Make your Craft Business Legit: Tax Licenses

Amy Kalinchuk, the Soap Crone, starts her series of posts today on “2012: Your Year to Make your Craft Business Legit.” She will blog every other Tuesday here on the Horseshoe site. There is some super helpful info below on tax licenses! Thanks, Amy!!

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This year is off to a great start: you’ve got a craft business. Are you taking it seriously, though? Do YOU consider it a business? Or is it just some fun to have during your free time?

If you consider your business a business, a pursuit to make money and not just fun, then it’s time for you to become legitimate in the eyes of the law, as well as your mirror. It’s time to get your tax license.

“Aaaaamyyyy!” you wail.  “Tax stuff is HAAAARD. It’s annoooooooying. It’s too much to understaaaaand! I don’t wanna.”

Now, now. Stop fretting, please. And also, please stop thinking that it’s hard. It’s not. You must do this to have a legitimate business, and there is good reason to do so. Having a tax license means several things:

• In the eyes of the law, you have a legitimate business. Too legit!
• You will start collecting sales tax from customers. Not a problem!
• You may be able to shop places you couldn’t before, and get better prices. Seriously!
• You may be accepted to participate in craft shows that are larger, better-attended, and make you more money than smaller shows. Sweet!
• You will be able to take tax deductions for lots of expenditures that you couldn’t before. Sweeter!

Yes, it does also mean you have a little bit extra to do at tax time. Don’t worry–I’ll cover that in another blog post. (It’s easy! I swear! I can hear that whimpering from here. Just let me handle it!)

Let’s get that tax license, first, and start focusing on doing business.

Acquiring a tax license is easy. Most cities and states have the forms online for download. You can fill them out and mail them in, and you receive your license in the mail after it’s been processed. Simple. Sometimes you can apply completely online, pay with your debit card, and then they mail it to you. Awesome! After you have it, the state or city will alert you when it’s time to renew your license.

For Colorado, you will need to gather the following information ahead of time:

• Business name and trade name, if any.
• Federal Employer Identification Number (If your business is a Sole Proprietorship, you can use your Social Security Number. If you don’t want to do that, acquire an EIN. It’s easy and quick and free. Click here to do it.)
• Names and contact information for all the owners, partners, and/or corporate officers of this business. (If it’s just you, then this is done already. See? Easy!)
• All applicable addresses, including primary business location, mailing, payroll, banking, primary worksite location, and any other addresses pertinent to the business. (Your home address will work if this is a home-based business.)
• Date you paid or will pay $1500 in gross wages in a single quarter OR the ending date (Saturday) of the 20th week in the calendar year that individuals were or will be employed in Colorado. (Don’t worry about this if it’s just you.)
• Payroll information, including the first date the business paid wages. (Again, don’t worry about this if it’s just you.)
• Bank information (Name, address, phone, etc. of the bank with your business account. You do have a business bank account, right?)

After you have this information ready, click here and fill out the Colorado application, step-by-step, online. Click the button that says “Start your Filing.” You want to make sure you apply for the “Multiple Events” license at the same time, so that you are covered for doing craft fairs in the state.

When you are finished with that, repeat the process using the website for your city or town. Here is a handy list of cities in the Denver area, and links to their tax websites (or directly to forms), for your reference:

Littleton, Colorado
Englewood, Colorado
Lakewood, Colorado
Arvada, Colorado
Broomfield, Colorado
Thornton, Colorado
Aurora, Colorado
Parker, Colorado
Castle Rock, Colorado
Fort Collins, Colorado
Boulder, Colorado
Golden, Colorado

Get that done, and next time I’ll discuss keeping the paperwork organized and up-to-date. Go forth and apply for your license!

Amy Kalinchuk is the soap crone at www.soapcrone.com, and the publisher at www.crafte-revolution.com. Her goals this year will be loftier than last year. Count on it.