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Reader Has Question About Sales Tax for Home Business

by Mary Emma Allen on August 26th, 2009

In response to a previous post, Sales Tax and the Home Business Owner, one of my readers asked a question: 

I am wanting to start a home based business selling purses…the
wholesale company I would buy them from needs a FED ID # which I already have… Do I
have charge taxes by selling them at home parties… Do I need a license to do this…

Since I live in a state that doesn’t have sales tax (so far!), I don’t have the specific answers.  Also, each state varies.  I have talked with home business owners who live in sales tax states, and they do need to collect and file taxes for home parties, unless the company they’re affiliated with (their supplier) does this for them.  Some of them will.

It sounds as though this person is getting her purses from a company that leaves it up to the individual.  So check with the tax division in your state and see if you need to get a tax number, how and when to collect, file and pay taxes.  Also, it often doesn’t end with the state.  Some counties, cities and towns add sales tax to what the state charges.  However, someone at the state level should be able to tell you whether they collect for everyone and distribute or whether you must file with each.

Regarding a license for conducting home parties, this will vary from state to state, even town to town.  You’ll need to check this out with local and state authorities.  Perhaps someone already doing home parties can give you information on what agency to contact.

Sales tax can become a daunting issue.

What has been your experience?

(Image from sxc.hu)

Tags: home parties, , , , sales tax, selling purses, tax filing

POSTED IN: Finances & Money

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