People all over the country set up at craft shows each year to sell their wares. It may be a little confusing to know whether you need a tax ID number to take care of your finances. You may be wondering if you need to have a tax ID number if you want to sell at craft shows only part time or if you want to make a living from it.
Making It a Business
If you want to make craft sales your business and you want to make a living by traveling around to craft shows, it is a good idea to get a tax ID number. For one thing, you want to make sure all your finances are in proper shape come tax time. Having a tax ID number also means you don't have to pay taxes when you buy supplies from retailers. This can save you a lot of money in the long run. Check with your local government for its requirements for obtaining a tax ID number, as the process varies somewhat from state to state.
If craft sales is just a hobby and you do only a couple of shows a year, it is probably not necessary to get a tax ID number. You should include whatever money you do make in your tax return for the year, especially if you make over a certain amount. Check with the Internal Revenue Service for the current year's requirements for filing taxes on wages not reported on W-2 forms.
Taxes at Shows
Some craft shows require that you collect tax. You can do this in one of two ways. You can simply charge the necessary amount of tax or you can figure the tax into your products by raising the prices slightly, but still keeping them at an easy amount for you to add up quickly, such as by dollars and half dollars. Either way, you will need to keep a record of how much money you collected during the craft show and then pay taxes on that amount. Some but not all craft shows that collect taxes require you to have a tax ID number.
Read through all the paperwork that you receive upon paying for your booth to make sure you have everything you need in time for the craft show's opening. Some craft show hosts will have numbers that you can use only for that particular show, especially if you do not make a business out of your craft sales.
You may need some other items to go along with, or instead of, your tax ID number, depending on the state where you live. Some craft sellers may need a DBA (doing business as) form. They may also need a seller's permit. Check with your local government to make sure you have all the proper forms you need for the craft show, just in case somebody stops to check.