Sales Tax?

[JTTHECLOCKMAN]

Just curious for those that sell their products, I was wondering how you handle the State Taxes. I do believe that sites like Ebay and Etsy and probably Amazon help with this situation. I would like to hear honest answers from those that sell. If you have your own web site, do certain pay as you go platforms such as Paypal and others handle the state tax things when it comes to collecting sales tax from different states? Or do you have to set up some other method to do this? Do you send the sales tax from each state that you made a sale from, to them and how is this done? What about out of country. What I am getting at is in NJ we have a sales and use tax and when I was doing shows it was very easy to keep tract of my sales and report and send taxes to the state because it was only my state involved. But if I want to become an online seller, what is the best method to handle this. This sounds confusing. If you are a big time vendor and sell lots of product it has to be a chore to keep tract of this. Is this done monthly, quarterly or some other way? How do you report this and to whom do you report to if anyone? I am familar with the business tax ramifications and what needs to be recorded for tax purposes but the State Tax thing has me confused. Hope I am asking the question correctly. Thanks. Any other tidbits you want to throw in the conversation, please do.

[kmmcrafts]

Definitely not an expert in this and because of that is why I have scaled back from running my own from scratch built website. I now only sell on platforms that handle the tax for all the states other than the one I live in ( Michigan ).. The platforms calculate it all up and report it on my behave.. but I still collect and report for my state ( Michigan ) all other states are handled by the platforms I sell on. 

That all being said, I believe there is a certain threshold for each state that you have to meet before you're required to report anyway.. BUT, I may be wrong on that. Same issues go for international selling.. but now you have to fill out a form and pay a I think yearly fee which is or was $10 each year per whatever country make this new rule. I quit selling international when all this came about. 

I don't think Paypal does the collecting and reporting to the states but maybe now they have updated their software to handle it.. they didn't when this all first came about. Maybe call and talk to them about it. 

I think this is about all the info I can give. 

 

[JTTHECLOCKMAN]

Kevin I am bringing this up because I just had my taxes done yesterday and as always she also did my business tax form. All  other years for over 35 years I only sold at shows and in stores in NJ. So I collected my sales tax and filled out the sales and use tax forms. I always included the sales tax in my pricing to keep simple and then just reverse calculate at end of quarter or end of year. I then payed my state what was due. But this past year I happened to make some out of state sales and included these in my reporting and she picked up on it and thus she questioned how I handle out of state taxes. My answer was and not playing dumb because I really had no idea of how to handle this was to collect the same tax and pay the same way as always. My thought process on this is I made the projects here using materials I bought and paid taxes on and I am selling from my home state of NJ. Why am I sending money to states that had no input in the sale at all. I had told her I probably will not be starting my own web site and just open a Etsy account or Ebay. I need to unload all the inventory I have stored away because I do not believe I can find any decent shows in my area any more and I am getting too old to do the touring. I just am not in tune with the on line sales platforms. I like using PayPal all the time. I have not taken any credit cards so that is the only $$$ intake platform I know beside good old green paper. I posted this same thing on another forum and getting conflicting answers.  

[kmmcrafts]

Unfortunately it has gotten very complicated over the years. Some states collect at different rates based on county etc so this is also another reason why I just cut back on where I’m selling at online. 
 

Selling on eBay and Etsy is also different because they do all the collecting of money and you have an account with them. They pay out to you via direct deposit to your bank account that you provide to them. I suggest a special separate account for that myself but it’s up to you how you handle that. Depending on your account health with the platform will depend on how / when they payout. Once you get established you can select how often you get paid. If you’re new I think they hold funds for a certain period of time. 

[JTTHECLOCKMAN]

42 minutes ago, kmmcrafts said:

Unfortunately it has gotten very complicated over the years. Some states collect at different rates based on county etc so this is also another reason why I just cut back on where I’m selling at online. 
 

Selling on eBay and Etsy is also different because they do all the collecting of money and you have an account with them. They pay out to you via direct deposit to your bank account that you provide to them. I suggest a special separate account for that myself but it’s up to you how you handle that. Depending on your account health with the platform will depend on how / when they payout. Once you get established you can select how often you get paid. If you’re new I think they hold funds for a certain period of time. 

if I do go down this dark road I probably will tap your knowledge. Just kicking it around now because like I said I am getting older and need to unload alot of inventory and with my pen turning now that inventory is growing too. I still need a hobby to keep the mind sound so that is why I do what I do. I just had a person email me a message about collecting and sending taxes to other states and in it there was info about each states threshold and it seems it is over  $100,000  each state or even a little higher. There are restrictions on number of transactions per year also but that too is up there. Mom and Pop type businesses will never reach those limits. Hope this is true. I will do some research on this over time. 

[kmmcrafts]

1 hour ago, JTTHECLOCKMAN said:

if I do go down this dark road I probably will tap your knowledge. Just kicking it around now because like I said I am getting older and need to unload alot of inventory and with my pen turning now that inventory is growing too. I still need a hobby to keep the mind sound so that is why I do what I do. I just had a person email me a message about collecting and sending taxes to other states and in it there was info about each states threshold and it seems it is over  $100,000  each state or even a little higher. There are restrictions on number of transactions per year also but that too is up there. Mom and Pop type businesses will never reach those limits. Hope this is true. I will do some research on this over time. 

This is exactly what I've read too, but this was a few years back and I don't really want to give out false info so I try to reply to this topic with caution because I don't "really know" myself. It's always best to try to talk to people that really know what's going on like a Tax accountant or CPA etc. 

 

[kmmcrafts]

I do not recommend Etsy as a platform at this time.. They are in the works to start allowing China sellers to join Etsy.. This is going to be a massive amount of China made products on the site when this happens. 

[JTTHECLOCKMAN]

6 hours ago, kmmcrafts said:

I do not recommend Etsy as a platform at this time.. They are in the works to start allowing China sellers to join Etsy.. This is going to be a massive amount of China made products on the site when this happens. 

There are China vendors there now along with other countries. I just dealt with 2 vendors from Turkey there and they offer products that I have not seen from any other vendors there that interested me. prices were reasonable. There are vendors on many platforms such as FB and I bet Amazon and I know Ebay also. Ebay is loaded with China vendors. I buy tons of old watches and they vendors are many from China. I try hard to stay away from foreign vendors on Ebay but again some have pen making stuff that you can not find anywhere in the states. What you do find or at least I do especially on Amazon, these vendors that are from China set up shop in USA, usually Cal. and sell out of there. So I bet you see that on Etsy alot more too. The thing about Etsy is there policy is unless they are changing is that any vendor can not sell mass produced items so if they are letting China made items they are not mass produced unless they are changing their own rules. I bought 6 pen display boxes from  China but were sold out of Cal. from Ebay. But what they do is just change the names of the companies but they are drawn from the same warehouse located in Cal. I know this for fact because I talked to the person who I bought boxes from. This maybe another way they get around those rules. 

Edited April 3, 2024 by JTTHECLOCKMAN

[JTTHECLOCKMAN]

6 hours ago, kmmcrafts said:

This is exactly what I've read too, but this was a few years back and I don't really want to give out false info so I try to reply to this topic with caution because I don't "really know" myself. It's always best to try to talk to people that really know what's going on like a Tax accountant or CPA etc. 

 

The Wayfair ruling was the one that was in place for a long time and that stated more or less you can only charge sales tax if you have a brick and mortar store in that state. I think in 2004 the rule changed because states want that tax money. You see this now on FB and marketplace. They are even going after garage sale people because they use that as a front of constantly selling on that platform. 

https://taxfoundation.org/blog/what-does-the-wayfair-decision-really-mean-for-states-businesses-and-consumers/#1

[kmmcrafts]

7 hours ago, JTTHECLOCKMAN said:

There are China vendors there now along with other countries. I just dealt with 2 vendors from Turkey there and they offer products that I have not seen from any other vendors there that interested me. prices were reasonable. There are vendors on many platforms such as FB and I bet Amazon and I know Ebay also. Ebay is loaded with China vendors. I buy tons of old watches and they vendors are many from China. I try hard to stay away from foreign vendors on Ebay but again some have pen making stuff that you can not find anywhere in the states. What you do find or at least I do especially on Amazon, these vendors that are from China set up shop in USA, usually Cal. and sell out of there. So I bet you see that on Etsy alot more too. The thing about Etsy is there policy is unless they are changing is that any vendor can not sell mass produced items so if they are letting China made items they are not mass produced unless they are changing their own rules. I bought 6 pen display boxes from  China but were sold out of Cal. from Ebay. But what they do is just change the names of the companies but they are drawn from the same warehouse located in Cal. I know this for fact because I talked to the person who I bought boxes from. This maybe another way they get around those rules. 

Yes I know the China stuff is there now, however it isn't supported by Etsy.. Etsy can and does shut those shops down... However that is changing.. Making it legal on the platform will probably bring in a lot more of it is all I'm saying.

My clock inserts come direct from China.. I have them made to my specs though, Not against China products.. what I was getting at was a whole lot of China knockoff "supposed handmade" products may hit the site at low prices. There is a difference between craft supplies and the actual handmade stuff.. that's where I was going with that China stuff. 

Etsy doesn't have a jury process to go through to prove your products are handmade like goimagine and Amazon handmade section does.. Yes people cheat the system and get in to resell mass produced stuff anyway on Amazon.. but with the rules in place they don't just drop in and set up shop like other sites.  

That all said, Etsy is probably the cheapest and easiest to get started on and especially for someone new to the game as they boost new shops items in the searches for the first few months to help get them sales.. 

[kmmcrafts]

7 hours ago, JTTHECLOCKMAN said:

The Wayfair ruling was the one that was in place for a long time and that stated more or less you can only charge sales tax if you have a brick and mortar store in that state. I think in 2004 the rule changed because states want that tax money. You see this now on FB and marketplace. They are even going after garage sale people because they use that as a front of constantly selling on that platform. 

https://taxfoundation.org/blog/what-does-the-wayfair-decision-really-mean-for-states-businesses-and-consumers/#1

Right, and everyone ignored it all so they put in place rules for the sellers to report the sales rather than the buyers on the honor system to report the purchases' they've made, and avoid paying the tax on their purchases. I started selling in 1998.. remember going through many of the changes.. the longer time has went on the harder it was getting to sell.. now everyone wants in on the "what appears to be easy money selling online" but doing it the right way and getting traffic is become a non-stop job just to keep up with the changes and maintain traffic to your products. 

 

[JTTHECLOCKMAN]

Yes the China situation became a huge problem even doing craft shows. Many times a show would say they are juried but then you see things as you walk around that are indeed China made and maybe altered in some small way and called a handmade craft. Back when I started selling, juried craft shows were truely that But as years went on shows just were looking for body counts. It is not only China that needs to contended with but also vendors who just sell their product so low to just make a dollar or 2 and they are happy. That is more or less another reason I am getting out of this. I can deal with real competition but there is a different world now.