If you plan to sell crafts of any type, local laws may require you to at acquire at least a peddler’s license or your local equivalent. This would apply to handmade items that are sold at a flea market, over the Internet or through exclusive sales companies or agents. Tax regulations require even the smallest businesses to be properly registered.
Taxes and Licensing
Business licenses are how companies are tracked for taxation and registered for such things as public liability. When you are asked what the expected income of your company will be, enter the projected sales for one year. If your estimate is too low, you will have to pay the difference when you file your taxes. If it is too high, you will be able to credit the difference to following years.
Type of License
For most craft sales, a basic occupational license is sufficient. Some types of crafts, such as preparing food for human consumption, have other licensing requirements and may involve periodic inspections for health and nutritional compliance. If your crafts use regulated materials, check local laws and regulations on how to get the proper licenses.
Business Banking Accounts
You do not have to have a business bank account to hold a business license. The most basic form of business, the sole proprietorship, does not require a special bank account at all. In a sole proprietorship, you combine your cash flow with the company’s assets so that you and the company are legally the same entity.
State, County and City Licensing
You may be required to secure more than one license of the same or similar type. For example, a town ordinance may require you to have a peddler’s license or permit, while the state law requires you to have an occupational license. It is up to each business owner to research local laws regarding starting a business and to take the necessary steps to conform to those regulations.
In addition to a business license, some localities require sole proprietorships to register fictitious names. This name registration is used to link the business to you and allows you to legally function as the company when decisions need to be made. Before the name is registered, you will need to do a search of current and former company names to make sure that your choice does not violate trademark or copyright laws.
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