Sell prints as individual or business

[Melany]

I have a state tax ID for Melany's Photography. I have photos up on Getty and prints for sale in FineArtAmerica
Is it better for me to do business as an individual or a business?*
I haven't sold anything, but I hope to in 2012.*

[Flores]

What is the difference?

Not to be too nit picky, but the two are not mutually exclusive.

[Tom]

It might be time to talk to a lawyer or CPA to straighten out your business practices and make sure you understand how to run a business properly. The IRS and Texas Comptrollers are not the most forgiving people.

[Melany]

I had to get the tax number in order to show at the local First Friday art show. I never sold anything and nOw I'm being spammed to death by credit card and office supply companies.

When I filled out the financial info for Getty and FineArtAmerica, I had to decide which way I'm doing business and provide a tax ID number or SSN. I picked as an individual.
I got the tax form to file from the state. Not many taxes on zero dollars.

I don't know if all it take to BE a business is the tax #.
I'll probably stick to being plain "melany" for now.

[Flores]

the tax number is so the state can track and hold you accountable for any sales tax you collect.

BTW, don't forget to file every quarter, even if you have no sales.


The sites you signed up to sell on are resellers, so they need a number to track 'who got the money' they paid you, the vendor. That counts (sort of) as wholesale sales, and is not subject to sales tax, so any money you bring in from those sites would count as income (you will need to show it on your federal tax return), but would need to be reported on your quarterly sales tax to the state as 'not taxable'.

YOU are running a business, as far as the state is concerned. how you are organized (sole proprietor, LLC, partnership, corp) is irrelevant. If you sell something to an end user in texas, you have to collect sales tax, and it must be paid to the state.

I am not an accountant or a business advisor, but you need to educate yourself on how these things work, before you find yourself owing penalties and fees for not taking care of your business.

www.texas.gov is a good place to start.

[Melany]

That makes sense. Thanks!

So the tax ID is just to track sales taxes if I ever sale a print at an art show, and not for income. I get it!
It's a good thing I'm not depending in ths as income, huh?

[Flores]

Originally Posted by Melany

That makes sense. Thanks!

So the tax ID is just to track sales taxes if I ever sale a print at an art show, and not for income. I get it!
It's a good thing I'm not depending in ths as income, huh?

correct. ANYTHING you sell as a business concern should collect sales tax, and be reported to the state using your sales tax ID.

It also means that things you purchase for use in 'manufacturing' your photos can reference your tax id to exempt you from paying sales tax.

Read this:

http://www.window.state.tx.us/taxinf...s/tx94_176.pdf

[kayumangi]

Paul got you covered with the State and Local taxes.

But here's one more thing to consider, aside from the Sales Tax you still need set aside monies for your Federal Income Tax (usually it's 18% of your gross sale but it varies). Which is why, you'll hear biz folks say that you need to set aside at least 25% of your sale just to cover taxes, the PPA says at least 30%.

On top of that you'll still need to account for your other costs such as production and marketing costs, as well as your desired income, which is a whole new can of worms.

Owning a business is fun but involves a lot of hard work =)

[Melany]

So far I have made $0. I'm sure I'll be ok on taxes.

I can get stuff for my "business" tax free???? :-) I'm liking where this is going......
I may be in the market for a new Nikon this year.

[Tom]

I had to get the tax number in order to show at the local First Friday art show.

Also, you have to get one by state law if you want to do one penny's worth of business.

I never sold anything and nOw I'm being spammed to death by credit card and office supply companies.

They will give up. I rarely get anything anymore.

When I filled out the financial info for Getty and FineArtAmerica, I had to decide which way I'm doing business and provide a tax ID number or SSN. I picked as an individual.

They weren't asking for your Texas Sales Tax ID. They were asking for an EIN which is an entirely different thing.

I got the tax form to file from the state. Not many taxes on zero dollars.

Even with no taxes, you have to file quarterly to tell them you sold nothing. If you don't you will get fined and they will guess that you sold $X amount of product, and owe taxes on it. And they get to make up that amount.

I don't know if all it take to BE a business is the tax #.
I'll probably stick to being plain "melany" for now.

There is a whole lot more to it.

But here's one more thing to consider, aside from the Sales Tax you still need set aside monies for your Federal Income Tax (usually it's 18% of your gross sale but it varies). Which is why, you'll hear biz folks say that you need to set aside at least 25% of your sale just to cover taxes, the PPA says at least 30%.

I set aside 35%. Wanna be really really really sure.

I can get stuff for my "business" tax free???? :-) I'm liking where this is going......

The IRS lets you run your business at a deficit for 2 of 5 years. Then you must show profit or they will say you are a hobbyist and you lose all tax breaks and they probably make you pay back all the taxes you deducted.

[Melany]

Originally Posted by Tom

Also, you have to get one by state law if you want to do one penny's worth of business.


They will give up. I rarely get anything anymore.


They weren't asking for your Texas Sales Tax ID. They were asking for an EIN which is an entirely different thing.


Even with no taxes, you have to file quarterly to tell them you sold nothing. If you don't you will get fined and they will guess that you sold $X amount of product, and owe taxes on it. And they get to make up that amount.


There is a whole lot more to it.


I set aside 35%. Wanna be really really really sure.


The IRS lets you run your business at a deficit for 2 of 5 years. Then you must show profit or they will say you are a hobbyist and you lose all tax breaks and they probably make you pay back all the taxes you deducted.

HMMMMM. I might be less of a headache if I just continue to let people steal my photos off Flickr, huh? My ears are ringing and my head is spinning now


Maybe I'll just sell stuff on Craigslist for cash only (SHHHHH!!!)

[fishcat]

Pretty sure you must still file with the State, even if you had zero sales. You can file annually if collected taxes are below $1,000 (if I remember right). I've been filing annually. I think the due date is January 20. Call the local state tax office. They are usually pretty helpful. Late fees use to be minimal, but a new law increased it to $50 for each reporting period.

[Howard Barlow]

Originally Posted by Melany

I had to get the tax number in order to show at the local First Friday art show.

Simply presenting yourself as in business requires it, regardless of ever making a sale.

Originally Posted by Melany

I had to get the tax number in order to show at the local First Friday art show. I never sold anything and nOw I'm being spammed to death by credit card and office supply companies.

Tax permits are public records. Therefore, those who market to businesses look for new companies. Also, if you get a commercial landline, ATT or such, the same thing will start all over.

[Flores]

Originally Posted by fishcat

Pretty sure you must still file with the State, even if you had zero sales. You can file annually if collected taxes are below $1,000 (if I remember right). I've been filing annually. I think the due date is January 20. Call the local state tax office. They are usually pretty helpful. Late fees use to be minimal, but a new law increased it to $50 for each reporting period.

I've been confused by this new rule. do they still charge you the $50, if you are reporting zero sales? I didnt collect a whole lot in the first half of the year, but have been busy starting a new job the last half of the year so. havnt sold anything.

when i logged into the state site, they hit with the penalty for last quarter... :(

[Melany]

Can I undo all this mess and get rid of the tax number? All I wanted to do was get involved in the art community when I moved her, and show my stuff!! I didn't know what I was getting in to when the gallery owner told me I had to get one.
I only showed ONE show! This is starting to feel like a vinerial disease LOL.