Ok, so I have decided to finally take the plunge and start selling the things that I make. My plan is to sell on Etsy and through friends/family referrals. My goal is to do about $1k to 2k per year, so pretty small time, but hoping to earn a little bit to justify (to my wife) buying additional tools/materials. When the virus stuff settles down I may do some local shows/markets. But I'm a bit confused about the tax implications.
Sales Tax: I understand that I will need to submit an application with the state for a sales tax ID number, and Etsy will take care of collecting appropriate sales tax, I will just need to collect sales tax from my other sales within TX and then submit - this seems pretty straightforward.
Federal Tax: I plan to operate the business as myself, I don't see a need to set it up as a separate legal entity. I understand that I will need to maintain a log of my income (sales minus expenses) and then I assume that I'll submit this as self employment income, in which case I will pay the income tax, social security and Medicare (both employer and employee portions - assuming this is still a thing when I get going).
State Property Tax: here is where I am most confused. I'm not sure whether I should get a DBA, I assume so because I will set up the Etsy store using a fictitious name, which I will also use in other ways (email, business cards, etc). It's unclear to me if this then means the business is a separate legal entity or if it is still just me but with a different name. Then actually filing/paying the tax - my understanding is that you are to pay property tax (about 2%) on all inventory, tools, raw materials etc over a $500 exemption for inventory. This could obviously add up fast if I consider all of my tools to be part of the business. I'm not sure if I can just allocate a very small percentage (or 0%) of the tools (as long as I don't deduct them as expenses for federal tax) considering that I own them anyway and use them for personal as well. I'm wondering how other TX sellers in a similar boat (small timers) handle this. I could easily wipe out all of my earnings with the property tax, which would obviously be kind of a silly venture.
I'm hoping I can do this all right and still make a few bucks, any advice or links that you used getting started would be much appreciated.
Sales Tax: I understand that I will need to submit an application with the state for a sales tax ID number, and Etsy will take care of collecting appropriate sales tax, I will just need to collect sales tax from my other sales within TX and then submit - this seems pretty straightforward.
Federal Tax: I plan to operate the business as myself, I don't see a need to set it up as a separate legal entity. I understand that I will need to maintain a log of my income (sales minus expenses) and then I assume that I'll submit this as self employment income, in which case I will pay the income tax, social security and Medicare (both employer and employee portions - assuming this is still a thing when I get going).
State Property Tax: here is where I am most confused. I'm not sure whether I should get a DBA, I assume so because I will set up the Etsy store using a fictitious name, which I will also use in other ways (email, business cards, etc). It's unclear to me if this then means the business is a separate legal entity or if it is still just me but with a different name. Then actually filing/paying the tax - my understanding is that you are to pay property tax (about 2%) on all inventory, tools, raw materials etc over a $500 exemption for inventory. This could obviously add up fast if I consider all of my tools to be part of the business. I'm not sure if I can just allocate a very small percentage (or 0%) of the tools (as long as I don't deduct them as expenses for federal tax) considering that I own them anyway and use them for personal as well. I'm wondering how other TX sellers in a similar boat (small timers) handle this. I could easily wipe out all of my earnings with the property tax, which would obviously be kind of a silly venture.
I'm hoping I can do this all right and still make a few bucks, any advice or links that you used getting started would be much appreciated.