Selling Online Taxes

[jonjon]

I am 16 years old and based in Tennessee. I would like to start trying to sell online but when I look at the tax laws (sales tax, income etc.) my head goes a bit foggy. To be honest it takes a bit of the fun out of the concept

Any suggestions to how to get a grip on it all. I want to do things correctly.

 

[jttheclockman]

I am 16 years old and based in Tennessee. I would like to start trying to sell online but when I look at the tax laws (sales tax, income etc.) my head goes a bit foggy. To be honest it takes a bit of the fun out of the concept

Any sugge.stions to how to get a grip on it all. I want to do things correctly.

Talk to your tax accountant is the best way to handle it. Every state is different and depending on where and what you have in mind to sell will be a seperate set of obstacles. New tax laws are taking place all the time and in fact shipping changes have taken place today. Increase. The one very important rule is to keep good records and not sure if your age thing becomes a matter of concern but again talk to tax man. Collecting sales tax from each state is one of those grey areas that has gained traction in recent years so be aware of this too.

 

[jonjon]

Thank you for your reply Mr. Terefenko. To be honest at 16 I have not used a tax accountant yet. Perhaps that is what will need to be considered.

I always enjoy reading your responses to different posts. You always seem to give the topics fair thought.

 

[jttheclockman]

Thank you for your reply Mr. Terefenko. To be honest at 16 I have not used a tax accountant yet. Perhaps that is what will need to be considered.

I always enjoy reading your responses to different posts. You always seem to give the topics fair thought.

MR. (ouch) :biggrin::biggrin: :crying::crying:

 

[MRDucks2]

Mr. Terefenko is probably right in seeking professional or at least highly experienced help. At 16, there may be a certain amount you can sell income tax free at the federal level, but state laws vary.

Sales tax varies hugely by state and sometimes locality within a state.

When I lived in Texas, I had federal income tax but no state income tax. Small businesses had a lot of tax issues to keep up with. So, no business in Texas.

Now I am in Indiana. I have both federal and state income taxes. I also have state sales tax bu I am much more familiar with Indiana sales tax. No tax on labor or materials used to make a product unless held in inventory. Only one sales tax established by the state. No sales tax on shipping if through USPS but shipping taxed if through FedEx or UPS. No tax on eggs, must be permitted if selling at farmers markets or otherwise to the public, except if you are selling out of your home/farm.

Oh, and don't forget that income tax is only paid on your profits, not your costs, which can most often be deducted from your overall sales.

And Indiana is one of the simpler, more tax friendly states for business. Lol

So yeah, makes friends with someone who understands taxes in Tennessee.


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[Talltim]

JT

It is better than the day I heard a child tell his mother, "there is an old man coming to the door."

 

[MRDucks2]

Just made the connection that you have ties to one of the ministries out of Cleveland, TN. Never realized how many of the Pentecostal movements came out of the area, nearly all from the same starting point.

This could give you another option setting up as non-profit and designating some portion or all other of your profits (again, varies by state) go toward the ministry or program of your choice.

The key to this relative to taxes is that what you pay yourself now becomes a part of the operating cost. More complex, but after struggling with a resale/consignment business for a few years I discovered a successful cousin in the same business actually made a living at it. Difference was she set up as a non-profit and it helped here expenses.


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[jonjon]

MR. (ouch) :biggrin::biggrin: :crying::crying:

According to the dictionary. "Mr." .... a title of respect.

My mom has drilled it into me. "It only takes a little politeness to make yourself stand out from the crowd."

 

[RKB]

I have been monitoring this subject for a period of time. I sell online in PA, i file Sales Tax only for 'in state' sales at this time. I am registered with the state and file every quarter. New Online sales taxes are being considered by many states, but they may contain A 'safe harbor' provision that may help the out of state small seller, ex: a $200,000 sales threshold that must be reached before 'out of state' sales tax needs to be collected, and it may not be retroactive. Here is an article that may help you https://bit.ly/2CMhERj.



Disclaimer: I did NOT stay a HOLIDAY EXPRESS last night and I am NOT giving ANY advice to anyone , only giving a snapshot example of what I do. Best of Luck to you. Get more info and Don't give up.




Rod

 

[dogcatcher]

As a retired accountant, I suggest you find a local tax accountant and get some real time information. Some of the stuff described above could lead to some extreme financial problems or even jail time. As a minor, it is your parents responsibility to keep this "business" on the up and up.

 

[mecompco]

One reason I sell on Etsy is that they apply the sales tax (if any) to the cost of your sale and remit it themselves.

I believe that if you want to claim the full selling price of the pens on your tax return as misc income or something that would work. If you want to deduct the cost of goods, equipment, etc. or a business loss, then you'll be looking at the long form, with extra schedules.

I concur that investing some money for a tax accountant's consultation would be money well spent.

 

[TonyL]

I am a tax accountant/CPA. I will send you a PM with number. Call anytime after 7:30pm ET. I am happy to help you.

You need to know where you are selling to (in TN and/or out of states and which states.. We will go from there.

 

[Aces-High]

Tony, you are so awesome!

 

[CREID]

Thank you for your reply Mr. Terefenko. To be honest at 16 I have not used a tax accountant yet. Perhaps that is what will need to be considered.

I always enjoy reading your responses to different posts. You always seem to give the topics fair thought.

MR. (ouch) :biggrin::biggrin: :crying::crying:

:biggrin::biggrin::biggrin::tongue::tongue::tongue:

 

[MRDucks2]

As a retired accountant, I suggest you find a local tax accountant and get some real time information. Some of the stuff described above could lead to some extreme financial problems or even jail time. As a minor, it is your parents responsibility to keep this "business" on the up and up.

I must presume you are referring to my comments since I am the only one who mentioned "stuff". You should also note I recommended seeking guidance from a professional in both comments.

All of the "stuff" described, when performed within the advice of a professional and adhering to all laws and requirements, often takes a lot of documentation and paperwork, but is perfectly legitimate and legal.

Make sure you seek the advice of a good accountant or tax consultant, one who works to help you. There are many who work more for themselves than their clients in an effort to keep things simple and their effort at a minimum.


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[ajollydds]

I am a tax accountant/CPA. I will send you a PM with number. Call anytime after 7:30pm ET. I am happy to help you.



You need to know where you are selling to (in TN and/or out of states and which states.. We will go from there.

Good on you, Tony! It's a blessing to see you willing to help out.

 

[jttheclockman]

MR. (ouch) :biggrin::biggrin: :crying::crying:

According to the dictionary. "Mr." .... a title of respect.

My mom has drilled it into me. "It only takes a little politeness to make yourself stand out from the crowd."

Just funnin you SON:biggrin::biggrin:

Good to see the young respect elders because the way society is today respect is a lost word.

What I would suggest also is you are so young and hate to see you burnout quickly. You may want to try your hand at a few church functions where crafts are sold or some small school craft show or other small time show where tax ID numbers are not required and get your feet wet. get a feel of what people are looking for and ask them questions as to what they like and things of this nature. You will have plenty of time to ramp things up on do the on line selling portion.

There is another young person who you remind me of and he has done well for himself and it maybe a good idea to get in touch with him and see his road to success and share ideas. I believe he started here around the same age group. His name is Seth Roland and sign-on name of " Rolandranch "

Good luck.

 

[Woodchipper]

As dogcatcher said. I had a bad experience with one of the store front tax services. For four years, they never deducted my expenses, etc., when I built fishing rods. Go to a CPA. Told CPA stands for: Can't Pass Again; Cheapest Person Around; Certified Parking Attendant.

 

[donstephan]

Look for an arts/artisans group, woodturning group, woodworking group, pen making group, et cetera in your area and ask SEVERAL different people about the issues. Although I don't thinking too well of it, there may be user guides for Etsy addressing these issues. Of course, there is no way to know if the included information in a user guide is accurate.

Not sure, but small business record keeping software may have the various state sales tax rates built in. It's no longer guaranteed that shipping out of state avoids any and all sales tax questions.

 

[TonyL]

Good on you, Tony! It's a blessing to see you willing to help out.

Thank you. That is what this is supposed to be about . However, few call (may be it is me LOL).

What Don states above is correct. At one time the state where it was delivered was considered to have "nexus" for sales tax purposes. And a seller only had to collect sales if they had a physical location in the state. As states became more vigilant about collecting sales tax (it is a way of increasing tax revenue without raising taxes.) , the expanded nexus, and therefore a seller's responsibilities to collect to mean anything that they want. What consumers do not understand is that they are legally responsible for pay the sales tax (called use tax when paid directly by the consumer) regardless of whether the merchant attempts to collect it or not. Few consumers do that so that is why the states come down hard on the merchants. I like the radio host Clark Howard, but years ago, he present erroneous information on his radio audience. I wrote to him and he doesn't make those claims anymore. I am sure he wasn't aware of the law and didn't mean any harm.