selling stuff - business question

OK...for all of you who sell crafts...can you help answer questions concerning the business side of it? (i hope this is allowed)

do you have to declare yourself a business? (like if you have an etsy store?)
what dollar amount do you have to obtain before declaring a business? what about taxes?

how do you usually go about getting materials/equipment for said business? do you buy all of your needed stuff at once or kind of go slow and see how things are going before making major committments?

are there any resources out there for crafting businesses? like the small business stuff.

any insight would be greatly appreciated.

christi

I spoke with a lawyer and - if you are just starting out you don't need an EIN number - they are free and easy to apply for on-line though if you want one.  AND - if you make less than $400 a quarter you do not need to declare taxes - it is a considered a hobby.

I do give a lot of stuff away. Every year I give crayon rolls to the children in my daughter's classes. For thank you gifts I give reusable bags or aprons. It nice to (1) use some of the fabric up and (2) grow a business by having others use what you make, rave about them, and send some business your way.

You might want to see if there is a farmer's market near you that would allow you to have a table. That might help you judge what will move well vs. what won't move and you can get feedback on prices, etc. at the same time.

I'd be interested in hearing where others purchase their goods as well.

Good luck!  Beth

Thanks for the great questions! I've wondered the same things. I will make stuff for my sisters friends & they will pay me a bit but everybody keeps asking do you have an online shop. I just say no because I was afraid of getting in trouble about it. Its really nice to know that under $400 per quarter is a hobby!
They will sometimes supply the fabric & then just pay a small amount for my time.
I'll be watching this thread to see what everybody answers.

The EIN is a federal number. And it's true that most small home based craft businesses will not require one. However, you also need to check the requirements of the state you live in, as you may need to register at the state level. Where I live, there is no allowance for hobbiests. If you are selling, you need a resale tax ID# and be collecting taxes on the sale. Does that mean the state would actually track down and prosecute people selling tiny quantities of things? I doubt it as the resources to do that would be greater than they could afford. But just to be safe, I got one anyway. There was a small fee. And once a year I file my buisness tax form online and send in the tax money I've collected on sales. I just keep track of everything in an Excel spreadsheet as I'm a very tiny business. My husband and I both felt better playing it safe. Another benefit is the resale # allows me to purchase supplies for items I'm making tax free. Honestly, though, I'm  small  enough I  don't even bother with the paperwork to do that. If you go to your state's website (usually statename.gov) you can often find  all the info you need under the business section.

thank you for all of the replies so far. very interesting information. I'm glad i am not the only one who wonders about this stuff. I wasn't quite sure why this wasn't a topic all the time.

does anyone have a business credit card or a business loan for supplies? And do you have to do a business plan or anything like that???  Ill check my state stuff and see what information I can find.

Keep em coming!

I live in Massachusetts and this is one place I have looked at - on-line - for info:

http://www.enterprisectr.org/

There might be something similar by you depending on where you live.  Or - even community colleges, around here, have seminars about starting a business. You could probably call a local college and see if they can point you in a direction.

There is a new (I think it is new anyway) blog out there designed to answer all these questions and just give good business advice about small businesses such as you are talking about.  I subscribe to her feed just to get good information in case I decide to grow into a full fledge business.  You should totally check it out.

http://www.modishblog.com/biztips/

thanks again ladies...

Bethvanduzer - **side note** i clicked on your blog and went to fabric hound. i havent seen this website and i ordered some of her lovely picot trim to try. glad to have found a new resource!!

dixiemango - thank you for this blog...it looks awesome..need to devour tonight after the wee one goes to sleep!! OK ... You said "in case i decide to grow into a full fledge business" - do you sell any of your stuff now? what does a full fledge business mean to you? I guess that's part of my post too...

WHEN DOES CRAFTING FOR MONEY ACTUALLY TURN INTO A BUSINESS???

Well, right now I sew for people I know.  You know the ones... "you made that?  Really?  Could I pay you to make me one?"  Those folks.  I think of full fledge as like I have an etsy shop or the like and sell to whoever happens to find me and I have a shopping cart on my site or if I sell at a craft fair.  That sort of thing.  I am also considering doing sewing classes... that would make me full fledged too.  Good luck!

Great thread ... I will be checking in so see what else is said .....

dixiemango - that is what i am doing right now (sewing for paying friends)  too but i dont know how many people have said that i need to start a shop (etsy, etc) so i have been thinking about it for awhile. I'm in between quilts at the moment and have been thinking of other things besides quilting!! 

I started little, well I still am little.  I made things for friends and used that money to start my etsy shop.  I was mostly making things at first but my real dream is having the most awesome pattern shop ever...slowly building up to that though.  Each state is different, but like somebody else said there should be some answers on your state's website.  Right now I have a DBA with my state so I can buy patterns wholesale, but everything is just under my SSN.  I don't have an EIN. 

Other things- I think the best way to market an etsy shop is to have a specific idea of what you want to make.  You love bags, sell bags.  Try to set yourself apart.  Etsy is competitive.  I tried different things before deciding to settle in with the sewing patterns.  So I have lots of other inventory that I am trying to reduce to focus on just those.  Having a little shop is more work than you might think, but it is really rewarding to see where it takes you!

Well, good luck to ya!  It is great doing what you love for money... just don't let yourself burn out.  If you over commit you will turn out dreading the thing that you really love.  I learned that the hard way when I decided to sew designer handbags and just got too overwhelmed and burnt out due to over committing.  I love it much more now that I have paced myself.

I have a 20 month old daughter that i love making clothes for and some of my mommy friends love the clothes I make too. what I LOVE is just the creating part and seeing everything come together. I started with quilts and still make quilts for people. I have a specific niche with 1 style of quilt and that is what i would promote on my etsy shop along with clothes, nap mats, burp cloths. I am questioning etsy because there are SO MANY shops out there that have the exact same clothes/accessories. what i want to do is set up an etsy shop to show people locally...does that make sense? like when someone wants to see my website i want to direct them to a store too just to see what i do.

If you are just using it to show others your work try Artfire. It's what I do. The local art fairs around here want photos, etc. I just direct them to my 'store' to see examples of what I make.  There are no listing fees on Artfire. Etsy charges you for every item you list. You could do both. (www.artfire.com)

Your quilts are beautiful & I'm sure you'd get some traffic in an on-line store.

Good luck!