So confused about what to do next...

[candice19]

As you guys may know, I had been asking about insurance for soaping. I've decided that RLI has the most cost effective for me, since I probably will NOT be grossing $5,000 in my first year lol.

I was talking to the gentleman and he asked what my registered business name was. Registered business name who what where?!?!

I'm in NY, and I'm so confused:

- Do I HAVE to register a business name with the state? What are the cons to not registering?
- If I'm a sole proprietor, does this mean my expenses are deducted from my personal income tax? How do sales affect my income taxes?
- Do I have to collect sales tax? How would I do this on Etsy, for example?

I'd appreciate if anyone can offer insight... especially those in NY.

 

[NancyJo]

As you guys may know, I had been asking about insurance for soaping. I've decided that RLI has the most cost effective for me, since I probably will NOT be grossing $5,000 in my first year lol.

I was talking to the gentleman and he asked what my registered business name was. Registered business name who what where?!?!

I'm in NY, and I'm so confused:

- Do I HAVE to register a business name with the state? What are the cons to not registering?
- If I'm a sole proprietor, does this mean my expenses are deducted from my personal income tax? How do sales affect my income taxes?
- Do I have to collect sales tax? How would I do this on Etsy, for example?

I'd appreciate if anyone can offer insight... especially those in NY.

Hi, I am in NY and will try to help you.

To register your business, just go down to your county building and fill out a form. Really easy and I think I paid about $25.00.

For your income taxes, you will fill out a schedule C. If you go to IRS.GOV, you can print out a blank schedule C and see what it looks like. As to the effect of your income taxes, the NET sales will be taxable as income to you. If you are just starting out, it will probably have no effect on the taxes you pay.

As to the sales tax question, yes you are required to pay sales tax---you are in NY need I say more? :roll:

Just go to the NY tax and finance web site (can't think of it off hand) and there is a place to fill out a form. It also allows you not to pay sales tax if you buy supplies in NY.

HTH, and if you have any more questions, feel free to ask.

 

[Tabitha]

Each state is dif, but in TX you can walk in, register a name & get a tax ID in just a couple of minutes. I do not remember if there is a fee, if so it is small.

If you sell even 1 bar of soap & do not collect tax, the tax man can come knocking at your door & threaten to confiscate your stuff. Been there personally!

If you sell online you only need to collect tax from residents in your state. Paypal will automatically add your sales tax to charges generated from your state.

At the end of the year you will figure how much you profited or how much you lost & include that info w/ your personal income tax, yes.

EX) You bought $5000 worth of equipmnt but only sold $1000 worth of soap. You get to claim a $4000 loss on your personal income taxes.

 

[candice19]

Hi, I am in NY and will try to help you.

To register your business, just go down to your county building and fill out a form. Really easy and I think I paid about $25.00.

For your income taxes, you will fill out a schedule C. If you go to IRS.GOV, you can print out a blank schedule C and see what it looks like. As to the effect of your income taxes, the NET sales will be taxable as income to you. If you are just starting out, it will probably have no effect on the taxes you pay.

As to the sales tax question, yes you are required to pay sales tax---you are in NY need I say more? :roll:

Just go to the NY tax and finance web site (can't think of it off hand) and there is a place to fill out a form. It also allows you not to pay sales tax if you buy supplies in NY.

HTH, and if you have any more questions, feel free to ask.

I am definitely going to research this more. I'm assuming that I should keep meticulous records of costs/income, since I would doing a sole propriety?

Each state is dif, but in TX you can walk in, register a name & get a tax ID in just a couple of minutes. I do not remember if there is a fee, if so it is small.

If you sell even 1 bar of soap & do not collect tax, the tax man can come knocking at your door & threaten to confiscate your stuff. Been there personally!

If you sell online you only need to collect tax from residents in your state. Paypal will automatically add your sales tax to charges generated from your state.

At the end of the year you will figure how much you profited or how much you lost & include that info w/ your personal income tax, yes.

EX) You bought $5000 worth of equipmnt but only sold $1000 worth of soap. You get to claim a $4000 loss on your personal income taxes.

What did the tax man say?? omg, just the thought is frightening!

You mention about PayPal automatically adding taxes.. that just goes to show how many people on Etsy do NOT collect taxes because nobody lists it on their listings.

I'm so worried about this starting a business stuff. I feel like this entire side of selling soap caught me offguard. I hope I don't bomb

 

[Tabitha]

He said he was feeling nice so he would give me 30days to hand deliver my tax check to his office. Then he handed me what he thought a first year soap biz should owe in taxes. Then he went on to say that even though it was a home based biz, he would return in 31 days w/ a construction crew & build a wall to divide the part of my home I used for biz from the part of the home I used as a residence & lock me out of the biz 1/2 and send me the bill for the construstion crew. I kid you not. I figured out what I owed in taxes and paid ASAP! I wasn't trying to withhold, I just hadn't ever paid taxes before & wasn't sure how & had not yet sat down to figure it out.

It's super easy in TX to pay your sales tax. You can do it online, you just enter your tax ID, enter the amount of sales you had for the year & it tell you how much you owe & includes any penalities if you are late. You can pay w/ your credit or debit card.

 

[donniej]

Hello, Can you tell me who RLI is?

Also, have you looked at the insurance through the soap guild? $480 for a year sounds like a really good deal to me...

 

[candice19]

Holy heck, Tabitha! That is VERY scary, waaaaaay beyond what I want to get into. *note to self: pay tax!*

donniej, RLI: http://www.rlicorp.com/Products/IBP/buy.asp I was quoted $234/year for what I was looking for. I don't think I need to go as high as The Soap Guild's policy.

 

[Tabitha]

LOL, my hubby says he was bluffing, but I was not going to find out :shock: .

 

[Dixie]

WA state is not small business friendly!! Everybody and their brother wants part of your profit here.
But getting a tax number is no big deal. Nothing to be scared of

 

[candice19]

I guess getting a tax number wouldn't hurt. I get most my supplies from online out of state sites so I'm not charged anyway.

But then if I purchase supplies I need for my soaping in person, can I present my tax-id form?

 

[NancyJo]

Yes, but I would clear it with them first.

Also, I don't know where in NY you are, but if you take a road trip to another state, you need to let them know you have a tax id. If not, you will be charged that states sales tax.

 

[pepperi27]

As you guys may know, I had been asking about insurance for soaping. I've decided that RLI has the most cost effective for me, since I probably will NOT be grossing $5,000 in my first year lol.

I was talking to the gentleman and he asked what my registered business name was. Registered business name who what where?!?!

I'm in NY, and I'm so confused:

- Do I HAVE to register a business name with the state? What are the cons to not registering?
- If I'm a sole proprietor, does this mean my expenses are deducted from my personal income tax? How do sales affect my income taxes?
- Do I have to collect sales tax? How would I do this on Etsy, for example?

I'd appreciate if anyone can offer insight... especially those in NY.

I have the greatest benefit being that my best friend is an irs agent so any questions I had she answered for me. Plus I work in an accounting firm which gives me access to the irs bible LOL. Check out this website to help you with any questions you may have.

http://www.irs.gov/businesses/small/index.html

Sales tax you have to pay for anyone purchasing in NY. I've heard that paypal is not good to use for taking taxes so I just do it myself. On etsy you will have to send another invoice with the corrected amount. I should probably state that in my shop announcement section? Hmm I've only gotten two orders from nyc but that's it. Hope that helps.

 

[CiCi]

He said he was feeling nice so he would give me 30days to hand deliver my tax check to his office. Then he handed me what he thought a first year soap biz should owe in taxes. Then he went on to say that even though it was a home based biz, he would return in 31 days w/ a construction crew & build a wall to divide the part of my home I used for biz from the part of the home I used as a residence & lock me out of the biz 1/2 and send me the bill for the construstion crew. I kid you not. I figured out what I owed in taxes and paid ASAP! I wasn't trying to withhold, I just hadn't ever paid taxes before & wasn't sure how & had not yet sat down to figure it out.

It's super easy in TX to pay your sales tax. You can do it online, you just enter your tax ID, enter the amount of sales you had for the year & it tell you how much you owe & includes any penalities if you are late. You can pay w/ your credit or debit card.

That guy has absolutely no idea what kind of trouble he would be in, if he actually did that. I guess he was trying to use it as a scare tactic. He could have shut your business down, confiscated equipment, taken you in for hearing, fine you or and/or prosecute you, which would have been bad enough...but build a wall in your home??? I'd would have him put under the jail.

 

[carebear]

I registered my business online. I pay sales taxes quarterly online as well.

 

[kittywings]

Yeah, the whole building a wall in your home sounds like MAJOR b.s. to me... but then again, so did me having to pay a $327 fine for leaving the scene of an accident where I was the victim and mine was the only car with any damage. Ahhh, justice!