I thought this would be a good thing to ask with the Dallas Makerspace Holiday Gift Show coming up in November.
Has anyone here started a crafting business in Texas? What do you have to do to stay compliant with the law?
Do you have any advice about a seller’s permit?
Do you have an insurance policy/company you would recommend for craft shows and selling online?
Thanks!
I have recently gone through this. I had a previous US Tax ID assigned and am using that. You will want one. I then applied for a Texas Sales Tax Use permit. All of this you can do online. At the moment I am sole proprietor operating under a DBA. I applied for that at the Tarrant County County Clerks office. Usually every county has a way to do that.
For insurance I had to get a $1M policy for an event coming up. I went with my local insurance agent I get my house and everything else from. They set me with a year policy that protects me not only at an event but everything I do. There are places you can get policies just for events.
Hope that helps.
This is the one thing I would advise against, and was my biggest mistake in my former small business. When something hits the fan, you’re on the hook personally rather than the business. It’s the fastest and cheapest way to get be able to get a business name on the books though it’s a messy proposition (fastest by about a day, expedited LLC takes about 2-3 and a normal LLC usually a week)
I’d recommend getting an LLC setup. It should cost between 200-350 for a lawyer to file it for you, depending on the firm and parameters set. They’ll guide you through it. If you need a referral I can provide one. They will usually act as your Registered Agent if required as well.
On top of the Texas Sales Tax ID, you need to register for Franchise Tax as an LLC. However, this is typically a zero-tax return filed yearly unless you hit a certain number in sales per year (it’s above 6 figures last I checked)
As for insurance a basic E&O for a small business will vary depending on the nature of the business, but getting sales venues etc as named parties isn’t usually a big deal. I got mine through the agent that got me my personal auto; I was required to get a business auto as part of a “package” but it wasn’t too bad. For my general E&O, my business auto, and my “specialty” cybersecurity insurance the premiums were at $1,500/year give or take.
Cheers,
-Jim
I don’t disagree with your reasoning. It is a risk and each person has to weigh that risk. I have had a few businesses where I just ran a DBA. It’s easier. If I thought I was at greater risk of something happening or I was providing a product that could be misused or cause injury in some way I would probably do an LLC as well.
The filing fee for an LLC in Texas is $300. If you are a Veteran then Texas has a special plan available where the State pays for the LLC fees and the first 5 years of fees. That’s how I set up my LLC. It only cost me a few stamps to mail paperwork back and forth.
Pretty much what some have said:
Get a sales tax ID through the Comptroller’s office. Simple.
If you’re using a business name, and possibly having checks made out to your business name, you need a DBA from the county for the bank to open a bank account that will accept those checks. However, if you’re just running cash and something like Square, nobody is going to require the DBA.
On the LLC, consider what you’re making/selling and what potential it might have for damages and liability. For Stardrake Books, we figure nothing we may is likely to injure anyone to the point that they’d want to sue us, so we’ve skipped the LLC part of the equation. If there IS a potential for damage or injury, a LLC does limit what they can go after to the business, and not your personal assets.
We’ve never figured out the insurance thing. We don’t have a house, so no homeowner’s that we might tag into. Our auto insurance is one of those cheapies, so there’s no option to add on any sort of business. Any time I’ve heard a quote, it’s Damn Pricy, so we’ve just skipped those shows.
what are checks?
All liability concerns aside I opened a business checking account with Bank of America ten years ago under my Studio name. I don’t recall having to show tax ID or anything. I’ve had no problem depositing checks in two different states under that account. they even issued a business credit card for that account.
Alas, I’m not a veteran. My hearing loss made the recruiters’ phone calls stop.
IIRC when I started my LLC years ago, the state required the initial contribution for the Bank Account, I don’t remember the exact amount. I think it was 1K. I cant say how it is now.
The state filling fee was 308.10 for us, I don’t remember how much we payed the lawyer.
If I were to do it again, I would go with just a DBA until things started panning out, then do a formation of a LLC
It all depends on the bank, I guess. The DBA just registers your business name, and our bank required it to get our account set up with the business name. That was years ago, though.
I’m set up as sole proprietor. (Mainly sell seasonally at renfair)
Get set up with state sales tax. You have option of filing quarterly or yearly (if under a certain amount, most small craft businesses, not an issue). Plus it’s really useful to have for wholesale purchase. Don’t mess around with not filing this correctly or on time. Any issues or questions, the folks at your local field office are super helpful and way better than dealing with the 800 number.
Dba, nowadays you need if open business bank account. Used to vary, but last number of years seems consistent. It’s handy to have things separate from personal money, especially for business expenses, clearer money trail for taxes, etc rather than commingling with personal money. You have renew DBAs with the county every 10 years.
Credit card processing, I use Square. There are others. Do some reading. Some have crappier reputations on resolving conflicts and chargebacks or the way they tie up money. I haven’t had any real issues with square. We use one of our slightly older cell phones after we upgrade (wifi signal) for the app, not our actual personal ones in case dropped/stolen.
HIGHLY recommend mobile hotspot if doing craft shows to avoid headaches with spotty recpeption. Pay attention to your likely selling areas, what’s best coverage (for example, at renfair, has to be sprint friendly since only nearby tower in rural area after a tornado ate the AT&T tower a few years ago and it was never replaced). You CAN process offline transactions that wait until signal, but if it’s bad later, you’re stuck unless you collected more info. Also battery pack. Sucks if your money stuff (device with app, hotspot, chip reader) needs a drink and goes down because you don’t have easy electricity. Just sayin.
Chip readers…you definitely want chip reader. Take a chipped card as a swipe and any issues like chargeback or declined later (if offline transaction) you’re up a creek. Liability on you. Non-chip, onus still on credit card company. Chipped it’s on you to take it as a chip. IMPORTANT, chipped cards, the reader HAS to have internet access to verify. Thus WiFi/internet important unless you want to gamble on later verification. Or can take a chip as a swipe (we do very occasionally on smaller amounts if our setup is having issues taking too long to troubleshoot while we’re busy and it’s a small enough amount I’m willing to risk the loss if it’s an issue.) All in all, very few issues, but may depend on venue.
I use TurboTax and file Schedule C. Keep track of ANYTHING business related. Dedicated home office or work area, tools, materials, costs of selling and doing business, displays, costumes, mileage, all of it.
Some venues require liability insurance, even if it’s not something you’re worried about at home/work location.
There’s a difference between liability for your sold item or someone hurt where you sell vs say theft or loss at your home. That, personal business loss, you need to talk to your insurance agent for something like a rider on your homeowners policy. If you need liability insurance for actual selling at venue, ACT Insurance is good. It’s specifically for artist and craft show liability insurance. You can get an annual policy (includes product liability), or 1-90 days (general liability, not product). For the eight-week renfair I do, it’s $89. A lot of folks are using this nowadays and seems to have a good rep. https://www.actinsurance.com/
Displays for craft shows, there’s some good groups dedicated to this on fb you might check out.
There is another benefit of registering a DBA: the county only allows one person to use the name. There have been cases in which a national brand had to use a different name in a region because someone had already been using the name.
This actually isn’t the case in most states; it doesn’t allow another registration within that county of the same name, but a DBA is valid for more than the county where you filed it.
Multiple businesses can go by the same DBA in one state, so you’re less restricted in what you can choose. There’s also more leeway in the clarity of business function. For example, a small business owner could use Springfield Electronic Accessories for their entity name but use TechBuddy for their DBA. Just remember that trademark infringement laws will still apply.
For reference: https://www.sba.gov/business-guide/launch-your-business/choose-your-business-name