I am in the process of opening an embroidery business operating from my home. I need to purchase clothing, blankets, hats, etc to have on hand as samples. I was told by the vendors that I need a sales tax id number??, or a resale tax id number??. I might be talking about 2 different tax id numbers, I'm really not sure at this point; very confused. I visited a number of gov't websites but didn't know what kind of information I was looking for. I live in PA. Can anyone help steer me in the right direction??

Fr_Chuck

Check with your county clerk. As you sale items you will need to collect taxes on the items you sale. city, county and state taxes all have to be collected and deposited in seperate bank accounts and paid.

In return, you with your tax ID number will not have to pay taxes on what you buy that will be used in the manufactoring of the product.

Check with your local county clerks office and or your states attorney generals office.

Also remember as a self employed person you will also be paying all of your own social security taxes. Normally as an employee they only hold 7.5 percent of your check for this, and the company pays the other 7.5 percent, but as a self employed person, you will have to pay 15 percent social security tax on any money you earn ( what you pay yourself)
Plus you will be paying all of your Federal and state income taxes also.

** alot of people forget to figure in that 15 percent extra out of thier pay as self employed and end up owing alot of money at the end of their first year.

Also you will most likely have to file quarterly estimated tax with estimated tax payments as a self employed person.

kp2171

as fr chuck said make a few local phone calls.

if you cannot find the county clerks number you can call the local irs office and explain what you are doing (setting up a business) and they will steer you in the right direction. the irs also had some useful info when we were setting up a small candle business. and any small business development groups can be helpful.

you can find useful info by simply searching online for "how to start a business", but you have to wade through all of the sites that want to sell you something. you can also go to almost any bookstore and find books on how to set up a business from home, lots in the crafting areas, and even if it is not in your area the ideas are the same. and make a few local phone calls... there are people and resources in your town that can help you, in some cases much faster and more reliable than online.

heres a link i had in my browser favs:

http://www.entrepreneur.com/howto/0,5967,,00.html

it is NOT perfect... they give some useful info and then they want to sell you books and crap... but its a start. i've had more success through a bookstore and small business dev info

take a little time to educate yourself on setting the business up, how to do so legitimately and in compliance with the law. it will also help you setup your business plan.

when we started ours there was very little capitol investment, so we really didnt need to think things out too much... it was a hobby that grew into a business. but the sooner you get yourself organized around the things you need to do, the fewer mistakes you'll need to make later.

the more money you're putting into it, and the more you are relying on this to truely be income (as opposed to us, where we simply started making candles for friends and for us) the more you need to be focused and organized. dont be intimidated... it just takes a little knowledge and planning.

with our business, we simply file at the end of the year with our accountant, not quarterly.