Tax ID?

Q: Everyone, I'm new to the beading stuff, and wanted to know what a tax ID is and what it is for, as well as how I can get one. I would love to buy beads wholesale, but what is needed? I'm going to start making bead jewlery someone, I told my hubby that there is a bracelet that's in style made from beads. Would anyone here happen to know what it is and what type of bead it uses?

A: A tax ID is a number usually assigned by a state agency (in my case, the 'Colorado Dept. of Revenue') to identify vendors who collect state and local sales taxes. If you are buying supplies wholesale, you will not be charged for the sales tax, but must collect it from your customers at the time your work is sold. Most wholesale suppliers will ask for this number so that they know you have the right to buy without the tax - it is your responsibility to collect the sales tax and remit it to the proper agency. Some states offer a regular sales tax license as well as a limited license for selling at craft fairs and the like - in some cases the organizer of the fair gets the license and collects it from you. If you are planning to sell your crafts, I strongly recommend contacting your state's tax agency to find out what their requirements are. You wouldn't want any nasty surprises later when you are asked to pay sales tax that you have not collected from your customers - it will come out of your own pocket! Also note that you should be reporting any income from these sales as part of your individual income tax statement (or, if you have a separate company, on the company's tax filing). Your state should have a small business development office. Start there first for tax information. An additional clarification to that last post... that would be charging tax to the customers that are in that state. If you make sales to out of state customers (like by mail), you don't collect tax from them. Once you have a tax ID number, you will be required to file quarterly whether or not you had any sales. If you don't file, you will be assessed an estimated tax and that can be quite a big bite. If you only have a small business and collect less than $250.00 in taxes each year (this also varies by state, so you should find out from your state revenue service) you will only have to file a statement once a year, but you have to apply for a yearly tax filing status. If you have a booth at a craft fair and don't have the required tax number and are not collecting sales taxes, the sheriff and the revenue agent can seize your craft items until the tax issue has been abated.

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