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Starting a(n) Business Licenses & Tax IDs
Hi, I'm Caylee 85262 Custom Hats
Will be home based, will set up Etsy and website. Maybe sign up for farmers market or a store that features many shops or handmade products.

Business Licenses and Permits For your home-based handmade products business, you'll likely need a general business license or permit. Depending on yo..., Caylee.
 
 
 
 

     





  1. Business Structure:



    • Sole Proprietorship: Super simple, but your personal assets are at risk.

    • LLC: A bit more paperwork, but protects your personal goodies.


  2. Business Name:



    • Make sure it’s unique and catchy.

    • Check availability in your state and register it.


  3. EIN (Employer Identification Number):



    • You can get this from the IRS. It’s like a social security number for your biz.


  4. Home Business Zoning Laws:



    • Some areas have restrictions. Double-check with your local zoning office.


  5. Permits and Licenses:



    • General Business License: Required in most places.

    • Seller’s Permit: If you’re selling taxable items.

    • Home Occupation Permit: Depending on your city.


  6. Insurance:



    • Look into home-based business insurance. It’s always better to be safe than sorry.


  7. Online Presence:



    • Etsy and Website: Get these set up to showcase your amazing products.

    • Domain Name: Make sure it matches your business name.


  8. Farmers Markets & Retail Stores:



    • Check with local markets and stores for vendor applications.

    • Each may have their own specific requirements and permits.


  9. Taxes:



    • Keep track of your earnings and expenses. Maybe consider getting an accountant or some good accounting software.

     


Industry Overview and Startup Considerations

The handmade products market is booming, with global sales expected to reach $1.1 trillion by 2024. Etsy alone saw over $13 billion in gross merchandise sales in 2021. As for capital, you might need around $2,000-$5,000 to get started, depending on your specific products and equipment needs. Speaking of equipment, you'll likely need:
  • Computer or tablet

  • High-quality camera for product photos

  • Crafting tools specific to your products

  • Packaging materials
    • Now, let's talk business structure and paperwork. Brace yourself for some acronym aerobics!

    Business Structure: LLC vs. S Corp

    Choosing between an LLC and S Corp depends on your specific situation. An LLC offers liability protection and tax flexibility, while an S Corp can provide potential tax savings through salary and dividend distributions. Both structures separate your personal assets from your business liabilities.

    EIN: Your Business's Social Security Number

    An EIN (Employer Identification Number) is a unique 9-digit number assigned to your business. It's used for:
  • Filing business tax returns

  • Opening business bank accounts

  • Hiring employees

  • Establishing business credit
    • Think of it as your business's social security number, but hopefully with fewer identity thieves trying to claim it.

    Seller's Permit: Your Ticket to Retail

    A seller's permit allows you to collect sales tax on your products. You'll need one if you're selling taxable goods or services. It's generally required for:
  • Online sales through Etsy or your website

  • In-person sales at farmers markets or craft fairs

  • Wholesale transactions

    • Business Name Registration

    Registering your business name protects your brand and prevents others from using it. This process varies depending on your business structure:
  • For an LLC: Your name is registered when you file your LLC formation documents

  • For a sole proprietorship: You may need to file a DBA (Doing Business As) if you're using a name other than your legal name

    • Additional Permits and Licenses

    Depending on your specific products and location, you may need additional permits or licenses. These could include:
  • Home Occupation Permit

  • Health Department Permit (for food-related products)

  • Zoning Permits
    • Remember, requirements can vary widely based on your location and the nature of your business. It's always best to check with local authorities to ensure you're fully compliant. And there you have it! You're now armed with the knowledge to navigate the exciting world of handmade product entrepreneurship. May your crafts be profitable and your paperwork be minimal!

         


    Will be home based, will set up Etsy and website. Maybe sign up for farmers market or a store that features many shops or handmade products.





    Business Licenses and Permits

    For your home-based handmade products business, you'll likely need a general business license or permit. Depending on your specific products and operations, you may also require specialized permits related to home occupancy, zoning, or product-specific regulations.  

    Tax Registrations

    You'll need to obtain the following tax registrations:  
  • Employer Identification Number (EIN)

  • Sales tax permit

  • State tax registration

    • Additional Considerations

    If you plan to sell food items at farmers markets, additional food handling certifications may be necessary. For online sales through Etsy and your own website, ensure compliance with e-commerce regulations and obtain any required digital business licenses.
    ✔ Biz Structure

    You can choose to be a(n) Custom Hats :

    • Sole Proprietor,
    • LLC,
    • Corporation or
    • Partnership.
      After you decide and select your business entity, you need licensing.


    ✔ Biz License


    Scottsdale Business Tax Registration ( Business License)
    All businesses including home, online or mobile BUSINESS need a BUSINESS license because they are BUSINESSES.


    ✔ DBA Biz Name

    A(n) Custom Hats business using a fictitious business name in Maricopa County i.e. you are a business with a trade name other than the owner's legal (full name) name are required to get a(n) fictitious business name.   For instance you open a(n) Custom Hats business and you name it "Superior Custom Hats Group". You will need to file a fictitious business name for that name.
    ✔ Seller Permit

    In AZ you need a resale ID ( AKA seller's permit) if you selling touchable items.  (A.K.A state id, wholesale, resale, reseller certificate, about $39 for most states).
    Seller's Permit

    ✔ Federal EIN


    Note: All businesses need a federal tax ID number except sole proprietors that are not employers and are not independent contractors.
    An independent contractor is a self employed business person that receives more than $600 per year from anyone of his or her clients.
    IRS rule: The client must issue a 1099 form to the independent contractor and the independent contractor must have a federal tax ID. However, even sole owners may obtain a federal ID and use it as a business tax ID instead of using their own social security number as a business tax ID number.
    However, all other licenses that apply to sole proprietors as discussed here are requited regardless of getting a federal tax ID number.

    ✔ State EIN

    In addition you will need a federal and a state EIN if you will hire employees. I.e., a AZ Federal Tax Id Number ($29)  and a(n) AZ  State Employer Tax Number  

    ✔ L L C

    Instead of filing a fictitious business name DBA Filing (about $49 plus state and legal newspaper publication fees) in Scottsdale, Incorporate in AZ  or form a(n) AZ LLC     . 

    You have a choice to file a DBA or form an LLC or incorporate. If you will do business under your first and last legal name you will not need to get a fictitious business name.
    Also note that even using your first and last name may not help you avoid filing a DBA if the name has a suffix such as "& sons" etc.

    ✔ Incorporation


    If you do form an Online Selling Stuff llc or incorporate (about $49 plus state fees for most states) your Custom Hats business instead of just filing a fictitious business name (dba), it will help you avoid personal liability from wrongs arising from your business dealings and you will not have to file the Scottsdale business name. In lieu of recording a Maricopa County trade company name (our filing service fee includes trade name registration and newspaper legal publication for 4 weeks) you can also form a corporation in AZ or form an AZ LLC (starts @ $49 plus state fee for most states & includes required documents such as bylaws for the corporation and Limited Liability operating agreement for the LLC). .
    		 
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