Was just wondering, if one was to get enough orders for rods/repairs, and was making money, would a tax id number from the IRS be enough or would one need to register as a business and get all the required paper work filled out.

May think of doing this from home if it ever becomes that. At this point I am not building rods for profit, only as a hobby and have given a few away as gifts to good friends, but have been approached with questions.

Also I imagine this would enalbe one to purchase parts at wholesale?


Thanks
Fernando

Fernando,

You will need to register as a business with your state and local tax collector as well as the IRS. The process and requirements vary from state to state, but that is what is required to be a business.

Thanks,
Rick

Fernando,
When I was in the business of sellling rods here in Texas, I had to estimate the amount of sales tax that I would collect in a year and get a CD at a bank. The bank held the CD in escrow until I closed my business. When I closed, the state gave me a release so that I could cash my CD.

As soon as you sell your first rod, just one, profit or not, you're liable for the Sportfishing Excise Tax.

For paperwork, you can sometimes get by with a social security number for identification purposes, but once you begin paying FET and state sales tax, they'll assign you a business ID number.

...............................

Alot depends if you are in the city limits or not as well. Here, I live outside the city limits, so do not have to register with the city. (saves about 7% cause in a tourist enviroment). I simply went to the state Dept. of Revenue office. Told what I was doing and they gave me all the paperwork that was required. Filled it out, paid $25 and had my Tax I.D. # in about 10 minutes.
Go to your DOR, I tried figuring it out on the website for a couple of days and just went in. They helped a bunch. I am not required to pay the excise tax. Asked about it and now forgot why but I don't have to pay it.

The Excise tax is Federal and if you sell ANY fishing tackle or rods, you are required to pay it. I would check with the IRS pretty quick. They have Excise Tax specialists. Many accountants and local governments are not even aware of this Tax. Tackle shops just include the tax in their prices and the buyer is not even aware of it, but they are paying it!

Mike

We just had a local builder get busted by the Excise Tax Examiner/Investigator. Someone turned them in. If you do not provide all the required documents or they don't seem to add up to them, they may estimate your tax owed and/or issue subpoenas to your suppliers for all your purchases. In NYS, the State Sales Tax Dept. is much nastier and actually has farther reaching powers than the Federal Agencies. Do it right, then you won't have to worry!
Ray