks, balancing expenses, reporting profit/losses, etc. I will ask her about the 599 rule
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Old 09-18-2010, 11:01
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

Your best bet is to talk to an accountant. I have one that's done my taxes for years. He set me up with my tax id. I collect sales tax on all sales made to Illinois residents and pay the sales tax quarterly. I also report all my sales for income tax. I don't know about the $599.99, I'm sure it's different in all states, I was under the impression from my accountant that I needed to collect tax for all sales I made.

I have my Paypal set up to collect the tax, and FYI if you are on Etsy you need to set up Etsy to collect the sales tax too because they are rolling out a new checkout and the paypal tax won't work with it anymore.
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Old 09-18-2010, 11:08
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

My sales have increased dramatically,Lucky me my sister is an atty and she is going to be setting me up as liget. I have always been using quickbooks, because i like to see my profit and losses.

Because my sister has has her own lawfirm I have learn alot...SAVE ALL RECEIPTS, most everything can be a write off...GOAL: Show a loss...even if you didn't LOSS=no taxes to be paid.

As far as taxes, i think is it a turn off for someone to pay taxes, I have jet to do a show, but my thought was to incorporate the tax in the price, knowing that it would have to be taken out.

Honestly, if your going to go liget, you need a good software program...Quickbooks is about $200.00... (It's a write off) I' very glad that I have invested in it. Sorry I rambled...
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Old 09-18-2010, 12:34
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Default Re: For those who sell on Etsy, do you have a tax ID and legit set up?

y'all are talking about 2 different forms of tax here -- sales tax and income tax. you do need to collect and pay all sales tax, therefore you need a tax id. at the end of the year when you are doing your income tax for your job, your business etc, here is where the 599 comes in. if you have earned less than 600, you don't have to include this as income and therefore be taxed on it, but if it is over that amount, total profit must be included.

i am not a tax accountant nor do i play one on tv. i am happy to be corrected, but this is my best understanding of the issue.
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