This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
Ok. I am interested in signing up for the warped tour, but I have a few questions. I am still a newbie when it comes to taxes. If you have a legit business, how do you handle some of the problems that arise from going on tour?
To the people who have been on tour through multiple states:
Did you get a sales license for each state, or did you sell under the table?
It seems crazy to get a sales license from every state, but I guess that's the only way you can do it legally.
How do you write off costs of the tour without throwing up a red flag that you are probably selling your shirts in different states and not collecting sales tax?
Am I going about this all wrong? Is this something that you just shouldn't even mention to the IRS? Any insight on this would be awesome.
I do business on site in several states on an ongoing basis as a vendor. I have a sales tax license for each state and report as required for each one. Some states tax clothing and some do not. (We sell other items, too, that are pretty much taxable everywhere.)
You can apply for sales tax licenses for most states online. There is normally no charge. If you only plan to be doing this ONCE, some states have a one-time temporary tax license (they ask you questions when you apply for the license). Or you can get the license and 'cancel' it after the tour when you submit your filing.
I know vendors who don't have licenses and run a lot of stuff 'under the table' - but it won't be pleasant if you caught. They have hefty fines if they figure out you didn't collect and file as required. SOME venues report to the state everyone who participated in their event.
The IRS doesn't ask you to list what states you did business in. You claim gross income and deduct any sales taxes paid to the various states.
Hope this helps. As always, this information isn't meant to replace talking with an accountant or other more qualified individual in these matters.
Thanks for the post grey. So, would that affect your online sales? Would you have to charge sales tax to every online customer that is from a state that you have a license with ?
We have a local festival every year that brings in vendors from up and down the east coast. I found it interesting that on the final day of the festival, a government official takes sales statements to each vendor and you pay him on site. That's in VA so I don't know about other states, but I'm sure that those vendors don't all have a VA liscense.
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Hard labor kills, make t-shirts instead.
It doesn't effect online sales. You pay sales tax where you are standing. I don't have to charge any sales tax on clothing on my online store (even to my state residents, since PA charges no sales tax on clothing).
Some events are targeted by the state (because they are large enough), and, you can plead 'whoops' and pay your taxes for that year. Still, I wouldn't press my luck, because once warned, they could slap a fine on you next time they find you in the state selling without a license.
Some of the events I attend require that I provide my sales tax license number for that state with the contract.
That said, EACH state decides how they handle vendor sales licensing and it is best to check their online site for information. (When we do shows in DELAWARE (which has no sales tax), we are required to pay a one time fee for the event ... actually I like that better ... it's reasonable and easier.
Good luck with the warped tour, we did part of it 2 years ago and sales sucked, I wondered around periodiclly and only 1 vendor was making enough to say it was worth their time. You will have hordes of youngsters traveling like a pack, very quickly, running from 1 stage to the next, most did not look old enough to have a job giving them spending money and because they travel quickly in hordes, they do not have much time to stop and look because they are being pushed by "the flow of traffic". At the end of the day we made more sales but mostly we had youngin's asking if we'd accept 5 bucks...f*** no we will not accept less than the blank for a custom designed, printed shirt...we had a lot of positive feed back , people definatly liked the work, they just didn't have money and were young enough to think we would sell using a garage sale mentality. I found that many of the vendors were there for the 1st time which told me all I needed to know, each year vendors decide it is not worth returning to....oh yeah, you'll also be competing with tons of free stuff including bags and tees being thrown out to the broke teens all day and the $5.00 tee shirt booth they set up!
Thanks Branda what part of Ohio are you in? My old band played a day on the Warped Tour in Cincinnati and I have a few friends that are signed to decent labels, so hopefully that will help me out a bit. I didn't really expect to make hardly any money at all. It's more about the experience for me. That might not be how I'm feeling after all of the money i spend though. That's why I am so interested in recouping some of my losses lol.
First of all, you have 2 topics confused. The IRS does not care about sales tax. That is a State issue.
In California, you can get a temporary sellers permit for sales tax. Other States will probably accommodate you in a similar way. The real glitch is what items are taxable. Some states may not require sales tax on your items while others will. Some States don't have a sales tax at all .
But wait, there is more! You are going to file Income Tax in each State that collects such a thing. A handful of States do not have income tax but most do. So, you will need to account for sales in all States you visit. But, it gets worse. You may be establishing a physical presence in the State and will need to register as a foreign entity doing business in that State! It really depends upon your structure (Sole Prop, LLC, Corp).
Thanks Branda what part of Ohio are you in? My old band played a day on the Warped Tour in Cincinnati and I have a few friends that are signed to decent labels, so hopefully that will help me out a bit. I didn't really expect to make hardly any money at all. It's more about the experience for me. That might not be how I'm feeling after all of the money i spend though. That's why I am so interested in recouping some of my losses lol.
Warped tour tax issues? 
