Death, Taxes and the CPSIA

Once I decided I was running an actual business* the next logical step was to get all legal. It’s amazing how doing this will change your perception of what you’re doing. Paying for a business license and trade name makes you really think you’re legit. Part of that may be that navigating the bureaucracy of getting those items is akin to going down the Amazon river in an innertube. It’s frustrating as hell. Not to mention time consuming, confusing and expensive. But it doesn’t have to be. (Except the expensive part. That’s pretty much a given.)

He wants your money.

I see more questions on my Etsy team discussion boards about getting your business license and taxes than almost anything else. I had no clue where to start, and like most people (I imagine) I started researching taxes at the state level. Save yourself a lot of time and don’t do that. Start at the smallest level and work your way up. Most of the time you’ll find that when you meet the requirements for your city or county, you’ll have met them for the state and feds as well. The only exception to this is the Federal Tax ID number, which you’ll need if you want to get wholesale pricing from some sellers.

In my case, I started with the county since my place of business (my house) is unincorporated. If I were within city limits, I would have started with City Hall. So I’ll use the county example, and you can adjust for your own situation. Start by Googling “business license” and your county. That should at least get you a site telling you where to go. If you’re lucky, the forms you need will be online. It’ll also tell you how much it is and whether you’ll need to submit it in person or if you can mail it in. (Gwinnett County, GA information is here.) You will have to renew this license every year, and mine runs on a calendar year so it pays to do it as close to January 1st as possible. They don’t prorate. In Gwinnett County, GA it’ll cost you $80.

Next, you’ll need to register your trade name or DBA (doing business as). If you sell under any name other than your own, you need to do this. It’s expensive, but you never have to renew it. Google “trade name registration” and your county to find the details. Pay attention to how they want to be paid. In my county, they want two different payments. One money order for the courts, and a check for the local paper to publish your name. I can mail mine in, and the form is online so that makes it a bit easier. (Gwinnett DBA form PDF.) Here the trade name will cost you $161 and publishing it (which is required) is another $40.

That should take care of your licensing, but be sure to ask when you’re at the business license office if you need anything else. I found them very helpful and knowledgeable. That brings us to…

DUM DUM DUM

Taxes.

You’ll want to do this part, because you can file a Schedule C with your taxes and any business loss you have will be deductible. Of course, you’ll be paying if you make a profit and you’ll also need to make sure you pay appropriate taxes on what you sell. As complicated as most people seem to think this is, in reality it’s super easy.

Yay!

In Georgia I have to charge tax and keep records on sales made within the state. So anytime a customer from Georgia buys a Ruggle, I have to collect tax and pay that to the state. My county taxes are paid in that same lump, so I only have to file with and pay the state. (The business license is also considered a tax.)

For Georgia, everything can be done online, which is awesome. You will need to know how much the taxes in your area are. For me it’s 6%. This is Georgia’s tax website. Once you get signed up, I suggest you appeal to have a more reasonable schedule for reporting. Georgia’s default is monthly, but I’ve only made one sale in Georgia and it was annoying to remember to go tell them I hadn’t sold anything every month. I just filled out a simple form on the site and it got approved fairly quickly. Now I report yearly, but you can also choose quarterly if you do more local business. Once you sign up with the state, that should cover you locally, but it’s not a bad idea to ask while you’re at the courthouse getting your business license.

You don’t need a Federal Tax ID (or Employer Identification Number – EIN) unless you plan to buy wholesale from someone who requires it, or you need it to get into special retailer events and whatnot. They’re super easy to get though. Just go here and follow the instructions.

As you can see, people are pretty passionate about this issue.

Which brings me to the CPSIA. Otherwise known as the bane of children’s products crafters everywhere. If you don’t make items for kids consider yourself lucky. Very lucky. The CPSIA (or The Consumer Product Safety Improvement Act of 2008) was passed after all those toys from China ended up being lead filled. It’s huge, encompasses a lot of crap and is necessary reading if you make child oriented things or plan to anytime in the future. I actually know a couple of sellers who decided to stop making things for kids altogether because of this law. Which is a damn shame.

HootNAndy stopped making awesome things like this Skelepony rocking horse as a direct result of the CPSIA.

Cool Mom Picks has a great list of things to do to fight for handmade children’s items sellers. Some things are exempt, like fabric, which makes it much easier for me. Even fabric items like my Ruggles have to comply with labeling laws.

Here’s a couple of cliff notes versions of the CPSIA to get you started:
http://crochet.about.com/library/blstuffedtoyregs.htm
http://crochet.about.com/library/weekly/aa041500.htm

You’ll need to add some way to track your material lots. It would be impossible to track lot numbers from every bolt of fabric I’ve cut. Instead, I add a date to my label which serves as my “date of manufacture”.  This way, if there ever is a recall on fabric I can track it down via receipts.

The textile labeling laws are actually under the FTC (more long, boring reading). The short version is on the second link above. Here’s what my tag currently says:

Made from natural and synthetic fibers & materials.
delicate wash, dry on low
Hog Mountain, GA
USA

So you can see I had to be very general since I use all sorts of fabrics for the claws. The space after the washing instructions is where I write in the date of manufacture before putting the tag onto the Ruggle.

There’s also an entire forum on Etsy dedicated to CPSIA regulations. Here’s the one I found most helpful when I was researching what I needed to do.

As much information as I’ve put in this post, you should be able to see that it’s fairly easy to get all legal and legit. Aside from the CPSIA which can be a huge pain in the ass. If you have any questions, feel free to ask. As always I’m no expert, but I’ll do my best.

You thought I’d forgotten Death, didn’t you? Of course not! What you probably should do is amend your will to give any and all assets from your business to a beneficiary. I admit to not having a will (eep! I know). So I made a file folder for my husband which lists all the passwords, usernames and any other pertinent info he would need if I kicked it. If you’re awesome like me, you’ll include some names and contact info for people who might be interested in any supplies you have.

That’s it for this post. Curious about another aspect of running a micro business? Leave me a comment. 🙂 I love comments.

*honestly, I’m still waffling. Probably because I don’t have the time to really focus on it and make it take off. I won’t until the boys are both in school, so until then I’m just trying to keep it going. So it’s really somewhere between business and hobby at the moment.

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5 Comments (+add yours?)

  1. Jamie Diaz
    Mar 19, 2012 @ 13:47:17

    WOW. They charge you guys THAT MUCH to do that there?! In my county, the DBA and state license are free unless you plan on having more than 20 employees, and even then it’s only $30 to get the more than 20 employees fee. The city charges $30/yr for a business license and you only have to have that if you plan on conducting actual business – like, having customers over at your house, which I generally don’t. I am glad I don’t live in GA!

    Reply

    • bewhiskered
      Mar 19, 2012 @ 14:00:22

      Yeah, it’s steep. I tried to reason with them every step of the way saying that I only sold online, no employees or customers at my house, etc. but no dice.

      Anyone selling anything in Gwinnett County is supposed to pay the business license fee. Doesn’t matter how big or small you are. 😦

      Reply

  2. Jason
    Mar 11, 2013 @ 11:23:53

    This was a TERRIFIC help for someone local starting a business in Gwinnett. I had a fruit stand as a teenager and my DBA was $25… I think it’s gone up a bit in the last 10-15 years…

    Reply

    • bewhiskered
      Mar 11, 2013 @ 13:15:06

      I’m glad you found it helpful! It was such a hassle to go here and there and everywhere figuring it out. If I’ve saved one person from that, then it was worth it.

      Reply

  3. Dragonsys
    Apr 01, 2014 @ 22:04:08

    You have helped us out quite a bit, thank you. We are in Gwinnett as well, so this has really helped clear up the DBA process.

    Reply

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