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Old 08-29-2017, 01:46 PM   #1
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Default The legal side to a homemade craft business

Hi everyone,

I am from MN and so far have not found any information on the legal side to homemade craft business. I have a few questions, any info would be appreciated or if you can tell me about your experience. Thanks!

Questions:

1. Do I need a business license/permit to start a homemade business if I am selling on Etsy or other websites, or at crafts fair?

2. Do I need a business name?

3. What about sale tax, how does that come to play?

4. Do I need to report to the IRS if I am making over a certain amount?

I hope someone has some information. I would also love to connect with someone with years of experience...maybe an adviser or mentor.

Thanks!

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Old 09-29-2017, 08:42 AM   #2
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Maybe I can help.

1- You will need a Sales tax certificate should you sell at local craft fairs. They're usually free and you can just Google MN sales tax certificate.

2- You don't need a business name. Just use your own name.

3- You must collect sales tax when you do a craft fair. You just put that money aside and pay when you file. Your state tax people can help you there. Really, it's not difficult at all.

4- You keep track of ALL your expenses, including how many miles you drive in your business. Then you file everything on IRS form 1040C. It's one page. Chances are for the first couple years you will operate at a loss, but if you lose money for 3 years or more the IRS considers it a hobby and you can't deduct anything.

I would suggest hiring an accountant to legally set up your business. We're a "Sole Proprietorship".
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