Are you planning to sell at a flea market or craft fair? Here’s what you need to know about taxes.
Do flea market or craft fair vendors pay federal income taxes?
Treating it like a garage sale? Probably no tax.
If you’re just going to a flea market or craft fair a couple of times to clear out your basement or attic, you probably don’t need to worry about income taxes. That’s assuming you’re selling everything for less than it cost you new. And, no, you don’t get a deduction, either.
Selling collectibles? Capital gains or hobby tax.
If you’re selling coins, baseball cards, art, or other collections, it depends on why you bought them.
If you bought collectibles expecting them to rise in value so you could sell them later, you’ll have to pay capital gains taxes like any other investment.
If your collection is more of a hobby and you’re trying to make space or raise money for a new purchase, you’ll pay hobby taxes.
Is this your business? Income tax and self-employment tax.
If you want to turn your hobby into a money maker, whether as your main income or a side gig, you get taxed like a business. That means paying regular income tax and self-employment taxes on your profits.
Your profits are your total receipts minus your expenses. In addition to the merchandise cost, your expenses may also include booth fees, credit card fees, supplies like paper bags, and other ordinary and necessary business expenses.
Do flea market or craft fair vendors pay state income taxes?
State income taxes will usually follow the above IRS classifications. However, the rules may vary by state, so be sure to check for your state. In some places, you may not have to pay tax even when you owe the IRS, and other states may charge you tax when the IRS doesn’t.
Do flea market or craft fair vendors have to collect sales and use tax?
The rules for sales tax will vary by state. If you’re selling new items, sales tax will almost always apply. If you’re selling used items or collectibles, you may or may not need to collect sales taxes.
This may also depend on whether you’re a casual seller or making it more of a business. To get an official answer, check with your state department of revenue or a local accountant who specializes in sales tax.
How do consignment sales work?
If you’re the consignment store
- You’ll need to collect and pay sales taxes according to the rules for your state
- You’ll pay income taxes based on your profits (selling price minus what you pay the owner and other expenses)
If you’re selling to a consignment store, you may owe income taxes depending on the reason you’re selling (garage sale, hobby, business, etc.) and how much you originally paid for the item.
Do flea market or craft fair vendors need business licenses or permits?
A business license or permit may not seem like a tax, but it effectively is when the only requirement is paying the fee. Some jurisdictions are very strict where even a small flea market or craft fair booth needs a business license. Others have requirements that may include the size or type of product sold.
To know if you’ll need a business license or permit, you’ll need to check with the city, county, and state that you’ll be doing business in.
Use a POS app to track everything.
To make life easier, don’t just pocket all the cash and count it easier. Use a point of sale system app to enter all of your transactions, so you have a sales report as soon as the day is done.
FreshBooks, QuickBooks, and Square all have easy-to-use apps that you can download on your smartphone or tablet. The only cost is usually for credit card processing. They will also send you a free or cheap credit card reader for your phone so you can accept card payments.