# Taxes in Georgia - Etsy, Craft Fairs, etc



## SarahFair (Jan 10, 2015)

So I started a Etsy store in Oct.
I havent made anything to brag about, pocket change..

But Im confused about taxes.
Am I supposed to be collecting state taxes from Ga buyers?
Am I supposed to be reporting all income?
Ive read that some states dont really count hobbies as incomes, which is really what this is.. A hobby. 
Then I thought if you make under a certain amount you dont even have to report it.
And someone else said that even trades/barters should count towards taxes...




So when do you report your income from etsy or craft fairs?


----------



## gobbleinwoods (Jan 10, 2015)

I can tell you if you are writing off expenses you better be reporting some income even if you are losing money.  That is what my accountant tells me about the farm.

Other than that wait for elfiii or a lawyer to answer this one.


----------



## The Longhunter (Jan 10, 2015)

SarahFair said:


> So I started a Etsy store in Oct.
> I havent made anything to brag about, pocket change..
> 
> But Im confused about taxes.  So is everyone else.
> ...



The short legal answer is that you should charge sales taxes, and pay them to the state.  Likewise you should report all income to the state and federal gov't, if you make more than a certain annual amount.

Some of the larger craft fairs require that you have a sales tax number, and report all income to them so they forward the info to the the state(and the local government, which is the moving party) .

The TRUTH is that there is a large cash economy, which is often called the "underground cash economy" except that it's not so "underground" anymore, where no one reports anything.

If you don't file any paperwork relating to your business (claim deductions as mentioned above), or do something like get a sales tax exemption number,  you can pretty much fly beneath the radar.  How much you can make   and get away with is mostly a matter of how much nerve you have and how much tolerance you have for risk.

Based on personal experience, if you go to the average craft fair, some where around 90% of those people are not collecting (or reporting) sales tax, and not reporting income.  

Look at Craigslist, under "services" and ask yourself how many of those people are collecting sales tax and reporting income.  Ever had a seller offer you a discount for cash?  Wonder why?

Even large scale cash operations such as restaurants and bars routinely keep two sets of books.  That's why restaurants and bars pay sales tax on the booze they buy and not the booze they sell --  understand completely that I'm not telling you to do this, and I'm especially not telling you that it is LEGAL, what I am telling you is what people in similar situations do.

What to see someone get the "deer in the headlight" look -- buy something like a load of firewood and tell the vendor you need his SS # so you can send him a 1099.


----------



## SarahFair (Jan 10, 2015)

The Longhunter said:


> The short legal answer is that you should charge sales taxes, and pay them to the state.  Likewise you should report all income to the state and federal gov't, if you make more than a certain annual amount.
> 
> Some of the larger craft fairs require that you have a sales tax number, and report all income to them so they forward the info to the the state(and the local government, which is the moving party) .
> 
> ...


That's what I needed to know,  thanks!


----------



## sinclair1 (Jan 10, 2015)

I doubt you will have a problem, but a single member LLC with tax ID would be a piece of cake, that would also allow you to buy supplies wholesale and tax free from vendors, as well as give you the ability to write off some stuff as you file together with your spouse.

How much you need to sell to make it worth it depends on your plans for the business I guess.


----------



## rjcruiser (Jan 10, 2015)

Does etsy provide you with a 1099?

I would only claim revenue on that which was through etsy or credit card. And yes, you can deduct your expenses. 

Would be done on Schedule A I believe.


----------



## merc123 (Jan 10, 2015)

For a hobby you can only deduct up to what you make. You can't take a loss as a hobby which is why a determinations of hobby vs. business must be made. Hobby has a whole different set of rules. Look it up on the IRS website. 

If you make $100 but spent $300 in expenses to make it you can only deduct $100 on a schedule a. 

A business can deduct the whole $300 against the $100 and claim a loss. 

You will be taxed on the income you make as a hobby. So if you made $100 you will be required to claim it as income and be taxed on it if you haven't been already.  

I'm sure many people that do not get any form of paper (w2, 1099) documenting it it goes unclaimed. 

I don't have a definite answer on sales tax but in researching sales tax for businesses in GA I would say you don't need to collect.  it seems it would only be for businesses.


----------



## NE GA Pappy (Jan 10, 2015)

I believe that Ga would require her to collect sales tax on anything she is saleing, unless it is tax exempt to a farm or something like that.  This is not a casual sale, but a continuing thing.  

You can call the sales tax division in Athens and they will be glad to tell you what you want to know.  I wouldn't want to chance getting on their wrong side.


----------



## bassboy1 (Jan 10, 2015)

sinclair1 said:


> I doubt you will have a problem, but a single member LLC with tax ID would be a piece of cake, that would also allow you to buy supplies wholesale and tax free from vendors, as well as give you the ability to write off some stuff as you file together with your spouse.
> 
> How much you need to sell to make it worth it depends on your plans for the business I guess.



No need for an LLC, can be done fine as a sole proprietorship. 

You'll need to attach a schedule c form to your 1040 to list your income/deduct expenses for this venture. If you truly aren't making much, your withholding from your real job will likely cover you, so need to pay quarterly.

If not, you can increase withholding. For a small hobby, this is the route I'd go.

As for collecting sales tax, some craft markets will file the sales tax. You simply keep records for the day, then remit the tax amount to them. 

However, obtaining a GA sales tax number is no big deal.  None of this costs any real money to start.




EBay and Etsy will both require you to take PayPal, so if you are selling there, you'll need to file. If selling at craft shows, listen to The Longhunter.


----------



## elfiii (Jan 12, 2015)

SarahFair said:


> So I started a Etsy store in Oct.
> I havent made anything to brag about, pocket change..
> 
> But Im confused about taxes.
> Am I supposed to be collecting state taxes from Ga buyers?



If you are selling to the end user retail customer, yes, you are liable for sales tax.



SarahFair said:


> Am I supposed to be reporting all income?



Yes.



SarahFair said:


> Ive read that some states dont really count hobbies as incomes, which is really what this is.. A hobby.



See the link.

http://www.irs.gov/Help-&-Resources...-Business/Income-&-Expenses/Income-&-Expenses


----------

