Disclaimer: I am not a lawyer nor do I play one on TV. 😉 This is my opinion and experience I am sharing. I am not qualified to answer specific questions or give legal advice.
I have been designing crochet patterns since 2011. I got my first check in early 2012 and was over the moon. That year, I went to the CGOA conference in Manchester, NH and learned all about running a crochet business. I have to admit, I was a little overwhelmed. You need a separate checking account? A business license? What?!?!
Why You Need a Business License
First of all, in most places it’s a requirement. To comply with the IRS you need a business license if you are trying to make a profit. If you are just crocheting as a hobby and occasionally sell what you make (but the sole intention of the creation wasn’t to make a profit) then you are required to have a business license. The IRS has more information about what qualifies as a hobby vs. a business in their publication Hobby or Business. This also gives some advice about deductions, so it’s worth a read.
Some places even require special permits or licenses to run a business from home, so check into your area to see what is required. Some places even require special zoning to run a home-based business. Check into it before you start making money and you know you will be doing it right. In our area all I need is a standard business license, nothing else required.
How Do You Get a Business License?
I researched and found out that in my county you don’t need a business license unless you make over $3000, but it only costs $15 to get one so it was kind of a no-brainer. I mean, $15 for peace of mind that I was doing the right thing and covering my behind just in case! I can easily make more than $3000 in a year designing patterns for magazines (especially since one sweater often nets me $500) so I have a business license every year.
When I googled my county + business license I found that ours is handled through the County Clerk’s office. Okay, easy enough. I go there every year to get my license plate renewed so I know exactly where it is. Plus it’s not far at all from the school where I work. An easy drive and only $15? Count me in!
Want More Information?
Here are some articles from the US Small Business Administration I found interesting when researching home-based businesses:
Home-Based Businesses This is the motherload of information about small businesses from the authority source itself.
Run a Home-Based Business This gives advice about licenses and permits plus has zoning information and a guide on how to collect sales tax.
So You’d Like to Start a Home-Based Business: Now What? Great information about starting a home-based business.
