UT business license?

[#1]

I keep hearing different things. As an Etsy Shop owner in UT are we required to have a business license?

Some of have told me that you only need one if you make a certain amount of money, but others have said everyone needs one?

Does anyone know what the rules really are?

[BobbinInQuilts]

I would get a business license just to be safe. In North Salt Lake it is only $20 a year. You don't need a business plan unless you are starting a corporation. I am a sole proprietor so I just registered with the state, and pay taxes and have a city business license. It wasn't that hard and I feel good about all of it.

[OakStreetPress]

I'm just starting out and am a sole proprietorship. I don't want to use my home address as my business location/address for privacy concerns. Does anyone have experience using a UPS mailbox as their official business address/location with the state and city (or in my case county)?

[Former_Member]

Jessica B.

The state requires you to register a physical location for your business and, in mot of our cases, this is your home address. Unfortunately you cannot us a PO box. I also had to use my cell phone for my business number since I do not have a home phone/land line. I haven't ever had anyone mail me or anything though. When I registered my business, I registered it as a website or online store, or something like that.

[Former_Member]

Does anyone know the cost of legalzoom?

[Former_Member]

Ok. So legalzoom is around $200. Is that normal? What should I expect to pay if I do it on my own?

[Former_Member]

So much info! As far as I was concerned, I didn't make nearly enough to call it a business! I just considered it a hobby. But I do want to start selling at craft fairs. So people with craft fair experience, do they ask for your business license info?

[Former_Member]

I've never done a craft personally, but I've done research and a majority do ask for one. If you make more than $600 per year, you're required to register your business with your city and the state.
It's a little time consuming, but it's good to have your bases covered. I'm glad I did it :)

[Former_Member]

@Kylie:

It really depends on who you talk to. I'm working with a local accountant who helps small business owners get their paperwork in order and such. I've also worked with another Etsian in my town who knows most of the bases I needed to cover.
I preferred to do it on my own so I knew what I was getting myself into and not following someone blindly.

[Former_Member]

Should I register under my real name or the name of my shop?

[Former_Member]

You need to register a DBA (doing business as) if you are not using your name. I did mine not long ago, and it was $22 on the one stop business registration site.
:0)

[Former_Member]

This link might help answer some questions
http://corporations.utah.gov/pdf/buslicguide.pdf

[Former_Member]

Thanks!! I'm not so great at the business-y stuff. :/

[Former_Member]

Most of us are not, Kami, LOL! That's why we're the Artsy-People :)
I'm sure if I had the time to do all the business-y stuff, I could understand it and do it on my own, but who honestly HAS that kind of time? I love these Forums and Teams so we can share experience, how-to's, and anything else under the sun!

[Former_Member]

Quick question! All you with a business license, I heard that you have to pay 35% tax on your income when you have a business license. Is that true? That seems a little outrageous. Let me know. Thanks

[CoopsCraftyCorner]

Ashley-Do you mean 35% on Federal taxes or State Sales Tax?

I file as a Sole Prop, which is a schedule C to file with fed. taxes I have never made a whole lot in profit, and there are so many write offs that you can use that I have never had to pay anything. I think that is only because I have not made very much for profit. Check with a CPA, and they would be able to tell you a lot more about it:) As a sole prop. you dont have to have an EIN, you can use your SS#.

As for state sales tax, you pay the sales tax on the items sold in Utah. Being a mostly online business, I sold 3 items in Utah for last year. So my sales taxes were very low, and I only filed annually, which is what I was told since I was under the $1000 mark. I never received anything throughout the year saying otherwise, and got my annual tax paperwork in the mail toward the end of Dec to pay by Jan 31st.

I was required to get a state sales tax license number, as well as get a business license for the city I live in...even as an online business/home business. Both were fairly easy to obtain.

[Former_Member]

Jen, You are correct with the information you have supplied here. I wonder what I do with the items I get wholesale and do not pay tax on. I believe that has to be reported also but I am not sure. That is the only reason I went ahead and applied for a sales tax number.
Any thoughts?

Kathy

[CoopsCraftyCorner]

Kathy, I didnt purchase any of my supplies using my sales tax ID number last year. I dont even know if Hobby Lobby, where I purchase a lot of my supplies even offers that option:) I know that you can buy supplies tax exempt (which sounds like you do when you purchase your wholesale items). In talking with my CPA, I asked about buying items sales tax free, and basically, you dont pay taxes on them then, but when you file that is when you do pay taxes on them. There is a box on the tax form that specifically asks for that information.

I would much rather pay sales tax on my supplies up front than have to pay it all back when I do the taxes at the end:) Im sure for some it works better the other way around though!

I started my business in a different state, and when I got here I was really surprised at all the fees and licenses and who has to know what that I have a business etc...it was kind of overboard from what I had to do in my last state. Each state is different though, and I know that I would much rather follow the rules than have to deal with consequences later:)

edited for spelling:)

[Former_Member]

Hi Everyone! New to the group here. I love this thread; it is so useful! We are all in the same boat - we don't know a lot about taxes and establishing a business but are quickly learning. I was so ashamed when I received a notice in the mail two weeks ago from the state tax commission saying that I haven't filed Utah sales taxes - who knew that I had to charge people that lived in Utah sales tax? Penalties could be up to $15,000!! I thought that when I filed with my accountant a month ago for my sole prop in my personal taxes, that was it!! I called the Utah Tax Commission and they walked me through paying my sales tax.

I solely sold out of state on Etsy. Thank goodness all my sales were out of state so I didn't have a lot of taxes owed. Lesson? Don't sell to Utah hahahaha totally kidding - I'm actually signed up for a craft fair in June. Now I know I have to charge them tax.

I suggest getting business license - it's only $22 and it makes it legit. I opened last September, went online to buy me a $22 business license and sign up on "TAP" a tax page for businesses in Utah. Better safe than sorry!

[brendascrochetnsuch]

I'm new to getting a business license and paying Utah taxes. I've been on Etsy since Jan 19, 2012; making less than $250.00 in sales and none to Utah residents. I do have my shop set up to take out taxes of Utah residents.

I've sold at the People's Market in SLC a few time and the Holiday market the People's market does at Trolley Square in SLC once. I've been provided with a temporary tax ID for the sale and paid taxes that way. I've never heard of getting a business license till now.

I'm going a bit bigger this year - just have been approved for the "Got Preemie" event in September. I was told to keep track of my sales for tax purposes.

Reading the above comments, I'm thinking I should register my business and get a tax ID number.

The part that confused me was the info they ask, for example: when is your first payroll date? when is the first day to do business in utah? they will do inspections on what- my half built craft room totes of yarn, craft supplies and finished items scattered throughout the house??

Any feedback would be appreciated :-)

[brendascrochetnsuch]

Jessie, I belong to a group on FB, it's web address is: https://www.facebook.com/groups/allvendors/

Its an informational site called, Vendor Events & Boutique Info Utah. A lot of events are posted with contact info and such. You can put your name in the "files" with what you sell and people will contact you. I just got into an event in SLC, not too high of a vendor fee. A lot of places for craft events are in Layton, south of SLC, or just plain anywhere in utah. I'm not one to travel, so I like to stay close.

[BobbinInQuilts]

Good info brenda! Thanks for sharing!

[CoopsCraftyCorner]

Brenda,

I pulled out my business registration paperwork that I filled out last year when I first moved to Utah. I am not sure where you are seeing the 1st thing you asked about, the payroll question...I see under the "Primary Physical Business Address-Business Headquarters" section where it asks if you have any employees working for you, but nothing about 1st payroll. If you have no employees then you would have no payroll.

As for the start date of doing business in Utah, that would have been your January 2012 date. I dont know if you will be penalized for not having gotten your business license before opening.

I have yet to have them do an inspection...I suspect for a small home based business, they probably wont :) If they do, then yes, I would do exactly what you mentioned and take them through the places in your home and show them your place of business:) Really though, I dont think you have to worry about them coming to check it out. The "rules" for home occupation permit say that your useable area, which I understand to be your work area, cannot be more than 25% of your home. Then inventory and supplies must not exceed more than 50% of that 25%. LOL...they make it so fun to understand!!

I hope that some of this helps you out:) Utah really does make it difficult to have a small business in my opinion! You have to get the Utah business registration, then the city business license, and THEN, which I just found out about a month ago...you have to file with the COUNTY too on all of your business supplies!! I have to now, by May 15th go through my entire work space, and find the value of any and all office furniture, tools, supplies etc that I use for my business...then if it is over a certain amount, pay taxes on all my office "property." Talk about nit picking and getting every penny they can! Dreading doing it...after making several phone calls to them I think I know what I need to do now, but seriously...what a pain! All that time to inventory when I could be creating:(

Best of luck to you, hope I was able to help you a little bit:)

[Former_Member]

So this newbie to Utah is going to throw a wrench in this discussion because this need for a business license and sales tax ID # just isn't sitting well.... isn't this Etsy site and its' sellers considered a "hobby" not a business? Especially to those of us that are smaller in number of sales per year? PayPal doesn't even send you a 1099K until you reach $20,000 or 200 transactions in a year so in the state of Utah, you collect taxes and register why? I'm not trying to make waves here just understand why it is so different here. Thanks

[CoopsCraftyCorner]

You are required to file federally on any income you make...even if you just think it is a hobby, they consider it a business. Paypal and Etsy only give you a 1099 if you make over 20,000, but you are still required to file for your income, even if it's under that 20,000 mark.

No matter what state you came from in the past, you still needed to be filing federally, as well as state sales tax. Unless of course it was from a state that does not require sales tax ( I think there are still a few of those:) ) For example, I did not have to do near as much when I lived in NM just over a year ago. I had a state sales tax license and of course filed federally using a schedule C, but they didnt require as much as the state of Utah. I was a little confused at first too since I only knew to file federally and through state sales tax...but here, they also want you to have a city business license, and you pay on property for the county as well...even if it is a home based business, which your etsy shop is considered.

Frustrating, yes, but unfortunately, it is not like garage sales...it is a business venue:) Good luck! I wish you all the best! :)

[CoopsCraftyCorner]

Here are some links that might help you get started:)

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Filing-and-Paying-Your-Business-Taxes

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Sole-Proprietorships

(Im guessing your business would be a Sole Prop....that is the most common for self employed and small business)

http://www.ehow.com/way_5315333_needed-file-business-taxes.html

Hope these help:)