What taxes beyond sales tax do I need to pay on my craft income?
Income and self-employment taxes often apply once you make a profit, even for small vendors.
The Narrative
The Empathy
You're focused on collecting sales tax but unsure what other taxes might apply. It is hard to know what to budget for at the end of the year.
The Education
Beyond sales tax, most vendors owe income tax on net profit. If you operate as a sole proprietor, you may also owe self-employment tax on that profit. State and local income taxes can apply as well. The key is to track your expenses so you only pay tax on profit, not on total sales. Setting aside a percentage of each sale can prevent a surprise tax bill later.
The Solution
Track revenue and expenses throughout the year, and estimate your profit quarterly. Set aside a portion of profit for income and self-employment taxes, and review your obligations with a tax professional if possible. When you plan ahead, tax season becomes manageable.
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