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If you're interested in starting your own jewelry-making business, but haven't made it official yet, obtaining a business license or otherwise registering your business, and/or obtaining resale tax identification (sometimes called a tax number, sellers permit or reseller's permit) is a simple but major step along the way.
How Tax IDs Work
Each state or country has its own specific rules and regulations regarding sales tax but, generally speaking, if you sell your artistic creations in a region that charges sales tax, you are required to collect sales tax when you sell your product. Having resale identification exempts you from paying taxes on items that will ultimately be used for resale. For example, generally speaking, you will not have to pay taxes on beads, wire, clasps, etc. used in making a finished piece of jewelry to be sold to someone else, with tax charged to that person.
Even with a resale ID, you will still need to pay a Use Tax on business items that will not be resold, for example tools that you use to create your jewelry (again, this varies from state to state). In most states, you will also have to file your own sales tax reports and pay the sales tax you have collected. Please check with your local tax expert to ensure you are in compliance with your laws.
Additional advantages of a Business License and/or a Tax ID:
- It is typically a minimal expense.
- It legitimizes your business in the eyes of potential suppliers and fellow craftspeople.
- It enables you to purchase from a larger number of wholesale suppliers.
- It helps you get into wholesale bead and craft-supply trade shows.
- It expands where you can sell your wares (some craft shows won't let you exhibit without one).
- It qualifies you for our Wholesale Program.