Has anyone else had to deal with this? The licensing and permitting part for homebased online only businesses in Mississippi is fairly straight forward. You need 1. register a business name ($25 to $50), 2. a business license (~$50), 3. a seller's permit ($36). Neither one of these things are over $100 to get.You also need a state sales tax ID number of course, which is free to get. However, I was told that because what you do will be done at home (doesn't matter if its online, part time, full time, whatever), the state of Mississippi wants a $500 cash sales tax bond before you get a sales tax permit. That's $500 cash upfront, period.I had the idea of selling a few homemade bath and body products online only. I don't want to open a store. I won't have employees. I don't want to put up signs. There's not a special place in my house dedicated to this. I may not even make $500 worth of products to sell, but mississippi wants $500 before I can even get started.Has anyone else had to deal with a similar issue? Have I been mislead? I only ask because the first person I talked to in the MS Department of Revenue advised me to contact every state to see how much tax I had to charge for each online purchase to each state. (Wha..? I always thought you only had to charge tax to people who were in the same state?)One lady even told me they want a $500 cash bond because the state can't come and lock me out of my house JUST INCASE I decide in the future to not pay sales tax on what they THINK I'm selling. The mere fact that I contacted the Department of Revenue to comply with the law should mean that.... I WANT TO COMPLY with the law. lol!I mean, not every business is honest, and i wouldn't even complain if the fee was reasonable. But $500 cash up front with no installment plan is terrible for people like me who want to start out incredibly small and see how/if I can build from there.http://www.sos.state.ms.us/busserv/AdminProcs//PDF/00015355b.pdf (read 101)Can anyone give me some advice concerning this? (BTW, it could be that I just haven't found them, but I don't see hardly any online bath/body businesses located in Mississippi.)
I also ran into this when I wanted to set up a web-based business to sell my
art and handmade jewelry. The idea is that if I'm successful online, I'll
look to expand one day and take on a store front. But I have to start small
because of my situation. I didn't know about the cash bond until after I
submitted all of my info to request my tax number online. Its not
specifically stated in the "Sales Tax FAQS." But what is specific is that
even if I want to "sell goods to a final consumer" from my hobby, I'm
required to register, collect and remit my sales tax AND that I must register
before I sell anything. (So much for trying to raise the funds to pay for the
cash bond.) So if I want to share my art & jewelry with the world or even
just my neighborhood, I guess I'll be giving it away since I can't afford a
$500 cash bond. What's sad is I really want to run a legal business, even if
it's a micro-business. I look hard for the info, seek advice and try to do
right. I see a lot of people recommending that you go to the SBA offices for
advice, unfortunately they can't over-rule state regulations. My local SBA
advised me to contact city, county and state offices to verify everything
they told me. They also suggested that I wouldn't need/qualify for loans
unless I was looking to open a store front/hire employees. (That money is
really needed for creating jobs. Also, that's been over a year ago so it may
no longer be accurate.) Plus, I don't really need to be further in debt for a
project that might make me a few hundred dollars a year, if that much. I'm
not suggesting others don't get advice from SBA or apply for loans. They
actually gave me great advice on the steps I should take and provided
resources for getting information. Unfortunately, it's been hard for me to
get clear advice regarding my creative business dreams even from the
"officials". I will continue to call it dream because it's seeming like
that's all it will ever be. IF anyone has any applicable advice for creatives
like us who want to start out small and hope big, please do share. Hopefully
from someone who actually started out where we are trying to.
I understand your frustration. I am in the firework business and they consider us to be a transient business even though we are domiciled in the state. We are the only business in the state that is dictated to via law as to when we can sell our product. Because we sell for less than 6 months of the year, the Dept of Revenue and County/City tax collectors consider us to be transient under Chapter 75 of the MS Code.
Every time I setup a new location, I have to have a new Sales Tax License which the State charges me a $500 cash bond on. Even though Chapter 35 states that if I have a permanent business in MS I dont have to have it imposed or if my lease is greater than 90 days. I own a different type of business in addition to the firework business. The folks at the Dept of Revenue will not follow that part of the law even though it exempts me from having to pay the cash bond.
On the County/City privelige license, I am charged $250 each season. The County/City can also impose a cash suriety bond even though they are not in the sales tax collection business. I usually get out of paying it by proving I have paid the State the bond. It dont take long to eat up $2000 in profit before I have even sold the first item by the time you throw the lease, electricity, and the cost of someone to run the location.
Also since you are "manufacturing" in addition to retailing a product, you could open yourself up to a few other "fees". Also if you are within the city limits, zoning laws may preclude you from doing so from your home.
Sharon I make Handmade Scented Soy Candles and I live in the State of Mississippi.
For some reason when I looked up information pertaining to this I never saw that, but I guess it for homebased businesses.
However I will be opening up a boutique here in my area starting this week as I have been planning for this a while now.
I do know a lot of others that are from the State of MS too that sell their handmade goods online too such as bath and body items and a few more stuff.
I'm assuming that it's still considered a Home Based Business though.
I need to look further into this myself, but my business will be in a permanent location around other stores.
billboy1001 | Window Shopper |
1/14/2012 - 4:35 am
Hi Sharon
Never come across this before, a high price to pay when you mat not even sell anything !!
Another option could be Amazon, they sell stuff like that and lots more, no $500 to pay instant sign up.
Bill
kmurray | Community Moderator |
1/12/2012 - 11:20 am
Hi,
You can find out where your local resourcese are by entering your zip code at SBA Direct.
SBA has resource partners like SCORE, Women’s Business Centers and Small Business Development Centers located across the country that provide free business counseling to individuals looking to start or expand a small business. Getting in touch with one of these offices should be able to give you guidance in this area.
Unfortuantely, the tax may have been created because of the number of people that set up a business and in a few months close it, often owing taxes and other expenses that they can't pay and that the state or the supplier have no way to collect. Because of the economy, more and more states are requiring all retailers, particularly online ones, to collect sales tax and remit it to the state in which the purchaser lives.
You may want to meet with a counselor at a small business development center or a SCORE office to find out exactly what you need to do in your state to create a business. They can also assist with marketing and finances and other areas to help you create a successful business.
Unfortuantely, the tax may have been created because of the number of people that set up a business and in a few months close it, often owing taxes and other expenses that they can't pay and that the state or the supplier have no way to collect. Because of the economy, more and more states are requiring all retailers, particularly online ones, to collect sales tax and remit it to the state in which the purchaser lives.You may want to meet with a counselor at a small business development center or a SCORE office to find out exactly what you need to do in your state to create a business. They can also assist with marketing and finances and other areas to help you create a successful business.
=========quote====================
Unfortuantely, the tax may have been created because of the number of people that set up a business and in a few months close it, often owing taxes and other expenses that they can't pay and that the state or the supplier have no way to collect. Because of the economy, more and more states are requiring all retailers, particularly online ones, to collect sales tax and remit it to the state in which the purchaser lives.
You may want to meet with a counselor at a small business development center or a SCORE office to find out exactly what you need to do in your state to create a business. They can also assist with marketing and finances and other areas to help you create a successful business.
================================
Yes. I can certainly understand it particularly for businesses with a medium to high level of sales and take in a certain amount of money and taxes. I can understand it for companies who sell liquor, or for contractors, or car dealerships, etc.
But for homebased businesses without manufacturing facilities, without a brick and mortar storefront, without a separate office/structure, and which cannot be classified as a transient business (IE they know where you live), its simply too expensive.
I would have to be in a manufacturing facility to sell so much product to generate ~$500 worth of taxes (given the type of business I plannED to start). A person can only handmake so many $6 bottles of lotion with a stick blender in a kitchen. lol! And that's assuming you're selling almost exclusively to people in your own state online.
I guess my concern is the number, and the way in which they are requiring it to be paid. If they allowed certain homebased businesses to qualify for an installment plan, OR for a cheaper rate (say $150 to $250), that would be better.
I think this is same bond amount ($500) that other states require businesses to post who sell liquor or who are out of state contractors dealing with thousand dollar contracts.
Mississippi can protect itself, but I think it has to be reasonable for 'low ceiling' homebased businesses.(low ceiling: low production numbers, low income generating, low taxes generating, etc) homebased businesses.
Unfortuantely, the tax may have been created because of the number of people that set up a business and in a few months close it, often owing taxes and other expenses that they can't pay and that the state or the supplier have no way to collect. Because of the economy, more and more states are requiring all retailers, particularly online ones, to collect sales tax and remit it to the state in which the purchaser lives.You may want to meet with a counselor at a small business development center or a SCORE office to find out exactly what you need to do in your state to create a business. They can also assist with marketing and finances and other areas to help you create a successful business.
Sonya623 | Window Shopper | 8/22/2012 - 11:52 am
art and handmade jewelry. The idea is that if I'm successful online, I'll
look to expand one day and take on a store front. But I have to start small
because of my situation. I didn't know about the cash bond until after I
submitted all of my info to request my tax number online. Its not
specifically stated in the "Sales Tax FAQS." But what is specific is that
even if I want to "sell goods to a final consumer" from my hobby, I'm
required to register, collect and remit my sales tax AND that I must register
before I sell anything. (So much for trying to raise the funds to pay for the
cash bond.) So if I want to share my art & jewelry with the world or even
just my neighborhood, I guess I'll be giving it away since I can't afford a
$500 cash bond. What's sad is I really want to run a legal business, even if
it's a micro-business. I look hard for the info, seek advice and try to do
right. I see a lot of people recommending that you go to the SBA offices for
advice, unfortunately they can't over-rule state regulations. My local SBA
advised me to contact city, county and state offices to verify everything
they told me. They also suggested that I wouldn't need/qualify for loans
unless I was looking to open a store front/hire employees. (That money is
really needed for creating jobs. Also, that's been over a year ago so it may
no longer be accurate.) Plus, I don't really need to be further in debt for a
project that might make me a few hundred dollars a year, if that much. I'm
not suggesting others don't get advice from SBA or apply for loans. They
actually gave me great advice on the steps I should take and provided
resources for getting information. Unfortunately, it's been hard for me to
get clear advice regarding my creative business dreams even from the
"officials". I will continue to call it dream because it's seeming like
that's all it will ever be. IF anyone has any applicable advice for creatives
like us who want to start out small and hope big, please do share. Hopefully
from someone who actually started out where we are trying to.
pwcskier | Window Shopper | 1/18/2012 - 10:40 am
Toynga | Window Shopper | 1/16/2012 - 6:24 pm
billboy1001 | Window Shopper | 1/14/2012 - 4:35 am
kmurray | Community Moderator | 1/12/2012 - 11:20 am
BizResearcher | Window Shopper | 1/10/2012 - 12:14 pm
sharon837 | Window Shopper | 1/11/2012 - 7:38 pm
sharon837 | Window Shopper | 1/11/2012 - 7:37 pm
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