Taxes

Taxes can feel intimidating when you're just starting out — and honestly, there's a lot to know. But here's the thing: you don't need to understand all of it before your first sale. Most makers starting out only need a few basics to get going.

Sales Tax: The Basics

Sales tax is collected from your customer at the point of sale — you're the middleman. You collect it and pass it along to your state.

You're required to collect sales tax in any state where you do business. For most makers just starting out, that's only your home state — where you live and make your products. As your business grows and you start selling a lot to customers in other states, you may eventually need to collect there too. But don't worry about that yet. Start with your home state and go from there.

What Is a Sales Tax Permit — and Do You Need One?

A sales tax permit is what gives you the legal right to collect sales tax from your customers and send it to your state. It also unlocks a nice perk: once you have one, you can buy your supplies without paying sales tax on them (more on that below).

Do you need a Sales Tax Permit before your first sale? Probably not. If you're starting on Etsy, they handle tax collection for you. If you're doing an occasional market, most states don't require it right away. But once you're selling regularly — especially on your own website or taking direct orders — it's time to get one. It's usually free or just a few dollars in most states. Find the link to your state at the bottom of this page.

Resale Certificates: Buy Supplies Tax-Free

Once you have your sales tax permit, you can apply for a resale certificate. This tells your suppliers that you're buying materials to make products for resale — so they don't charge you sales tax on them. Your customers pay the tax when they buy the finished product, not you.

Give a copy to each wholesale supplier you buy from — places like CandleScience, Brambleberry, or your jewelry supply company — and they'll stop charging you sales tax on orders

Selling Online: Who Collects the Tax?

Most major platforms now collect and remit sales tax for you automatically — so if you're starting on Etsy, you're already covered.

Etsy collects and remits sales tax in all required U.S. states. You don't collect or owe anything on Etsy sales.

Amazon Handmade handles sales tax collection as a marketplace facilitator.

Facebook and Instagram Shops collect and remit in most states where required.

Shopify is different — you are responsible. You'll need to set up tax collection in your Shopify settings and file it yourself.

Your own website works the same way as Shopify. You're responsible for collecting and remitting sales tax in your home state.

Collecting Tax at Markets & Craft Fairs

In-person sales are your responsibility. A few things to have ready:

A sales tax permit for your state (and any state where you regularly sell)
The correct rate for the market location — rates vary by county and city. Most state tax websites have an address lookup tool.
A simple record of total sales and tax collected at each event for when you file

Tip: Many makers build tax into their prices so there's no math at checkout. Just track what portion was tax for your filing.

Year-End Taxes: What to Track

Business income and expenses are reported on Schedule C of your personal tax return. If your net profit is $400 or more, you're required to report it — even if it's a side hustle.

Track all your income:

Every platform, every market, every custom order. If you receive $600 or more through a payment processor, you may receive a 1099-K form — Etsy, PayPal, and Square all send these. Keep them, because that income has already been reported to the IRS.

Common Deductions for Makers:

Materials and supplies - everything that goes into your products: wax, oils, soap base, findings, packaging, labels

Tools and equipment - molds, scales, pour pots, jewelry tools, heat guns

Booth and vendor fees - craft fair applications and market fees

Display and fixtures - tent, tables, shelves, signage

Shipping supplies - boxes, mailers, tape, bubble wrap, postage

Platform and payment fees - Etsy fees, Shopify subscription, Square and PayPal processing fees

Marketing - business cards, photography, paid ads, website costs

Education - books, courses, and workshops related to your business

Mileage - miles driven to markets, supply stores, and the post office. Keep a log.

Home office or studio - a dedicated space used only for your business may qualify

Software and subscriptions - bookkeeping apps, design tools, email marketing

Save every receipt. Even small purchases add up — and you can't deduct what you can't prove.

For more on what to track and how to stay organized throughout the year, visit the Bookkeeping section.

Government Tax Resources + Education

IRS Small Business Center

IRS lessons covering small‑business taxes, business structures, recordkeeping, and self‑employment basics, plus short courses to help you understand how to run a business.

SCORE.ORG Tax Resources

A collection of tax guides and resources from SCORE mentors, offering clear explanations and support for small‑business owners navigating tax requirements.

Tax Resources by Location

These links lead to government tax websites by state, as well as federal and Canadian tax agencies. You don’t need to read everything on these sites — they’re here if you need to check sales tax rules, registration requirements, or other details for your area.

United States - States

Alabama – https://revenue.alabama.gov
Alaska – https://www.tax.alaska.gov
Arizona – https://azdor.gov
Arkansas – https://www.dfa.arkansas.gov
California – https://www.cdtfa.ca.gov
Colorado – https://tax.colorado.gov
Connecticut – https://portal.ct.gov/DRS
Delaware – https://revenue.delaware.gov
Florida – https://floridarevenue.com
Georgia – https://dor.georgia.gov
Hawaii – https://tax.hawaii.gov
Idaho – https://tax.idaho.gov
Illinois – https://tax.illinois.gov
Indiana – https://www.in.gov/dor
Iowa – https://tax.iowa.gov
Kansas – https://www.ksrevenue.gov
Kentucky – https://revenue.ky.gov
Louisiana – https://revenue.louisiana.gov
Maine – https://www.maine.gov/revenue
Maryland – https://marylandtaxes.gov
Massachusetts – https://www.mass.gov/orgs/massachusetts-department-of-revenue
Michigan – https://www.michigan.gov/taxes
Minnesota – https://www.revenue.state.mn.us
Mississippi – https://www.dor.ms.gov
Missouri – https://dor.mo.gov
Montana – https://mtrevenue.gov
Nebraska – https://revenue.nebraska.gov
Nevada – https://tax.nv.gov
New Hampshire – https://www.revenue.nh.gov
New Jersey – https://www.state.nj.us/treasury/taxation
New Mexico – https://www.tax.newmexico.gov
New York – https://www.tax.ny.gov
North Carolina – https://www.ncdor.gov
North Dakota – https://www.tax.nd.gov
Ohio – https://tax.ohio.gov
Oklahoma – https://oklahoma.gov/tax
Oregon – https://www.oregon.gov/dor
Pennsylvania – https://www.revenue.pa.gov
Rhode Island – https://tax.ri.gov
South Carolina – https://dor.sc.gov
South Dakota – https://dor.sd.gov
Tennessee – https://www.tn.gov/revenue
Texas – https://comptroller.texas.gov
Utah – https://tax.utah.gov
Vermont – https://tax.vermont.gov
Virginia – https://www.tax.virginia.gov
Washington – https://dor.wa.gov
West Virginia – https://tax.wv.gov
Wisconsin – https://www.revenue.wi.gov
Wyoming – https://revenue.wyo.gov

United States – Territories

American Samoa – https://www.asrevenue.gov
Guam – https://www.guamtax.com
Northern Mariana Islands – https://www.dof.gov.mp
Puerto Rico – https://hacienda.pr.gov
U.S. Virgin Islands – https://bir.vi.gov

Canada

Federal

Canada Revenue Agency (CRA) – https://www.canada.ca/en/revenue-agency.html

Provinces & Territories

Alberta – https://www.alberta.ca/finance
British Columbia – https://www2.gov.bc.ca/gov/content/taxes
Manitoba – https://www.gov.mb.ca/finance/taxation
New Brunswick – https://www2.gnb.ca/content/gnb/en/departments/finance.html
Newfoundland & Labrador – https://www.gov.nl.ca/fin
Northwest Territories – https://www.fin.gov.nt.ca
Nova Scotia – https://novascotia.ca/finance
Nunavut – https://www.gov.nu.ca/finance
Ontario – https://www.fin.gov.on.ca
Prince Edward Island – https://www.princeedwardisland.ca/en/topic/taxes
Quebec – https://www.revenuquebec.ca
Saskatchewan – https://www.saskatchewan.ca/government/government-structure/ministries/finance
Yukon – https://yukon.ca/en/finance