Hi everyone! I'm in Ohio and have recently decide to sell cakes and cookies from home under the Cottage Food Law.
What I would like to know is, Do I have to file taxes on my baked goods? If I do, how do I need to go about doing that?
Any information would be very much appreciated! Thanks!!!
Since there is no tax on food, you don't have to worry about that. The only taxes you need to do are for delivery and your income.
You only charge tax on your delivery fee and rental fees. The tax percentage is based off the drop off location, not the starting point.
I live in Kent, Ohio (Portage County). So when I deliver a cake in Stow, Ohio (Summit County) I chage the needed percentage for Summit County. Same when I deliver a cake to Cleveland (Cuyahoga County), Canton...
If you don't charge a delivery fee, you don't have to worry about it.
Now, you will have to pay income tax on your sales on baked goods. Keep good records on income, expenses, travel milage (I was shocked how much milage helped me come tax time)... I use Cake Boss Software to keep track of my income and expenses. I have an accountant that specializes in small business that I talked to for about an hour at the end of last year trying to find out what I needed to do make both our lives easier and the IRS off my back. An accountant that specializes on small business is worth his weight in gold.