Jewelry Business

by Tracey
(Nashville, TN)

I have a full time job, but have started making/selling jewelry. I want to make this hobby legitimate, so that I can deduct my "loses" from my income tax...as well as purchase wholesale with a federal tax ID number (EIN). Right now my expenses are more then I'm making. It seems the SMLLC is the right way to go...any advice?

Answer

The single member LLC setup will let you deduct your losses from your personal income taxes.

This is one of the big benefits to an LLC over a corporation (personal tax deduction of losses during startup, which you cannot do with a corporation).

One thing I need to clarify you on, though. When it comes to wholesale purchasing, you are likely going to need a sales tax ID from your state in addition to an EIN.

The sales tax ID allows your wholesalers to sell to you without charging sales tax.

Legalzoom has a great service called "business license compliance". For $99 (pricing as of late 2008), you'll answer a series of questions about your business and they will determine what additional permits/applications/etc. your business will need.

One of the services that is included with the business license compliance is obtaining a sales tax id.

You can find out more about business license compliance at Legalzoom's site.

Scroll down and there should be a link called 'Business Licenses' at the bottom right under the heading 'Additional Business Services'.