PDA

View Full Version : For those who sell on Etsy



TheCookieCounter
January 23rd, 2012, 02:28 AM
I know a few of you cookiers sell on Etsy and I was wondering how that works legally. For example, is your Etsy shop name a legal business, or more like a screen name you came up with? Also, do you report the income you make from your sales?? I want to start selling on Etsy but I feel like I am confused how that works legally.

Any information on the topic would be helpful! Thanks!! :lol:

SugarDotCookies
January 23rd, 2012, 12:39 PM
Hi Michelle. I sell on etsy. Not cookies though.

To sell your cookies on etsy, you're supposed to follow your local laws for selling baked goods. Etsy won't check up on you or close you down if you don't. It is a good idea to do it legally though and to say in your listings that you're licensed, bake in a commercial kitchen (if that's required in your state), etc. Some people won't purchase from food sellers that don't mention that they're doing things legally. Some buyers don't care.

If I were to sell food online, I would definitely do it legally. I think that it's different than friends or family paying you cash to bake cookies now and again. You're putting it out there, advertising yourself, as a business. If anyone ever reported you, the evidence is there. You'd have to stop selling until you made it legal. You'll also be receiving payments through paypal so I would report the income.

I do report my sales income.

Then there's the matter of insurance. But I know nothing about that. I don't know if insurance is required of bakers or if it varies by state. I would look into that though if I were to sell.

It kind of all goes together, you know? If you're going to be licensed, then I think you really have to do it all - reporting your income. If you don't get licensed, then I don't guess you really can report your income because you don't have a legal business. I don't know. That makes sense to me.

Your etsy shop name doesn't have to match your legal business name. Mine doesn't but I wish it did.

I hope that helps. Hopefully someone that sells cookies on etsy will respond.

frostedbylesley
January 23rd, 2012, 02:05 PM
Michelle, don't the tx cottage laws specifically prohibit Internet sales of home baked goods?

Kimbo's Cookies
January 23rd, 2012, 02:41 PM
I sell cookies on Etsy.

You don't have to pay taxes on Internet sales. That's across the board. You DO have to collect and pay taxes on sales made in your state. There's an option when you set up your account to charge sales tax in your specific state. You set it for your rate and it does it automatically. I've never had anyone ask me if I work out of a licensed kitchen, except for people who are interested in getting into the business themselves. In Idaho, I found out - not the hard way, but the pain in the butt way - that cookies are considered a "low risk" food item, and therefore don't fall under the category of other foods for sale. I didn't find this out until I was in the middle of the required food safety course at the health dept., which the certified kitchen required proof of me taking, and my specific asking. The instructor said something that made me wonder, so I asked very specific question which led to, "So you're telling me that cookies are considered a low risk food item and I don't have to work out of a commercial kitchen in order to sell them?" To which she replied, "That's right. You only need to work out of a commercial kitchen if you'll be selling wholesale, or if a certain venue requires that you do so."

Everything I'd read in my research led me to believe otherwise. That's why I asked so many questions. If I hadn't been in that class and picked up on something she barely mentioned, and then followed up on it, I'd be wasting money right now on insurance for and rental of a commercial kitchen. I'm not saying it's the same everywhere, I'm only suggesting you do some specific further investigation with your health dept. before laying out the dough. :)

Back to Etsy: You can pick your store name. As long as no one else is using it, it's yours. You can't change it in the future, though, so choose wisely. They did allow a change recently - I'm not sure why - but their policy says that once you name your "store" you're stuck with it. It's up to you whether you want it to be the same as your screen name or otherwise.

If you have any other questions, I'll be happy to help. :)

SugarDotCookies
January 23rd, 2012, 02:50 PM
Kimbo, you don't have to pay income tax on internet sales? Could that vary by state? Or is that specific only to food items? I've been paying them for the past seven years.

That's interesting about the "low risk" food item. I saw mention of that on my health dept's website. It's all so confusing. Good thing you found out!

Kimbo's Cookies
January 23rd, 2012, 02:56 PM
Much to the frustration of the government, there's no way for them to track taxes on Internet sales. How often do you pay taxes for on line orders outside of your state?

SugarDotCookies
January 23rd, 2012, 03:10 PM
Do you mean sales tax? I pay the sales tax that I've collected to my state (MD) just once a year. That's for my internet sales to MD residents and for the few craft/quilt shows that I do.

I was talking before about income tax. I pay income tax on my internet and local sales.

(sorry to derail the topic.)

Kimbo's Cookies
January 23rd, 2012, 03:12 PM
Okay, yes. Always pay your income tax. :)

SugarDotCookies
January 23rd, 2012, 03:25 PM
Ha! Dang. I thought the government owed me money! LOL!

If I ever get good enough to sell cookies, what worries me about selling online is shipping the cookies safely. I've seen lots of blog posts about how to do it properly but it still seems so risky. I've seen people say that they won't be held responsible if the cookies break, but when selling through paypal, the seller is responsible. If the buyer opens a claim, paypal will refund their money for any item shipped that either doesn't arrive or arrives damaged.

CookieCounter, have you thought about shipping? Kimbo, I guess you must be great at packing the cookies safely. Do they ever arrive damaged?

Kimbo's Cookies
January 23rd, 2012, 09:59 PM
The only cookies I've ever had arrive broken were some monkey cookies made from a cutter like the one on Karen's site. It's long and skinny, so I don't sell them anymore. I won't ship my cheerleader cookies for the same reason. Other than that, they've all arrived perfect - and I've shipped hundreds. Even overseas.

DippinPops
January 23rd, 2012, 11:11 PM
All very interesting! I have been thinking of selling custom RI transfers - is that considered a "baked good"? There is no baking, and nothing perishable going into them. I live in IL where the cottage law basically says "home baked goods only at farmers markets." TIA!

TheCookieCounter
January 24th, 2012, 04:42 AM
Yes the cottage laws DO prohibit selling baked goods online. However, I was actually going to start selling some baking supplies on Etsy. My hobby has started to take up a lot of space around here and I have tons and tons of gift/favor boxes in all sizes and other random supplies that I buy in bulk that I think I could sell to other bakers. I just didn't know how the whole reporting income would work. For example, can I deduct expenses from the income, which would then essentially for me sort of zero out? I do not plan on making a load of money on Etsy just to combat some of my bulk purchases.

TheCookieCounter
January 24th, 2012, 04:43 AM
I do not plan on selling cookies online just baking and cupcaking supplies :) But I would love some advice on where you can get the best shipping options, got any ideas?

SugarDotCookies
January 24th, 2012, 12:30 PM
Kimbo, that's very encouraging to hear.

CookieCounter, supplies are a big seller on etsy. Please let us know if you open shop!

I use USPS for shipping. First Class is it's light enough (under 14oz I think). Always get Delivery Confirmation. It's your proof that you shipped. It also can help you find a package that has gone missing. I think DC is 75 cents if you go to the PO. It's only about 20 cents if you ship online through paypal.

focadima
January 24th, 2012, 03:06 PM
I would love to see what supplies you have for sale :)

Kimbo's Cookies
January 24th, 2012, 04:24 PM
If you use PayPal to print your labels, you'll always have a tracking number, so there's no need to pay for delivery confirmation. And yes, you can deduct expenses. :)

frostedbylesley
January 24th, 2012, 05:58 PM
Yes the cottage laws DO prohibit selling baked goods online. However, I was actually going to start selling some baking supplies on Etsy. My hobby has started to take up a lot of space around here and I have tons and tons of gift/favor boxes in all sizes and other random supplies that I buy in bulk that I think I could sell to other bakers. I just didn't know how the whole reporting income would work. For example, can I deduct expenses from the income, which would then essentially for me sort of zero out? I do not plan on making a load of money on Etsy just to combat some of my bulk purchases.

Ah, gotcha. Sorry, I didn't mean to sound like the know-it-all Internet cookie trafficking police. ;)

TheCookieCounter
January 25th, 2012, 05:53 AM
If you use PayPal to print your labels, you'll always have a tracking number, so there's no need to pay for delivery confirmation. And yes, you can deduct expenses. :)

Good to know about PayPal, I just went to the site and looked up more information on it. It seems like if you use this feature, you have to have your own mailing scale, is that right? Also can you print on normal paper and just tape to the box or does it need to be a label sticker?

Also, if you use this feature do you need to ship in authorized USPS boxes or UPS? Thanks for the helpful information!

Jill W.
January 29th, 2012, 09:18 PM
Good to know about PayPal, I just went to the site and looked up more information on it. It seems like if you use this feature, you have to have your own mailing scale, is that right? Also can you print on normal paper and just tape to the box or does it need to be a label sticker?

Also, if you use this feature do you need to ship in authorized USPS boxes or UPS? Thanks for the helpful information!

Yes, you have to use your own scale. Yes, you can print on normal paper and tape it on the box.

You only have to use USPS Priority Mail boxes if you are paying for the USPS Flat Rate Box - then you have to use that specific box. You can ship USPS Priority Mail with a regular brown box, it's doesn't need to be a priority mail box (again, unless you are paying for the Flat Rate Box, then you have to use that specific box).

I've use USPS Priority Mail boxes and shipped it UPS - the guy at my local UPS store said they don't care what kind of box you use, as long as you have an UPS label on it - it's all good!

TheCookieCounter
January 30th, 2012, 05:47 AM
Excellent information 2tulips!! Thanks for the help :)

Kimbo's Cookies
February 1st, 2012, 03:35 PM
Also, you can get boxes for free from USPS. Flat rate as well as others. AND they'll deliver them right to your front door. Just go to their site and look for supplies. You'll have to order in units of ten, I think. I usually use priority, but not flat rate, because I can typically ship cheaper using just priority mail.