Business license

How's everyone doing tonight?

I was just wondering if a business license is required to sell your snakes or what exactly the purpose of it is and at what point it would be a good idea to get one.

My mom has been sewing and selling dolls on an eBay store for years and she just claims it on her taxes. She even claims work space, expenses, and the sort and age doesn't have a business license.

From what I under stand if you have one a person can't sue you directly. Are there any other benefits to it?

I'm from San Diego, ca if that's important lol

Thanks!

It depends on what state you are in... some require one while others do not. The scale of your sales might also be a factor (as in if you sell over $$$$ in xxxx months then you need the license). The way that you sell them also could be a factor, selling things on king snake vs selling from your own shop/website for example

Chances are if you are selling a few snakes from a few clutches a license won't be required (but check with your state and local governments. Business license are usually pretty easy to get, but can take time. There are advantages and disadvantages of them, it will require a good amount of research on the offerings local to you. (hopefully somebody from your area can chime in)

I woul also like to know more about this. Ive been thinking about getting an llc

Just do what a lot of us do. Sell babies, never claim the income and pray you don't get caught.

I think if you are planning on making a huge investment and hoping this does become a business that getting a license would be a great idea. Yes you have to claim any money made as income but you can also get tax write offs on anything you purchase that is for your business. Yes you can get tax benefits buying snakes!

I got my business license as there are a lot of better tax breaks when you have it. You also usually (at least here in Cali) need a resellers permit or business license to sell at some shows. You can run it as a hobby thru taxes but if you make a profit for 3 or more years out of 5 they will require you to get a business license...

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Weird, my mom has been selling her dolls for a very long time (over 10 years) and making more money then I make at my job a year and doesn't had to get one yet. You think her cpa would have said something if she needed to get one...

Well at least it's not the hardest thing in the world to get lol are there any down sides to having one? What if your not profitable for that year, do you end up paying more taxes or anything?

All - here's a little info for you...

1. Business licenses offers no liability protection. If you're worried about the liability involved with your business, you need to look into different corporate forms, i.e. forming an LLC, an S Corp, etc... Do a Google search, talk to an attorney or CPA for more info.

2. Having a business license doesn't give you different tax treatment. You can legally form a business just by saying you're in business - i.e. a sole proprietorship. With a sole proprietorship, you report your income & expenses on a Sch C on your federal tax return (I have no info about your particular state). What you need to be careful about is whether you can claim breeding as a legitimate business or whether the IRS would classify it as a hobby. There's a lot of info about this on the web. Most of us on here would likely be classified as hobbyists, and disallowed any deductions.

A (very aggressive) tax attorney once told me, "you can deduct anything you want as long as you aren't audited". I offer no advice on corporate forms or tax deductions other than be careful and do your research.

I hope this helps!

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Originally Posted by swansonbb

All - here's a little info for you...

1. Business licenses offers no liability protection. If you're worried about the liability involved with your business, you need to look into different corporate forms, i.e. forming an LLC, an S Corp, etc... Do a Google search, talk to an attorney or CPA for more info.

2. Having a business license doesn't give you different tax treatment. You can legally form a business just by saying you're in business - i.e. a sole proprietorship. With a sole proprietorship, you report your income & expenses on a Sch C on your federal tax return (I have no info about your particular state). What you need to be careful about is whether you can claim breeding as a legitimate business or whether the IRS would classify it as a hobby. There's a lot of info about this on the web. Most of us on here would likely be classified as hobbyists, and disallowed any deductions.

A (very aggressive) tax attorney once told me, "you can deduct anything you want as long as you aren't audited". I offer no advice on corporate forms or tax deductions other than be careful and do your research.

I hope this helps!

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In the state of California you need to operate under a business license if claiming to be one. If you make a profit for 3 out of 5 years you must claim a business and not a hobby. I just went thru all this. There are many more tax breaks, in this state at least, when your a business versus being classified as a hobby. The type of business doesn't matter, its based on profit and legality of the business...

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Originally Posted by Zombie

In the state of California you need to operate under a business license if claiming to be one. If you make a profit for 3 out of 5 years you must claim a business and not a hobby. I just went thru all this. There are many more tax breaks, in this state at least, when your a business versus being classified as a hobby. The type of business doesn't matter, its based on profit and legality of the business...

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I can't disagree with any CA info - I only know the federal side. On the federal side, to classify as a business, I believe the IRS uses the 3 out of 5 year profit test frequently. Obviously, they're trying to make sure if you call yourself a business (and thus qualify for the tax benefits) that you really are a business.

http://www.irs.gov/newsroom/article/...169490,00.html