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Go To Great Panes, Kathryn Maloney ©2011
(This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.)
- Register with your state to collect sales tax,
- Register your business with your state and/or local authorities,
- Get a business license or business permit,
- Report the money you make on your income taxes, no matter how little it is…
Even if you only sell online, make no profit, consider selling only a hobby, or don’t sell items often, the government may want you to register with them.
Once folks learn that there are some legal issues with selling, they often don’t know where to start. Hopefully this page will help you get started on the right foot. It’s not meant to replace getting help from a professional and you should double check info you get online with the state & local authorities.
Sales tax and business laws vary widely from state to state and often from city to city/county to county. Your best bet it to contact state & local officials to find out what is required for your type of business in your location. Links below take you to official government pages, but first some introductory info…
Please, please, please don’t take the word of people in forums or on non-official websites for what your legal responsibilities are. That includes this blog. Always check info you get with the authorities in charge of setting the rules.
Sales Tax:
Most states require you to register before you start selling. There are a few states with no sales tax, some that allow some sales before your need register, some that allow you to collect & remit sales tax without registering and some that require you to register before you start to sell and you won’t know which yours is until you check your state’s laws. (Often states offer an amnesty program/voluntary disclosure or compliance program for folks just learning that they should have been collecting taxes, so be sure to ask about that if it suits your situation. Click here for a page also lists current/upcoming amnesties–though I don’t know if it is kept up to date well.)
Registering to collect sales tax:
Sometimes it’s free, sometimes there’s a fee. The paperwork is not difficult, don’t bother paying some “business registration” or “legal help” website to file it for you.
| Before you register… Be aware that if you give a phone number while registering for sales tax, the state may make that number public as a business number and you might end up getting phone calls from solicitors.* See here for how to avoid using your home number during registration. |
You might need an NAICS code for your business–this is just a code that describes what type of business you have. These sites should help you find the right one: http://www.census.gov/eos/www/naics and http://www.naics.com/search.htm
The types of things you might look up when figuring which code is right for you: retail sales, internet sales only, used goods/second hand dealers, antiques, artist (fine, graphic, photographer…)
What you need to know about your state’s sales tax:
Sales tax laws are different in every state but the questions folks have are always the same. Answering the questions on this list with info you get from your state will give you a good understanding of the issues involved before they even come up: gotogreatpanes.com/blog/2008/06/26/sales-tax-questions
Occasional Sales:
If you set up a shop online, like an Etsy shop, you generally don’t qualify as an “occasional seller”. Many states will consider this a business venture and require you to register at the very least to collect sales tax, sometimes there’s other registration required too. Please check if your state considers how you sell to meet their “Occasional Sales” exemption from registration & tax collection. In many states more than 3 days worth of a yard sale per year will even take you out of the occasional seller group and make registration a requirement.
Hobby / Individual Seller:
Non-business sellers, in most states, are required to register & collect sales tax if they set up to sell to the public. Even if you think you qualify as a hobbyist or “individual” seller and not a business, the law may be that you still need to at least register for sales tax and the authorities may feel differently about you meeting other registration too, so please check your state & local (county/parish, city…) registration requirements.
See here for how the IRS differentiates a business from a hobby:
Is Your Hobby a For-Profit Endeavor?
Business Type:
Picking a business type depends on what you sell. Many small businesses are Sole Proprietorships, the most simple business structure.
If you sell items for children, food or bath & body products it might be better to incorporate to protect your personal assets. Basic info about business structure from the IRS: Choosing a Business Structure.
If you go with a Sole Proprietorship, you will file your business income with your personal income taxes on the Schedule C each April. See here for help–preparing your records as you go will save big headaches come spring: Filing Income Taxes for Your Small Business
Doing Business As (DBA), also known as a Fictitious Name:
If you are doing business under a name other than your given name (“Soap is Dope”, for example, as opposed to “Mary Smith”) most areas will require you to register the DBA name.
Some places have a small fee to register a DBA & a page or so of paperwork that basically has a person’s name, address and the business name on it. Other locations require that plus posting it in the newspaper for a set amount of time. (If you need to do the newspaper thing, I’ve heard small weekly papers work and cost less than putting the legal notice in a daily paper.) Again, you don’t need to pay for some business registration service if you are filling out one of these forms.
More personalized help:
If you need more help after reading the links above & below that apply to you, you might want to consider setting up an appointment with a business counselor. The US Small Business Association (SBA) is government run and offers free help: SBA
State names in blue text are links to info for that state. Some have just basic info to get you started, some have a lot of links to details. I’ll add links for more states & more info for already linked states as I have the information. |
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| Alabama | Kentucky | North Dakota |
| Alaska | Louisiana | Ohio |
| Arizona | Maine | Oklahoma |
| Arkansas | Maryland | Oregon |
| California | Massachusetts | Pennsylvania |
| Colorado | Michigan | Rhode Island |
| Connecticut | Minnesota | South Carolina |
| Delaware | Mississippi | South Dakota |
| District of Columbia | Missouri | Tennessee |
| Florida | Montana | Texas |
| Georgia | Nebraska | Utah |
| Hawaii | Nevada | Vermont |
| Idaho | New Hampshire | Virginia |
| Illinois | New Jersey | Washington |
| Indiana | New Mexico | West Virginia |
| Iowa | New York | Wisconsin |
| Kansas | North Carolina | Wyoming |
| Visit our Etsy shop: GoTo |
| Alabama Starting a Buisness Sales & Use Tax “All persons or businesses that sell tangible personal property at retail or operate places of entertainment or amusement must collect the tax…” Source: Starting A New Business pamphlet More Brochures & Pamphlets |
| Alaska Starting a Small Business (PDF file) Small Business Assistance Center DOR–Tax Division |
| Arizona Transaction Privilege Tax (TPT)/Licensing: AZ has Transaction Privilege Tax, not sales tax. Publications page–see: ~~~Seller owes if whether or not they collect if from buyer: see Publication 602, p1 ~~~Casual Sales: You need to collect… “even if you consider your sales a part of a hobby.”: see Publication 602, p1 #3 ~~~Tax on Shipping: see Publication 602, p1 #8 AZ: Business Forms–including: ~~~TPT-1 Transaction Privilege, Use & Severance Tax Return ~~~TPT-1 Instructions ~~~TPT-Deduction Codes (details) AZ Dept of Commerce: Small Business Services Out of state sales are exempt–: “Retail sales of tangible personal property to nonresidents temporarily within Arizona, for use outside of Arizona, are exempt from transaction privilege tax…” From: A Guide to Taxes for Arizona Businesses – Business Basics |
| Arkansas Who must register? “Vendors located and operating in Arkansas must register under the Gross Receipts Tax Law if the vendor sells property or services subject to sales tax…” See the start of this official state PDF: Starting a New Business? Arkansas local sales tax is based on delivery location State Sales Tax Main Page Local Sales Tax Page Raffle Info (and Charitable Bingo) PDF file Who needs a permit to sell food? |
| California Starting a Business Business Resources Sales & Use Tax – Regulations Who must obtain a seller’s permit? Sales & Use Tax Publications–see #100 for tax on shipping info Sales & Use Tax Forms & Applications (including instructions) Register for a Permit or License Applying Tax to Your Sales & Purchases–info on tax rates, when to collect, what to do when you collect the wrong amount, shipping & handling charges, barters/trades…. Secretary of State’s Business Entities Page Basic CA Sales Tax Return Instructions PDF file (from the state) An Etsy forum thread with great links: etsy.com/forums_thread.php?thread_id=6249138 LA County Fictitious Business Names |
| Colorado Start a Business Sales Tax FYI Publications Page–see: Sales 8: Sales Tax Requirements for Small Home Businesses–you must collect even if you don’t have to register Sales 9: Sales Tax Licenses and Filing Requirements Before you decide that you don’t need to register, please call the state to see if how you sell (like setting up your Etsy shop) qualifies you as an occasional seller or if CO sees what you do as a business that requires registration. (“The sales tax license exemption outlined above does not apply to you if…”) Sales 29: Tax on Shipping? Read pub 29 Rate for mailed items–see Sales 62 under “Deliveries of Goods” Sales 79: Sales of Taxable Items Over the Internet–currently being re-written according to the state website (01/12), but this might help a bit in the mean time: Business Licensing Database for mail order/online sales Common Filing Errors on Sales Tax Returns–tips from the state Tax Classes–learn how to handle sales tax from the state Bingo & Raffle–do it by the state’s rules |
| Connecticut Starting a Business Checklist Starting a New Business Who need to register to collect sales tax Registration Options One rate for the whole state Shipping & tax State Tax Guides Business FAQ |
| Delaware |
| District of Columbia Start a Busines Start a Busines Checklist Business Homepage Forms & Publications Sales Tax Publications Tax Rates & Revenues Sales Tax Rules |
| Florida Starting a Business in Florida What taxes are required? FL discretionary sales tax info: Destination-based salest tax “The full amount of sales tax must be collected at the time of the transaction. Sales tax, including any county surtax, must be separately stated on the sales slip, charge ticket, invoice, or other evidence of sale.” Source: Publication GT-300015: Guide for Business Owners (page down for a link to this publication) Florida Department of Revenue |
| Georgia First Stop Business Information Center Business, Labor & Employment–resources you need to start a business Every person making a retail sale should collect & remit the applicable tax on all non-exempt sales. (PDF file–see page 12) Department of Revenue General Sales Tax Info: Destination-based sales tax–”The tax rate is based on the county where delivery takes place.” Sales Tax Forms Dept of Revenue Publications Business Taxes Info including sales tax |
| Hawaii Starting a Business–PDF file HI Government Starting a Business Page Regsiter with the Dept of Taxation Tax Facts page: info on HI’s General Excise/Use Tax (GET). General Excise vs. Sales Tax PDF file–how sales tax & GET are different. GET FAQs page |
| Idaho Idaho Business Resources Sales Tax–main page Sales Tax Publications Do I need to register? If so, when? That’s covered in this PDF document: #4 Retailers–An Educational Guide to Sales Tax in the State of Idaho Shipping & handling is only taxable on taxable goods when it is not stated separately–see page 7 of #4 Retailers (above) |
| Illinois Starting a Business Step by Step Guide to Starting a Business Do I need to register with the IL Dept of Revenue? IL Dept of Revenue IL Dept of Revenue FAQs Publication 113: Retailer’s Overview of Sales and Use Tax Internet sales are taxable except when shipped out of state Shipping and handling taxable? Sales & Use Tax Forms City of Chicago: Operating a Business Out of Your Home Know what your business owes use tax on: Illinois Use Tax Fact Sheet–pdf file. |
| Indiana An Entrepreneur’s Guide to Starting A Business in Indiana Busines FAQ–Start a Business, Tax Form info… Sales Tax FAQ Business Structures Register a New Business Must regsiter if (this is a PDF file): “A person is an Indiana Retail Merchant and must be registered with the Department to collect Indiana Use Tax if the retail merchant is engaged in selling at retail for use, storage, or consumption in Indiana.” (see more info below) Information for Businesses Retail Sales Tax & Use Tax PDF file, AKA “Brochure #3″, gives you the basics including that items shipped out-of-state are not subject to IN sales tax. Selling Food DOR–Sales Tax Forms & Publications Sales Tax Information Bulletins–there are many, be sure to check out at least these in the table for Sales Tax (not the income tax bulletins): # 20: See the last page for a definition of non-auction casual sales # 34: Sales Tax Application to Photography # 40: Prizes & Other Free Merchandise (Blog give-aways anyone?) Chapter 7-Registration for Tax ID: “You will need to register your business with the Department if you: Will be selling products or tangible items (sales tax)…” “Selling at retail” defined in IC 6-2.5-4-1 as “Sec. 1. (a) A person is a retail merchant making a retail transaction when he engages in selling at retail.” Registered retail merchant’s certificate IC 6-2.5-8-1 Version a:… Sec. 1. (a) A retail merchant may not make a retail transaction in Indiana, unless the retail merchant has applied for a registered retail merchant’s certificate…” Tax Forms–includes a link to sales tax forms |
| Iowa Starting a Business Sales tax FAQs Forms & Publications |
| Kansas Thinking About Starting a Business Starting a Business: Developing, planning & licensing Sales Tax Looks like destination based sales tax Sales Tax & Compensating Use Tax (PDF)–pages 17 & 18 for tax on shipping info Sales & Use Tax: Rate Locator Sales Tax Forms & Publications |
| Kentucky One-Stop Business Licensing Program or see the Professional Licensing & Permits–page down to the “Business Permits and Licensing Requirements” link in the left column of links Business Center Sales & Use Tax KY FAQ Sales and Use Tax–PDF file Delivery Charges–taxable More KY “Sales Tax Facts” editions: http://www.revenue.ky.gov/newsroom/publications.htm#S |
| Louisiana Register a Business Online Business Registration Who must file Main Business page Forms & fee schedule Geauxbiz: mail in this form and the state will send you a customized list of requirements for your business Sales Tax Statutes and Regulations Sales tax FAQ |
| Maine |
| Maryland Who needs to register? “If you will make sales in Maryland, you will need to obtain a sales and use tax license…” Maryland Checklist for New Businesses Starting a New Business in Maryland Tax Included? Sales Tax FAQ Purchases for Resale–not all are tax free when you buy in-person, but you can report tax overpaid when you remit your sales & use tax return. Want to read the laws straight out? Try: Subtitle 06 of the SALES AND USE TAX Page |
| Massachusetts Getting Started Who Should Register? A Guide to Sales and Use Tax Sales/Use Tax Forms & Exempt Certificates Sales and Use Tax–Overview Sales and Use Tax–Documents DOR Small Business Workshops City of Worcester Business Guide The Laws (boring tax code, but the info is in there): PART I: Administration of the Government TITLE IX: Taxation CHAPTER 64H: Tax on Retail Sales of Certain Tangible Personal Property |
| Michigan Business Center: Starting your business Guide to Starting a Small Business–PDF One sales tax rate for the whole state Sales and Use Tax FAQs Shipping & sales tax Sales & Use Tax Certificate of Exemption Voluntary Disclosure Selling food: In-home bakery Raffle Guide Use Tax |
| Minnesota Should I be collecting sales tax? Who needs to register? How frequently will I file & when? See the MN Sales & Use Tax Instruction Book–PDF file Register for a tax ID number Sales and Use Tax Sales tax fact sheets |
| Mississippi |
| Missouri Missouri Business Portal Sales & Use Tax Main Page–includes some FAQ links, tax rate links, etc More FAQ links here for sales & business taxes Shipping & sales tax |
| Montana How to Launch a New Business Main MT Business Page MT Dept of Revenue Business Page Sales Tax FAQ Made in Montana–who qualifies |
| Nebraska Sales Tax FAQ New Business Information–including DBA Forms Nebraska One-Stop Business Registration Starting a business in Nebraska–Who needs to register? You do, if you are selling on Etsy or have another web-based venue. Sales & Use Tax–the main page including a link to register & a link for filing your Nebraska sales tax online. See the links on the left side of this page for forms & information guides. Business Tax FAQ Delivery charges taxable? See the “Delivery Charges” PDF file here Want to read the dry old sales tax regs? Title 316 – NEBRASKA DEPARTMENT OF REVENUE Chapter 1 – SALES AND USE TAX |
| Nevada Start a Business Main Business Page NV Dept of Tax FAQs says: ~~~Shipping is not taxable, but handling is… ~~~Sales tax included is ok, but you shouldn’t be charging tax to out of state buyers so if you are selling online tax included probably isn’t the way to go unless you want to do a lot of refunding. Tax Forms Tax Publications & specifically ones for Sales Tax Main Dept of Taxation page |
| New Hampshire |
| New Jersey Who Must Collect Sales Tax? Shipping taxable? See this PDF file: Making Mail-Order & Internet Sales Starting A Business NJ Business Registration Page Printable Forms–Sometimes it’s just nice to see it on paper before you fill it out online, or to be able to read the instructions before filling something out. Arts & Crafts Businesses Pub ANJ–11 (PDF) Sales & Use Tax: Forms, publications & FAQ Sales Tax FAQs Getting Registered Tax Center |
| New Mexico Small Business Services: Starting Your Business New & Small Business Education Center NM has a “gross receipts tax” instead of sales tax which is based on the seller’s location. Some states with this type of tax have an exemption for items shipped out of state but I couldn’t find info on the website so I recommend calling the state to check if that’s the case. The closest I saw was the third faq link in the right sidebar of this page, but it didn’t mention goods shipped out of state. Who should register? (& how to) Tax workshops provided by the state NM Tax Forms & Publications How NM defines a business nexus. Gross Receipts Tax Credits See the “What is a DBA & do I need one?” link on the FAQ page if you are selling under a name other than your given name. |
| New York Because I’m from NY, I’ve got the most info on NY so I have organized it here: NY Sales Tax & Business Registration Requirements |
| North Carolina Start Your Business in North Carolina–Start a business check list, licenses… Who should register for sales tax Required to collect & remit sales tax Sales & Use Tax Starting a home-based food business Dept of Revenue–Information for BusinessesTax info, forms… Destination-based sales tax: A retailer who ships or delivers… |
| North Dakota When is a (sales tax) permit required & how do I get it? Sales & Use Taxes FAQ Is shipping taxable? More details: Guideline: Sales, Use and Gross Receipts Tax Requirements (PDF file) Business Registration Web Site |
| Ohio Who needs to register? Ohio law requires any person or business… Sales Tax Electronic Filing–now required, includes dates 1st Stop Business Connection Vendors: Sales Tax Laws in Ohio PDF Sales & Use Tax Origin-based Sales Tax and also here Ohio Business Gateway Business Filings: Name Availability Guide & Search–see links on left Sales Tax FAQs–near bottom of page Tax on shipping? and also explained here in detail |
| Oklahoma Do I really need a sales tax permit? See here and here Business Registration Packet–good overall info Register to collect sales tax online Starting a Business Destination-based rates when item is shipped Sales Tax FAQs Main Sales Tax page Forms & Publications Business Taxes–including Business Tax Workshops, Business Structures, How to Form a Business… The legal code: CHAPTER 65. SALES AND USE TAX PDF–dry but detailed. See: 710:65-15-1. Sales related to interstate commerce, b(2)–items shipped out of state aren’t taxable 710:65-1-5. Unlawful to advertise that sales tax will be absorbed 710:65-1-6. “Tax-included” prices PART 7. “D”–Shipping/Delivery Charges |
| Oregon Business Info including the Business Wizard to tell you how to start Business FAQ DOR Business Taxes Homepage Forms & Publicaitons How to Start a Business in Oregon–PDF Food Businesses Small business state tax and government agency contacts–PDF Portland |
| Pennsylvania Starting a Business in Pennsylvania-A Beginner’s Guide Online Business Start up wizard–see the “Online Business Registration Interview (OBRI)” on this page Who must register to collect sales tax? See #1a in the Retailers’ Information: State and Local Sales… Tax PDF Register to collect PA sales tax FAQ & ask a question center What is included in the purchase price of an item for Sales Tax? Shipping & Handling–even when some items are not taxable Sellers collect state tax if they are not in an area with local tax Sellers can voluntarily collect local tax too (looks like they are not obligated to if not in a local tax area, please contact state to be sure…) This is also covered in the PDF link above in entry # 16 What’s taxable? See the “Retailers’ Information” PDF link above Use Tax Manufacturers exemption from Sales Tax on purchases but check on local zoning before stating that you are a manufacturer, as opposed to an artist-the benefit of no sales tax may not be worth the hassle. What is a tax exempt number? sale tax license number? exemption certificate? Fines for not registering Want to read the actual code? § 60.16. Local Sales, Use and Hotel Occupancy Tax |
| Rhode Island |
| South Carolina South Carolina Business One Stop (SCBOS) General Sales Tax Info Sales Tax is Destination Based, rates go by county–see page 46 5 Digit zip codes cross county lines, so you need the full address or 9 digit zip code to calculate sales tax accurately |
| South Dakota |
| Tennessee Instructions for Opening a Business in Tennessee One Stop Business Resource Sales & Use Tax–FAQ Sales & Use Tax Sales tax on shipping Registration requirements: If you sell less than $400/month, it depends on where you get supplies… Sales and Use Tax Forms, Instructions & Exemption Certificates |
| Texas Selling on the Internet: ~~Register if you sell 2 taxables items in-state w/in 12 months Texas Busines Advisor Start a Business Quick Start for Business: A guide to Comptroller resources for businesses. How much is sales tax? Local Sales Tax Rate Search Sales tax FAQ–#6–penalty for inaccurate collection, #7–trades taxable, #8 tax on shipping for taxable items…. Food Sellers Cosmetic Sellers: Texas Department of State Health Services |
| Utah Main Sales Tax page Who Must Collect and Pay Sales Tax… “A person who sells personal property to a final consumer must collect tax on the sale.” page 2 of publication 42–PDF file “Most businesses must begin by doing the following…” page 1-4 of publication 38–PDF file Publication 25, General Sales Tax Information–PDF file |
| Vermont |
| Virginia Starting a Business in Virginia Sales & Use Tax FAQs for Business: How to Register, When to Register, When are they due… Are shipping charges taxable? |
| Washington WA Business registration quiz–helps you figure out what you need to be properly registered with the state. Get a Business Licensing Guide online–a second quiz for licensing requirements Online sales–info on registration When you engage in any activity, including hobbies, for gain, benefit, or advantage (regardless of profit or loss), you are considered a “business”… Get a Business Licensing Guide online–gives you a list of who to contact for registration in your specific business & location Starting a Business–more on Business Licensing Get a form or publication from the Dept of Revenue Seller must remit sales tax for all in-state transactions, even if they don’t collect it from the buyer. Destination-based sales tax: You need the 9-digit zip code to accurately calculate it, but the state will allow you to use 5 digit zip codes because 9 digits is difficult for many sellers: Tax rate–Use 5 digit zip codes Tax on shipping? Click the “Individuals Via Online Auctions or Marketplaces” link here and see the bottom of the page. |
| West Virginia |
| Wisconsin Who needs a Wisconsin seller’s permit? WI Business Wizard Sales & Use Taxes main page WI Sales & Use Tax FAQs including: no tax on items shipped out of state (#4), tax on shipping for taxable goods (#5)… Sales & Use Taxes Publications County Sales & Use Tax: rates are destination-based WI State Business Services Tax Rates Want to read the tax code? It’s a little dry… 
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| Wyoming |
*Buisness phone numbers do not qualify for the Federal Do Not Call Registry so telemarketers do not need to follow the rules about not calling a number you give out as a business phone number.
