How to Legally Sell Your Goods at Fairs, Garage Sales, Flea Markets, and Craft Shows
by JimD, Former Moderator
- Created: July 22, 2010, 10:13 am
Summer is here and the season of fairs, flea markets, garage sales, and craft shows has officially begun. Small businesses - especially artists, craftsmen, and those selling homemade goods; take advantage of temporary vendor opportunities to bring in sales without the overhead expenses of a commercial lease or utilities. Starting up a successful- and legal- vendor business means that you have do more than just set up a folding table of merchandise; there are rules and regulations that need to be followed. Do I need to register? Do I need to pay taxes? These questions can get confusing whether you are operating as a business or just an individual trying to make some extra money.
First you will need to figure out whether you are actually operating a business or just have a hobby. This is important because there are differences, especially in regards to taxes whether you need an Employer Identification Number (EIN).
Understand that fairs, garage sales, flea markets, and craft shows are not the same in regards to registration, licenses, and taxes. For the most part, fairs, flea markets, and craft shows can be grouped into one category with garage sales in another. Fairs, flea markets, and craft shows tend to require more paperwork and permits, since they are usually occupied by vendors or businesses, whereas garage sales tend to be run by individuals.
Fairs, Flea Markets, and Craft Shows
Do I need to register with the government?
If you have the proper tax ID number, you do not need to do any additional registrations with the Federal government. The Federal government registration does't change where or how you do business. If you do not have a proper tax ID number, you will need to get one.
In most cases you will need to register with the states where you plan to sell goods. Registration information can be found the stat's business or tax portal. Some states have online forms while other must be mailed, so fill out the paperwork as soon as possible to allow processing time. Registration will require information such as name, tax id number, and some other basic information.
States usually have different registration requirements based on your intentions to sell at many events or just at one. For example, Illinois has a'changing locatio' filer option which is for vendors who routinely travel throughout the year. This ensures that your collected sales and use taxes gets to the proper locality and not to your hometown.
Do I need a permit?
Sometimes permits are required by the state or local government. In order to collect sales tax from customers, many states require businesses to apply for a state sales tax permit. Connecticut, for example, requires all vendors to obtain a Sales and Use Tax Permit before making any sales. This permit needs to be displayed prominently at your booth or table. To determine if you need a permit, visit your state governmen's business or tax portal on Business.gov.
Whenever you sign up to sell at a fair, flea market, or craft show, ask whoever is in charge of the event what paperwork or permits are needed. They can serve as a good resource since they should be familiar with the state and local procedures.
Do I need to pay taxes?
The short answer is it depends, but probably. The tax question really can be broken down into two parts: federal and state & local. For federal tax purposes, you need to report your profits from each of these events. If you are an individual, you will submit the income on your tax return and if you are a business, it will be reported as business income. There are no special procedures for federal taxes.
State and local taxes are more difficult to generalize because each state and locality has their own tax laws. Some states require you to pay taxes on all your sales while others have certain floors that must be met first. For example, in Minnesota, vendors do not have to collect sales tax if they qualify for an Isolated and Occasional Sales Exemption. With this exemption, there are certain restrictions the number of days and amount of sales. If you do not qualify for the exemption, you will need to pay all state and local sales taxes. For more information, check with the event manager and your state tax agency.
Do I pay sales tax to my home state or the state where I plan to sell?
Sales and Use Tax law follows the rates and procedures of where you are selling the goods. For example, if your business is in Florida, but you sell your goods at a flea market in Georgia, you will need to follow the Georgia rates and procedures.
How do I pay taxes?
If you are selling in the state where you live, paying taxes is straight forward, since there will only be few additional forms. One of which would specify what part of your taxes should be allocated to the event hosting locality. Check your stat's tax portal for information regarding multiple locations.
If you are from out-of-state, it can get more difficult because you are not familiar with the forms. You should receive information about paying taxes when you register with the state, but if not, ask. See if the state offers a Special Event Collection Report. This form is usually is accompanied with a payment coupon, and allows you to submit your paperwork and payment after the event.
In some areas, a tax collector will be onsite to collect the taxes immediately at the close of the event. This is done to make sure the local government collects the appropriate taxes. If this is the case, the tax collector will help you through the process; just ensure that you can verify their credentials.
What if I do't sell taxable goods?
Most items are taxable, but there are a few exceptions. The exemptions can be confusing, and vary from state to state, so make sure to thoroughly research whether your goods are considered non-taxable in the hosting state or locality. For advice and guidance, contact a state tax representative, ask a small business attorney, or do your own research on the stat's tax portal.
Do I need to register or get a permit?
Garage sales are handled at the local level. You do not need to register, but many local governments issue permits. Permits are usually about $5 and require you to give the dates and times for your garage sale. The reason is mainly to limit the amount of garage sales that someone can have in a calendar year and to make sure they know the rules on posting advertisements. If you have questions about whether or not you need a permit to have a garage sale, you should contact your local government.
Do I need to pay taxes?
The shorts answer again is it depends. In some areas, you do not need to pay taxes if your profit is under certain about. Each state has different ceilings for determining sales tax exemptions. For example, in New York any amount under $600 in one calendar year does not need to be reported.
In most states if you own a business similar to a garage sale, you will need to pay taxes. Antique dealers, thrift store owners, or similar businesses will need to treat a garage sale as part of their business operations and pay sales taxes accordingly.
For more information on exemption regulations and your tax requirements, visit your state's department of revenue or tax portal.
Requirements and tax laws that regulate fairs, flea markets, craft shows, and garage sales can be difficult to understand. Remember to use a small business accountant as a resource to answer any questions that come up.
Have more questions? Ask them in the Community.
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