Taking The Plunge.

Q: Well, I'm gathering the courage to try to sell my earrings to boutiques, I have a number of questions which I will post once I can state them clearly. My first question, however, is simple: Do I need a resale number in order to sell to stores? I'd rather not get all charged up, and then look like an idiot my first time out...

A: Sales tax is required to be paid by the FINAL consumer. The stores need a resale number to keep from having to pay YOU (or their other vendors) sales tax, because they will be reselling the items. You are not "re-selling" earrings if you made them (they didn't exist before!), only if you bought them ready-made. You are re-selling beads and findings, however. If you had a resale number, you would not have had to pay sales tax on those purchases of beads. Does that help? In a state that has sales tax collected by the retail vendor, THEY must supply you with a certificate with their tax number on it. You could get caught in the middle of something very ugly if the state decides to audit you. Don't rely on a store to send you the certificate at a later date. Demand that they give you the certificate when you bring the merchandise to the store. Whether you leave things to be sold or sell them outright. You need this certificate for your records. I've heard of some pretty awful things happening to artists that didn't have a resale certificate when they were audited by an over-eager IRS agent. I keep the certificates in a special file folder with files for each of the vendors I do business with. You should have a tax number so that you don't pay sales tax on materials that your purchase. Keep careful records of all materials bought and all finished products sold. At the end of the year, it will come in handy when preparing your tax return for your business. When you apply for your tax number, the state may require that you file a tax return quarterly, but you can request that you only file once a year especially if your business falls into a very small business category. Even if you don't have any sales, you are required to file that tax return or the state will assume you have done business and are withholding tax monies that belong to them. They will arbitrarily assign an amount of tax money and I can assure you, it will be much higher than you ever collected from any business or craft sale you made that quarter.