Sales Tax Question

[Former_Member]

Ok, so it's tax time...

According to my research online, craft-persons or artists operating out of a home business that sell less than $1000/yr do not have to register for a state sales tax license. I am trying to save myself the hassle of the $50 deposit this year. Last year I sold more than the $1000, but most of my sales were out of state.

So my question for you all is if you sold less than $1000 in state, would you qualify for the craft-persons / artists exemption of not requiring a sales tax license? Any and all feedback would be much appreciated!

Cheers :)

[EllieGraceCrafts]

Correct me if I'm wrong, but if you want to be able your expenses, then you need to pay taxes on your applicable sales. Also, I was told that the $50 was a one time fee that's reimbursed once you pay in $50 of sales tax. My renewal this year was $16. A multiple events license to do craft fairs is $16, but free if you have a regular sales license. Hope this helps.

Anyone taken the sales tax class yet? I need to go.

[Former_Member]

My understanding of it is if you are under $1000 dollars of sales all you need to do is collect the sales tax of items sold in Colorado. If you surpass the $1000 a year then you have to get a sales tax license. I mentioned this to my friends tax guy for his business and he has never heard of the $1000 thing and said it was best just to get the license.

[Former_Member]

Thank you both for the advice. I think I'm going to have to bite the bullet and get the license. Hopefully I can make more local sales and someday see the $50 deposit again!

[herie7]

So sorry but did you pay for a license last year and put up the $50 deposit? You only have to do this once and just pay for renewals of $16 every 2 years. You might want to seek clarification for the state sales tax dept. (very friendly people) on the parameters of the $1000. It may be $1000 overall or just within the state of Colorado. I had to chat with them about collecting sales tax on out of state orders and they were very friendly and helpful.

[Former_Member]

I have never heard of this $1000 limit and I've gone to 2 sales tax workshops hosted by the Denver Handmade Alliance and some other group I can't remember at the moment.

You will need a state sales tax license and a sales tax license for your county and/or city you do business in. If you do a craft fair outside your city and/or county you will have to pay for a special events license for that location and file a special events license form with the state (free if you already have one for your business location). For example, I am based in Denver so I would have to have a state license as well as the City and County of Denver's sales tax license for all the sales I do in Denver (actual physical Denver NOT the suburbs). I did a craft show at Southglenn mall, so I had to file a special events license with the state (free with the regular license) and then had to file a special events license in the county and city in which the event was located (which I had to pay for just for this event). For that event I would not obtain or file sales taxes for the City and County of Denver since the event was outside the county. Your sales tax you collect will also be different from location to location. The total you would collect in the City and County of Denver is 7.62%, with 2.9% being the state's share, 3.62% being the City and County's share, and the remainder sent to the state for RTD, the cultural district, etc.

I hope that makes sense! Also if you are selling online and you sell to someone in Colorado, collect the sales tax!

[Former_Member]

Thank you both! Just to clarify, I have not paid for a license yet. I started my business last year, and actually did better than I had originally hoped. Most of my sales are here on etsy, mostly out of state. I have collected sales tax for all the in state orders, and none of my sales have been specifically in my suburb, so I think I should be fine with just the state license for now.

I will give the states sales tax department a call. Thank you again for all the great information! It is much appreciated. :)