Does it sounds like fun to grow produce or make crafts or baked goods and sell them at a local farmers market? It's not quite that simple. Seasonal businesses like booths at flea markets, farmers markets, and craft fairs must also pay taxes. Although each locality and state has different regulations, if you have a business where you sell to customers, you probably are going to have to pay taxes.
Flea Market and Farmers Market Booths are Businesses
If you have a booth at a farmers market you are creating or growing something, and you expect to sell it for a profit. And profits are taxable. If you are selling at a flea market booth, for example, you may be selling collectibles you picked up at garage sales for a low price, and you want to sell for a higher price and make a profit (otherwise, why would you bother?). Those profits are taxable.
What Taxes Must a Seasonal Business Pay?
A seasonal business must pay, at minimum:
- Income taxes on profits of the business, depending on your business type
- Sales taxes on sales of taxable items
- Self-employment taxes (social security and Medicare) for yourself as a business owner
- Employment taxes, if you have employees
Many localities charge other taxes, and your state may charge franchise taxes or other types of business taxes. As you start out, keep it simple, but do make sure you pay those taxes. Ask a CPA or tax advisor for help.
And don't forget that a cash business like a booth must verify income and expenses to avoid IRS audit. CPA Gail Rosen has some tips to help cash businesses.
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How to sign up for sales taxes (then collect, report, and pay)
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