Business license to sell here?

[MoreGooder]

Hi, fellow CPF'ers,

Is it necessary to have a business license to sell a few custom flashlights here? You see, I'd rather just claim any income (probably quite low in the grand scheme of things) on my personal income tax. Not being a tax expert, though, I thought it prudent to pose this question to those of more experience than I.

Thanks!
MG

 

[dom]

Hi MG
No license needed mate - just start a thread
on
CPF's Custom & Modified Flashlights B/S/T
forum.

Have a look at a few there to get an idea as to how it's done.

Cheers
Dom

 

[Databyter]

I could make a strong case the the net sum gain of customizing and selling a modded light for most on this board who don't do itin larger amounts is 0 or even a loss.

Therefore personally if I sold one of my money holes, I would be losing money on a larger investment and would save my records but would not claim it on my taxes.

Unless your doing a massive amount of business I wouldn't consider a business license either. Then your opening a can of worms that in many on-line cases is not required, but hard to close once opened, and You would have to charge and report taxes for your State etc.

Disclaimer: These are reckless assumptions on my part.

 

[MoreGooder]

Thanks for the replies.

While I was not expecting to make any money, I did want some assurances that I wasn't setting myself up for tax troubles.

 

[greenLED]

Thanks for the replies.

While I was not expecting to make any money, I did want some assurances that I wasn't setting myself up for tax troubles.

More, do keep in mind that ANY type of income is considered taxable by the IRS. You are expected to report any profit from on-line sales (via eBay, PayPal, forums, or whatever).

 

[JohnR66]

Tax laws vary by country. If you don't expect to make any money, don't worry about it. If you spend $100 to make $100, you are at 0. Nothing to tax.

If you spent $25 to make $100, you have $75 taxable profit (keeping it simple here). I wouldn't report anything unless it was substantial. If you made $250 in a year, just keep it. If you're right on the boarder with you main income, reporting profits on hobby type stuff can put you into the next tax bracket.:thumbsdow

 

[jasonck08]

I'm no "tax expert" but I believe I remember hearing that if your making <$500 a year on something, its considered a "hobby" and you do not need to report it to the IRS.

 

[MoreGooder]

Here's what I plan to do:
If and when I do decide to sell a few "money holes", I'll keep all of my expenses and receipts and income tallied. Then, I'll take the info to a tax adviser next April and let them tell me what to do with it.

At least it would appear that I don't need a business license to sell here. That's one less expense to worry about.

Here's something I ran into:

You must include on your tax return hobby income. Tax deductions for expenses related to hobby income are limited to the amount of hobby income you report on your tax return, and can be taken as tax deductions only if you itemize your tax deductions on Form 1040, Schedule A. The tax deductions are subject to the 2% AGI floor.
If you collect stamps, coins, or other items as a hobby for recreation and pleasure, and you sell any of the hobby collection items, your gain is taxable as a capital gain on your tax return. However, if you sell items from your hobby collection at a loss, you cannot deduct a net loss on your tax return.

​

(from this website: http://wwwebtax.com/income/hobby_income.htm)

At least it would appear that I don't need a business license to sell here. That's one less expense to worry about. I'll try and sell my custom builds at a break even price or give them away for birthdays and holiday gifts, and thus avoid the tax issue altogether.

 

[fyrstormer]

I'm no "tax expert" but I believe I remember hearing that if your making <$500 a year on something, its considered a "hobby" and you do not need to report it to the IRS.

As far as I know, the difference between a hobby and a business for tax purposes depends entirely on how you choose to declare the income to the IRS, unless that income is entirely supporting or significantly improving your lifestyle. Which is to say, if you build chairs and sell them for a profit, you can call it a hobby, but if that profit pays your mortgage the IRS won't believe you.

That being said, given the kind of equipment and "soft labor" needed to produce a product from scratch, unless you're wildly successful you ought to be able to find all kinds of legitimate costs you can assign to the production process, in order to reduce your taxable profits to zero.

 

[saabluster]

... unless you're wildly successful you ought to be able to find all kinds of legitimate costs you can assign to the production process, in order to reduce your taxable profits to zero.

I find the easiest way to reduce your taxable profits is just to not make any profit.:sick2:

 

[CarpentryHero]

I'm curious as to what your going to sell