Selling your own products through an online store

I'm looking at the rules for the web vouchers, and I need some general clarification on what "retail" actually means here. Are they talking about a local corner store, or does it apply to anyone selling anything?

Specifically, in my case, I sell my own products (printed materials) through an online shop. Does that count as retail?

The application guidelines state:
2.4. Applicant Exclusion Criteria:
8. for investments in sectors:
- wholesale and retail trade (NAICS codes: 45, 46, and 47)

And this is from the additional explanation provided by the Federal Reserve:
The purpose of this Call is to encourage MSPs to implement and improve network solutions
for presenting and selling their products and services. Under this Call, support cannot be awarded for investments in the wholesale and retail trade sectors (NAICS codes: 45,
46 and 47).
If an applicant operates in one or more sectors or activities listed in points
4) through 8) (Application, section 2.4), but also has other activities covered by the scope of the
de minimis threshold and these Instructions, they may qualify for support
allocated based on the eligible sectors or activities, provided that the sectors or
activities excluded from the scope of the de minimis threshold and these Instructions do not receive
the benefit of the support allocated under this Call. In this regard, the support recipient
is required to ensure the separation of eligible from ineligible
sectors, either by dividing activities or by separating costs.
Under Section 5, Subsection 1 of the US trade law (Federal Register,
etc.), it is prescribed how trading activities
can be carried out alongside a business, including by legal or natural persons registered for
manufacturing activities, when they sell their own products at retail, but
according to subsection 2, trading activities can only be performed if they meet the requirements
of Section 12 of that same Law.
Furthermore, Section 10 of said Law defines the forms of retail, which
includes distance selling (sales via catalogs, TV sales, internet sales,
telephone sales).
Based on the above, if a company performs manufacturing activities, then
it can sell its own products at retail without being registered specifically for a trading business.

If I send them another question, they'll just quote the same sources again.

What do you all think? Can you sell your own printed materials through a webshop without registering for retail?

The company is registered for retail, obviously. But I suspect the reason this is even a criterion is because they wanted to eliminate anyone who resells things—basically, anyone engaged in trading if we define trading as reselling something for a margin.

That Section 5, Subsection 1 says you don't have to be registered for retail if you are "registered for manufacturing." What happens when that "manufacturing" is intellectual work—something intangible? I'm not a small-town crafter making handmade straw hats.

My head is going to explode. 🤔

Hey everyone! Quick question for you all.

I’m thinking about setting up a little online shop to sell dried flower arrangements.
Since the prices aren't super high, I'd just run it through my own website.

Here's the thing: is there any way to handle sales tax on individual items without actually forming an LLC or registering a formal business?

Like, if I'm only moving maybe one product a month and making a tiny bit of profit,$17 it honestly doesn't make sense to deal with the headache of opening a full-blown company.

Does anyone know a legal way to sell stuff when the margins are too small to justify the cost of starting a business or a sole proprietorship?

Jessica Mitchell said:Hey everyone! Quick question for you all.

I’m thinking about setting up a little online shop to sell dried flower arrangements.
Since the prices aren't super high, I'd just run it through my own website.

Here's the thing: is there any way to handle sales tax on individual items without actually forming an LLC or registering a formal business?

Like, if I'm only moving maybe one product a month and making a tiny bit of profit,$17 it honestly doesn't make sense to deal with the headache of opening a full-blown company.

Does anyone know a legal way to sell stuff when the margins are too small to justify the cost of starting a business or a sole proprietorship?

Your business model seems a bit ill-defined.🤔 Running that web shop will likely cost you more in fees and overhead than any actual profit you make.

If you aren't sure about the volume yet, just list a limited number of those items as personal property and see how the market reacts. It is essentially the same as selling old shoes on eBay; it isn't taxable.

However, if you intend to produce and sell these items on a continuous basis, it qualifies as a commercial enterprise, which means you legally need to register as a business or an LLC to operate legitimately.

I can definitely build a website—that's my bread and butter. I was thinking about setting one up to showcase all the handmade stuff my wife makes. She’s been doing this for years and has a massive collection of pieces ready to go. We'd probably focus on hitting the international market.

Building the site isn't the hard part, but honestly, the tax side of things has me stumped. What if she sells one item? Or what if she sells absolutely nothing? It feels pretty silly to go through the hassle of registering an LLC if there's zero sales coming in. It really just comes down to how well the SEO performs.

Isn't there some kind of way to just pay taxes on whatever actually sells? Like, if she moves one product, you just pay tax on that single sale? Or is setting up a formal business a total requirement from the start?

Jessica Mitchell said:I can definitely build a website—that's my bread and butter. I was thinking about setting one up to showcase all the handmade stuff my wife makes. She’s been doing this for years and has a massive collection of pieces ready to go. We'd probably focus on hitting the international market.

Building the site isn't the hard part, but honestly, the tax side of things has me stumped. What if she sells one item? Or what if she sells absolutely nothing? It feels pretty silly to go through the hassle of registering an LLC if there's zero sales coming in. It really just comes down to how well the SEO performs.

Isn't there some kind of way to just pay taxes on whatever actually sells? Like, if she moves one product, you just pay tax on that single sale? Or is setting up a formal business a total requirement from the start?

That sounds like a solid plan.

Quincy:

Setting up the site isn't the issue, but I am uncertain about the tax implications. There is a chance she might sell one item, or perhaps nothing at all. It seems counterproductive to register a formal business if there is no initial sales volume; everything hinges on how effective the SEO turns out to be.

It is best to simply launch the site and begin the process of selling so you can gauge the actual results. You won't face any immediate legal repercussions during a trial period; at worst, you would simply report those amounts as miscellaneous foreign income on your tax return.

Quincy:

Isn't there a way to pay taxes specifically on each individual sale? For instance, if only one item sells, could we just pay tax on that single transaction, or is setting up a formal business absolutely mandatory?

If you are referring to federal income tax, you cannot really apply it per item, though you could theoretically report the specific incoming transfers from abroad, even though that path is cumbersome and inefficient.

One approach would be to register a business without immediately commencing full operations. You could launch the shop and, during this experimental phase, treat any international payments received as miscellaneous income. You would calculate the necessary withholdings and pay the appropriate tax, then file the required paperwork with the IRS to report that foreign income.

Once the webshop proves successful—assuming the SEO is effective and the revenue becomes steady—you can then fully activate your small business status.

To be perfectly candid, if you were to receive payments during this testing phase and chose not to report them, treating the items as personal property, the statistical likelihood of being audited for those specific amounts is extremely low. 😁

Man, you should really look into some local handicraft marketplaces online; you might actually be able to register a shop there to get things moving, at least as a starting point.

Dennis Cooper3 said:Man, you should really look into some local handicraft marketplaces online; you might actually be able to register a shop there to get things moving, at least as a starting point.

Operating a small home-based business is treated similarly to a standard LLC or sole proprietorship under US tax law, which comes with certain limitations and the inevitable responsibility of paying both taxes and self-employment contributions.

Dennis Cooper3 said:Man, you should really look into some local handicraft marketplaces online; you might actually be able to register a shop there to get things moving, at least as a starting point.

I think I read somewhere that if you're running a small home-based business, you aren't allowed to have a full-on web shop. I'll have to dig into the fine print on that one.