Im thinking of starting a business in making candles, soaps, scrubs, etc. things of that nature, for some of you that already have started a business when do you think is a good time to get a tax id? right now we dont have alot of money to do a big investment, but we do plan on making an investment in the business we are trying to start, I have some of the supplies but not all, Im in the testing out phase, and Im just wondering when would be a good time to start getting a tax id and things like that?
Getting a tax ID....
- Thread starter tlaborn
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I'm in Canada and I chose to get my tax id right away so I could claim the taxes back on purchases I make. I don't know how it works elsewhere...
tlaborn said:
Depending on where you live, there is a process you need to go through before getting your tax id number. In the state I live in, I had to apply for my Trade Name certificate first and it took about 6 weeks to get that. I am the beginning stages of my business as well and I have all the legal/tax things done even though I probably won't officially be up and running for another 30 days or more.
donniej
Well-Known Member
If you're in the USA go to a state office (look in the blue pages in the phone book). Just ask the where you need to go. In PA you just fill out a form and send a check for ~$70. The IRS is simple, it's an on-line form and is free. The City of Philadelphia was a little more complicated and cost a whole lot more.
If you're not using your actual name then you also need to register the company name. This is called either a DBA (doing business as) or a Ficticious name. IIRC, in PA that's another $70.
If you're not using your actual name then you also need to register the company name. This is called either a DBA (doing business as) or a Ficticious name. IIRC, in PA that's another $70.
Ok Thank You for the information... I Live in South Carolina and from other people I talk with who have their business has a tax ID and told me to go to the irs website because its free. When I did research on just getting a tax id in SC, it seemed simple for me to just go on the irs website and get a tax ID... I was thinking of doing it for the same reason as the person from Canada! but I wanted to know if there was anything else I was missing.
donniej
Well-Known Member
I'm willing to be that South Carolina and your county will both require you have a tax ID. If you're forming a sole proprietorship you don't need anything from the IRS. The IRS will accept your social security number for anything tax related. In fact the IRS prefers you use your social security number but will issue you a EIN (employer ID number) to help you protect your SS#.
My research into this has led me to believe that any state and county will require you to have a business license & tax ID to allow you to collect and pay sales tax. The business license will likely come with a tax ID number. IMO, they don't really care about the "business license" part, they just want you to have a tax ID so you can pay your sales tax :wink:
My research into this has led me to believe that any state and county will require you to have a business license & tax ID to allow you to collect and pay sales tax. The business license will likely come with a tax ID number. IMO, they don't really care about the "business license" part, they just want you to have a tax ID so you can pay your sales tax :wink:
FYI: Sticky situation w/ tax number before selling
THis is sort of hard to explain/understand. If you get your items tax free, the understanding is that you will make someone else pay the tax on those items.
If you buy a doll tax free & sell it, your customer is responsible for the tax.
If you buy a doll tax free & decide to keep it for display or whatever reason, YOU MUST pay the sales tax you originaly avoided.
If you buy a doll & donate it to a church, YOU MUST pay the tax you originaly avoided.
If you purchase $500.00 worth of soapmaking supplies tax fee, the govt is going to want to see tax paid on those supplies, by you or by your customers. So, if you are not selling right now I would not advise buying items tax free.
It is tax fraud (in the US anyway).
Trust me on this one. About 5 years ago the tax man knocked on my door & ran me through the mill.
THis is sort of hard to explain/understand. If you get your items tax free, the understanding is that you will make someone else pay the tax on those items.
If you buy a doll tax free & sell it, your customer is responsible for the tax.
If you buy a doll tax free & decide to keep it for display or whatever reason, YOU MUST pay the sales tax you originaly avoided.
If you buy a doll & donate it to a church, YOU MUST pay the tax you originaly avoided.
If you purchase $500.00 worth of soapmaking supplies tax fee, the govt is going to want to see tax paid on those supplies, by you or by your customers. So, if you are not selling right now I would not advise buying items tax free.
It is tax fraud (in the US anyway).
Trust me on this one. About 5 years ago the tax man knocked on my door & ran me through the mill.
Tabitha said:
This is very true. I used to teach classes at a candle/soap shot and people would come in and say...oh if I get a tax id I don't have to pay taxes, huh? Well, let me go do that. They had no idea what they were getting in to or how things worked. Yikes.
Educate yourself.
I took a small business and a small business tax class and it was a life saver. I recommend anyone just starting out to take a class. Alot of cities offer them or community colleges.
cwarren
Well-Known Member
I have had businesses before - talk to your tax person... they will advise you..
PrairieCraft
Well-Known Member
I'm going to go back to the basics here with this convo. I planned years ago to have my own business (massage office). I worked my way up to this goal, building clientele, gaining knowledge etc... I can't imagine why I would have needed a tax id when I was still in school learning massage. Does that make sense as it applies to this situation? Also, if you have limited funds and no skills as of yet then it is going to be really difficult to pull a business out of thin air. Not to be discouraging. I too would love to wake up tomorrow and have a soap business.
Also, I am fairly successful in my business, but my intention was never to be focused on the money. Obviously I want and need money but your passion has to be in the service or product. Focusing on money and business first isn't how a good product is developed. There are steps, you have had the first one, an idea, then there is learning all you can, then practicing, then perfecting, equals good product...then start a business and sell it. (I might have missed a couple steps) If you start backwards you might really stress yourself out by jumping ahead to owning a business but not having anything to sell.
Also, I am fairly successful in my business, but my intention was never to be focused on the money. Obviously I want and need money but your passion has to be in the service or product. Focusing on money and business first isn't how a good product is developed. There are steps, you have had the first one, an idea, then there is learning all you can, then practicing, then perfecting, equals good product...then start a business and sell it. (I might have missed a couple steps) If you start backwards you might really stress yourself out by jumping ahead to owning a business but not having anything to sell.
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