# How does TAX work when Tax time comes around



## TeeNoob (Aug 14, 2012)

Hi,

I've read my forums where people are saying not to register for trademarks or anything when you first start off since it cost $350 and I can use those money on marketing or printing more tshirts. 

*So now my questions are:*
1) Do I charge people tax when they buy from my website/

2)What should I do when the tax time comes around (note: did not register brand). Do I pay tax? Is this consider another income? 

Any information related to paying tax during the tax time is appreciated. Please advise!

*Background Story:*
I built a website myself and designed the graphics myself. Then I outsource it to printers such as ooshirts and etc. for them to print the shirts. I havent registered for any trademark or anything related to save money. 

Now I have a website and a few designs of tshirts and other products to sell. I will be doing Marketing myself. What should my next step be?


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## greyhorsewoman (Jul 19, 2007)

Welcome to the forum, Teenoob. 

If your state collects sales tax on apparel, then you much register for a sales tax license in your state and collect sales tax on items sold in YOUR state only. 

Federal, State, and and, possibly, Local taxes will be payable on any net PROFIT (makes no difference if anything is registered, trademarked or copyrighted). The IRS only cares if you have made money from your endeavor. You deduct any expenses incurred in produces your product, so start asking for and keeping all receipts.

This can be pretty simple. I still file as a sole proprietorship and use Turbo Tax. No issues in 10 years of business.


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## Alpha Statuz (Feb 20, 2009)

Just tagging on to grayhorse's response. Taxing your customers is variable depending on what state you're in. California recently changed the rules to begin taxing all internet sales. So it is dependent on what state you operate within.

Sent from my PG86100 using T-Shirt Forums


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## barcelona10 (Apr 15, 2011)

greyhorsewoman said:


> Welcome to the forum, Teenoob.
> 
> If your state collects sales tax on apparel, then you much register for a sales tax license in your state and collect sales tax on items sold in YOUR state only.
> 
> ...


 so when you file as a sole proprietorship,you use your own ssn?so like a second job correct


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## TeeNoob (Aug 14, 2012)

Thank you everyone for answering. Can I simply sell my tshirts online without registering for trademark or registering as a business?

Simply create tshirt and sell on website. Is that illegal?


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## Alpha Statuz (Feb 20, 2009)

barcelona10 said:


> so when you file as a sole proprietorship,you use your own ssn?so like a second job correct


Sole Proprietorship, you can apply for a federal tax ID #, but it isn't mandatory. You can use your SSN if you prefer.

Sent from my PG86100 using T-Shirt Forums


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## kimura-mma (Jul 26, 2008)

You do not need to register for a trademark. That is completely optional.

You should definitely register as a business. At the very least, you can apply for a DBA. But your business should be on record for legal and financial purposes.


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## barcelona10 (Apr 15, 2011)

Alpha Statuz said:


> Sole Proprietorship, you can apply for a federal tax ID #, but it isn't mandatory. You can use your SSN if you prefer.
> 
> Sent from my PG86100 using T-Shirt Forums


So if use my ssn,I just give it a company name and when I file throw any profit on top of my income?


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## GordonM (May 21, 2012)

Get an EIN, and use that for anyone other than the government that needs to have your data. You don't want your personal SSN floating around for just anyone to grab and use for identity fraud.


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## barcelona10 (Apr 15, 2011)

So get an EIN# name the business and register it as DBA and use that for taxes and that would also help me open accounts for merchandise?


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## Sport T (Nov 10, 2010)

Most suppliers are going to require you to have a state sales tax number to purchase at wholesale. You need to register as a business in your state.


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## missswissinc (Feb 21, 2012)

With all orders be it a walk in, phone, mail or internet order if the purchaser lives in your state and your state says that your required to collect sales tax on in state residents your required to collect it. Look at ebay people who use that as a business and they do charge in state residents who buy on the site the sales tax for their state. Now the only thing is your going to have to state somewhere the amount of tax your required to collect for the area your in. So lets say for your area they say you have to collect oh 7.35% so on your site you state to all residents of that state that they will need to be charged that amount since your operating in an area that requires all shirt purchases be charged that amount.

Yes keep all your business transactions and personal transactions seperate. This way come tax time if you have any deductions for your personal side it won't effect what happens on the other business side with those deductions.


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## barcelona10 (Apr 15, 2011)

Its complicated to me..


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## missswissinc (Feb 21, 2012)

actually barcelona10 its not. In NY you have 2 taxes that equal the whole tax we pay for our state. you have a county and state tax. Now since this is a web site that talks about screen printing and embroidery I will help keep it simple for you. So for my area of NY its 8.125% or as some put it 8.13%. Break it down for you its 4.125% or 4.13% for the county and 4% for the state. Now lets say you live in NY and ask me to do oh 24 shirts. Now with NY they allowed the county to charge sales tax on anything under $50. NY state said we won't charge you unless the shirt prior to embelishment costs over $50. KIS we all know a gildan is less then that so now I would be required to collect sales tax price I charge you for the shirt. So lets say I charge you Oh $10 per shirt. So here is how your bill would look if you live in NY. Its $240 plus the 4.13% so the total for the bill would be $249.91. The tax part I would need to set aside is $9.91 to give to the county for their share of the business. Now lets say you want me to do a $50 shirt then its full charge of the 8.13% so that mean $4.07 would be added to the cost since the shirt prior to embelishment is over $50. 

Believe me I found a web site called zip2tax.com which will help you out with knowing what amount of taxes your area is supposed to collect on items if they do collect taxes at all since delaware doesn't collect sales tax on anything. 

If your still in doubt then I would suggest sitting down with a CPA (certified Public accountant) before the yr ends to get your ship together or don't be suprised if you might get a little audit from the state or feds regarding why you didn't report everything with your business collecting taxes.


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## barcelona10 (Apr 15, 2011)

I haven't sold anything g yet, I don't eve. Have a license,but I do want to get in it. I think before I d anything I will have someone do all that for me proper so I don't get n trouble with uncle Sam! Thanks for the info.


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## suzamac (Mar 18, 2008)

Make an appointment with a reputable CPA. They will give you a short course in all of the different taxes in your location. From the questions above, I can see several who have zero tax knowledge. I was in this position 30-some years ago when we opened our business. Your CPA will help you. With Quickbooks, it's pretty easy. 

One of the reasons you need to get a resale license and therefore collect, report and pay sales tax to your state is you won't be able to buy from wholesalers if you don't. Kinda hard to make money paying retail for your substrates.


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## barcelona10 (Apr 15, 2011)

Yeah very true,here in via if you don't own your own place I think I have t get the landlord to sign some papers,and that's what's making me not even try to get anything


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## missswissinc (Feb 21, 2012)

hey no problem that is why I said if your still confused seek a higher authority and that is a CPA. They will help tell you what taxes you need to collect on and such. Believe me you don't want to get audited over something so stupid as not showing the correct amount of taxes you should have collected.


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## Ezra4ever (May 11, 2011)

quick question....

I have my tax ID, license, etc...I probaly spent $1000 on inventory and services so far (shirts, hats, printing, embroidering, stickers, etc...) 

I am still in the starting process and only sold a few hats to my friends. Do I report those come tax time??? 

I don't wanna get audited for spending $$$ out of pocket, writing it off and have nothing to report. I dont wanna get in trouble for something I could avoid.


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## Ezra4ever (May 11, 2011)

^ Anyone?...........................


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