{County Clerk's office circa 1895, from Redwood City Public Library. Are you registered yet?}
You're taking your hobby to the next step and are going to start selling your work- good news!
But oh wait, bad news! You're now subject to laws and regulations, taxes, fees and more, doh!
It's not as bad as it sounds though, don't worry! And it's important that you set your business off straight with the proper legal registration. To help get you started, here's a list of things that you may need when you're first setting up your business. (US based info only)
Business License
Even if you're just running a tiny handmade shop out of your home, you may need to get a business license to legally conduct your business. There are different rules and fees depending on where you're located. For instance, I didn't need a license when I lived in Nevada, because they don't require one if you make under a certain amount of money per year. I suggest you head to your state's main website (google "state of _____" and you should be able to find it) and find the information regarding starting a business in that state, or give your state offices a call and ask them to guide you.
DBA
If you plan on using any name other than your own to conduct business (like Modish for example) then you'll need to file for a DBA or "Doing Business As" name (also called fictitious or assumed business name.) These are registered per county and you'll have to make sure your preferred DBA is not already in use- for instance, I had to register as "Modish Handmade" here in Portland because "Modish" was already in use by another company (doh!)
Head to your county clerk's office to register and get more information. It may also be a good idea to register your DBA even if you are using your name, especially if it's common. You wouldn't want the "Jane Doe" cafe to come along and start doing business in your name!
Seller's Permit
If your state collects sales tax and you sell taxable goods (yep, you probably do) you have to file for a seller's permit before you can legally sell your goods in that state. Once filed, you'll be required to collect sales tax on retail sales made within your state, and file a sales tax return to remit those tax payments back to your state.
If you have an online shop and sell your items all over the country and world, you will only be collecting sales tax on orders that ship to the same state where your business is located.
Resale Certificate
To go along with a seller's permit above, when you sell your goods wholesale, you do not need to collect tax on those sales, even if they're sold within your state. Your purchaser will need to supply you with a resale certificate that says they're purchasing goods for "re-sale" use and are not subject to tax.
By the same token, if you own a shop selling retail goods and stock it with items you purchase at wholesale cost (a boutique with items from various designers, for instance) you'll need to have a resale certificate to give to your suppliers when you make a purchase from them. In order to get a resale certificate, you have to have a seller's permit first. You can usually find resale certificates to print off your state's website, or call your state offices.
Federal Tax ID
If you're doing business as a sole proprietor, your social security number can be used as your Tax ID when filing taxes. If you are doing business as a partnership, corporation (we learned how to choose a business structure last week!) or have employees though, you'll need to file for a Federal Tax ID, or EIN (employer ID #). This is done at the federal level so check irs.gov to apply online and find more information.
Business Bank Account
I think it's an absolute necessity to have a separate bank account for you business. It makes your business taxes and bookkeeping so much easier to keep track of and manage so you can see exactly what is coming and going out of your business.
To open a bank account in your business name, you'll have to show your bank proof of your DBA (see above) and may be required to supply other information as well. Get a separate checking and savings opened before you spend anymore money on your business!
You'll need to look further into all these items to see if they're required in your city/state or for your particular situation, but these are pretty common ones!
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