Hello all! I've been doing cakes for awhile now.. and sell them legally under Ohio cottage food law. I have to give a disclosure and a list of ingredients to my customers. But as far as I know I don't need to include taxes or have a tax ID.. am i wrong? I do less than $4000 worth of business each year... I didn't think it was necessary... If someone has some information for me, please let me know.. I'm really wanting to know if I need to have a tax ID or not.. Thanks!!!!
If your business is not structured as an LLC or corporation, you probably don't need a federal tax ID, unless your state requires you to collect sales tax from your customers.
From the IRS:
If you just have a sole proprietorship (which is the default business structure) you'll need to declare your income (minus expenses) on Schedule C in your personal income tax return.
So if I'm just a one person operatino I don't need a tax Id it looks like... but do i need to still withhold taxes or no? anyone? again.. I pull in less than $4000 of cakes a year... for example.. this year so far.. I've only done about $1500
You only need to withhold taxes if you are paying an employee. When you fill out your 2011 personal tax return, you do need to declare your income and expenses on Schedule C, even if you make less than $4K.
thanks for the replies! but even without employees don't i still need a state tax id? I thought the federal tax id was for those with employees... but that i would still need a state tax id.
If you have no employees and do not collect state sales tax or use tax, you typically do not need a state tax ID either.
I have a dog grooming business I do out of my home in Ohio. There is no tax on a service like a grooming or providing a cake. Now if I would sell pet supplies or grooming supplies I would have to have a tax ID and collect sales tax. Same with you, if you sell cake supplies you would have to collect sales tax. And like someone else said, you have to file a Schedule C on the income minus your expenses.
thanks ellie! glad to hear from another ohioan! just wanted to be sure.. one last thing though.. what about if i sold candles (which i'm thinking about) would i need a tax id for selling a few candles here and there?
Cake is food, here in Ohio, NON taxable. Candles are a product you charge tax on - so yes, you need to have a tax ID number to report the taxes on them. You have to send in the reports each period whether or not you sold any or not too, just an FYI.
the cottage food law has nothing to do with taxes. Check with the IRS and the Ohio dept of revenue to be sure. Also, does your state require you to collect sales tax on the items you sell? If so, then a Tax ID is definitely necessary.
In Ohio (where my business is and I live) there is no tax on cake. There IS tax on things such as anything you may rent out (like stands) and on delivery fees, or if you sell NON edible items.
You can call the tax folks to verify.
If you do get the tax ID number, be sure to send in the forms each period, or you will be fined. (even if you don't have anything to report) I had a hard time getting them to realize I no longer had a business a few years ago. (we sold ATV parts).
Contact the State of Ohio Internal Revenue Service below and ask them directly. Even if you are making $4000 it is still considered income.
Primary Telephone Numbers
* Individual Taxpayer Assistance -
* Business Taxpayer Assistance -
thank you everyone so much for your help! I know I sound completely clueless... and I am really I guess. lol i just wanted to be sure.. thanks again!!!
One of the great things about forums like this is you get a number of perspectives and sometimes great "food for thought." We are all running toward the same goal, ...to be a better baker, mom, daughter, sister, friend and supporter of all things positive. We all make mistakes, and fall short of what we know to be "perfection." The important thing is to dust yourself off and get back in the game. I am grateful for this forum...it helps to keep me grounded! Ladies have a wonderful holiday in case I forget as the coming days get busy.