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?

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!

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

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

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.

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

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.

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

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!

great info morgan..thanks