As a crafter, you may not be the most business-minded person in the world. However, if you’re going to succeed in the world of craft fairs and festivals, you’ve got to think like a business person! One of the ways you do that is by learning about sales tax before you hit an event. Here are the things you need to know about handling sales tax at fairs and festivals.
1. You have to pay it! No matter whether you pay sales tax at the show or later when you file your state taxes, you definitely have to pay the taxes on what you make. It’s actually illegal not to pay state taxes! From a business perspective, paying this extra money can actually make sense. It allows you to legitimize your business and to use that income from it when you’re looking for a mortgage, car loan, or similar item.
2. It’s different in different states. You probably already know that different states have different tax rates. Before you travel to a state, you need to know not only what its tax rate is but also how and when you pay sales taxes. In Illinois, for example, you have to register with the state before you can sell at a fair or festival. You may have to pay taxes when you’re actually at that festival, and sometimes the state will send representatives to collect the money at the end of each day.
It won’t be like this with all states, though, so make sure you know the rules and regulations of both the state you live in and the state you sell in. If you’re going to be traveling a lot during the fair and festival season, it can be a good idea to do all this research well ahead of time so you’re prepared.
States – Where do you do business?
* Hawaii does not have a sales tax; instead, we have the general excise tax, which is assessed on all business activities.
3. Decide whether you want to figure it in or not. Sometimes at a festival when you’re processing lots of orders quickly, it’s easier to have tax already figured into your prices. This does, though, require you to set your price tags a bit higher. If you’re afraid that this will turn customers off, price your items according to what you’ll make off them. To figure sales tax quickly, keep a chart handy of the tax you need to add to each item according to its price.