Craft Fairs are a blast, a great way to reach a wider demographic and network network network. However, the not so much fun side is making sure everything is legal. Dotting all the I's and crossing those T's when it comes to your licensing, taxes, permits, and insurance needed and required for selling to the public.
1. Licensing: You must register your business as a sole proprietorship, LLC, corporation etc. in order to sell your products to the public legally. This process will provide you with your Employer Identification Number, or EIN, which you will need to file tax returns. The U.S Small Business Administration website is a great resource for more specific information.
2. Taxes: In addition to federal taxes, in most states you will have to file your state taxes as well, which can be done by getting a state sales tax license using your EIN. Some cities have county or municipal sales taxes or require a temporary sales license or permit (next step!) so make sure you know what is required!
Before going into a show, make sure you know the proper sales tax to charge. To make it easier to sell, a lot of vendors round up to the nearest whole number and tack it onto their product price! Make sure you keep proper records of everything, any expenses, sales info etc. so that you can efficiently report and pay your taxes (typically you can do this monthly, quarterly or annually).
3. Permits: In addition to the proper licensing, some areas may require a permit in order to sell in that local area or municipality. For instance in Pasadena, they require a Special Event permit. A lot of times the show promotor will provide you with this information. Especially if you are selling food you will most likely have additional permitting and health regulations to abide by.
4. Insurance: Although insurance is sometimes not required it is definitely recommended. Just as you would get car insurance or home insurance, it helps protect you and your products if something were to happen. At one of our Jackalope Phoenix events, we had terrible wind, right out of the movie Twister! Unfortunately even though all the tents were weighted, some did not hold and flipped over- either breaking themselves or breaking someone else's tent or products. In this instance, insurance can help you out! We recommend ACT Insurance who has a lot of experience insuring artisans and crafters and you can even do a short term policy. Some fairs require that you list themselves under "additionally insured" so look out for that!
As discussed each city and state is different when it comes to their licensing, permits and taxes required. When participating in Jackalope Art & Craft Fair we make sure that you are in the loop with what is required per show. Please visit our Vendor FAQ page for more specific information!
It is very important that you conduct your business legally. Not only can you get in trouble, but the event can be shut down-which is not good for yourself, the promoter, and your fellow vendors.
Thank you to the following sources for putting this legal jargon into proper words: http://www.fairsandfestivals.net/articles/view/licensing-permits-and-taxes-for-festival-craft-show-and-art-fair-vendors/14504 AND https://www.sba.gov/