Taxes

Business By Denelly666 Updated 15 Dec 2009 , 8:36am by FleurDeCake

Denelly666 Posted 3 Dec 2009 , 1:31pm
post #1 of 13

I am feeling a little ignorant about this so bear with me but do I have to get a tax ID number and everything in order to sell cakes? If I am looking at setting up a website and doing cakes through a rented commercial kitchen, how do I handle charging taxes and claiming my income, etc?

12 replies
jodibug0975 Posted 3 Dec 2009 , 1:37pm
post #2 of 13

Yes, you need to start by setting up a corporation, LLC or another type of business. Probably with your Secretary of State.

Then go to your state Department of Revenue and get a Tax ID number. You will need to collect and remit sales tax, and if you hire employees later then you will have to remit employer withholding tax.

Good luck!

MnSnow Posted 4 Dec 2009 , 3:44am
post #3 of 13

Some states do not require taxes to be paid on baked goods, such as mine. however, there is a use and sales tax I have top ay quarterly. That's tax on items I order from out of state that has no taxes charged on them. So you may want to check on that as well

Harleyfan Posted 4 Dec 2009 , 4:23am
post #4 of 13

In Virginia, entities are registered with the State Corporation Commission and State Tax ID numbers are acquired from the State Department of Taxation. A Federal ID number would be required as well. Localities, respectively, control what types of home-based businesses are allowed. Virginia's website, www.virginia.gov, has a section, Business, on the left side of the homepage that walks you through what you need to get a business started, home-based or otherwise. The "Business" section covers other aspects of operating a business in VA as well.

I noticed you're located in CT. I'm willing to bet that your state has a similar site, I'm guessing maybe "www.ct.gov" with a "Business" or "Doing Business" section or something of the like. Virginia is big on promoting small businesses and provides lots of info and/or contacts to assist in their success. Guessing again, but willing to bet that every state has a section on their official website regarding conducting business, how-to's, etc.

Hope this helps!

Always Learning!
~Harleyfan

indydebi Posted 6 Dec 2009 , 4:59pm
post #5 of 13

Sounds like you'd benefit a great deal by visiting your local SBDC office. THey have classes, workshops and one-on-one advice counseling for people wanting to start a business but have no idea how to get started. They are VERY helpful and most of their help is no-cost or very very low cost.

cutthecake Posted 6 Dec 2009 , 5:02pm
post #6 of 13

I think it would be a good idea to talk to a tax professional who can help you get set up.

niccicola Posted 6 Dec 2009 , 9:29pm
post #7 of 13

Harley Fan....just to let you know, in Virginia, if you are a one-employee LLC (like me) you are not required to have a Tax ID. You can use your social security number in place of it.

The only time it really matters is when you want to open a bank account. They don't accept socials. Also, opening an account with a food service distributer requires a fed. tax id.

I pay my taxes through our personal taxes. Makes life simple.

Harleyfan Posted 6 Dec 2009 , 11:43pm
post #8 of 13

I made a general statement that State Tax ID numbers are acquired from the State Department of Taxation, but in re-reading my post I can see where the next sentence would infer that the state number was required. I apologize to everyone if there was any confusion there. Anyway, I did know that. I've worked with many businesses over the years who's owner uses their SSN. I appreciate you posting the information though. I didn't intend to mislead anyone.

Always Learning!
~Harleyfan

this-mama-rocks Posted 7 Dec 2009 , 12:26am
post #9 of 13

First, I would start by registering as an LLC. This will also get you an FEI number (FEIN). You will nedd an FEIN to get registered with the state, open a business bank account, and get insurance. Go to LegalZoom's website to get that done; I think it's about $150.

Then, find out what's required by your state. Register your business name (probably thru the Secretary of State), get a state business license/ID, and register for sales/use taxes, if required. Also find out what;s required by your health department/dept of agriculture.

Find out if you also need to register with your county for a county license. This is usually covered by your sales/use tax account, but not always.

Next, buy business insurance. Many facilities require evidence of $1M in liability before they allow you to deliver on their premises. This will also be necessary when dealing with wacko customers who threaten to sue over every little thing.

hth!

chelleb1974 Posted 7 Dec 2009 , 6:46am
post #10 of 13
Quote:
Originally Posted by Denelly666

I am feeling a little ignorant about this so bear with me but do I have to get a tax ID number and everything in order to sell cakes? If I am looking at setting up a website and doing cakes through a rented commercial kitchen, how do I handle charging taxes and claiming my income, etc?




I can help answer a lot of your questions. I don't have the time right now to respond appropriately, but will come back. Feel free to PM me in the meantime if you wish! I am an accountant and tax preparer with over 9 years experience in this. icon_smile.gif

~Chelle

costumeczar Posted 7 Dec 2009 , 5:55pm
post #11 of 13
Quote:
Originally Posted by niccicola

Harley Fan....just to let you know, in Virginia, if you are a one-employee LLC (like me) you are not required to have a Tax ID. You can use your social security number in place of it.

The only time it really matters is when you want to open a bank account. They don't accept socials. Also, opening an account with a food service distributer requires a fed. tax id.

I pay my taxes through our personal taxes. Makes life simple.




Just out of curiosity, do you use your SS number when you pay monthly sales tax, too? I'm in Richmond, and I have to use my FEIN to report sales tax online, even though I'm a sole-owner LLC

morgnscakes Posted 15 Dec 2009 , 7:36am
post #12 of 13
Quote:
Originally Posted by Denelly666

I am feeling a little ignorant about this so bear with me but do I have to get a tax ID number and everything in order to sell cakes? If I am looking at setting up a website and doing cakes through a rented commercial kitchen, how do I handle charging taxes and claiming my income, etc?




This site really helped me out. www.sba.gov

it's the small business Administration website. It helps you locate any offices you may need to get ahold of and helps you to decide how to structure your business from start to finish (sole proprietor, general partnership, LLC, Inc, etc.'' because there are added fees with LLC and Inc.) There are even online "courses" that take about 30 minutes or so.

Most states require you to register or certify through the Secretary of State office and get a business tax ID from the Dept of Revenue. But check into the Small Business site.

FleurDeCake Posted 15 Dec 2009 , 8:36am
post #13 of 13

great info morgan..thanks

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