Taxes and under the table taxidermy

I wonder the same thing Michael, here in MN we are required to collect sales tax on taxidermy but we are also required to have a permit from the secretary of state to do so. We are not required to pay an use tax on materials ordered from out of the state. I believe that those folks that are "Under the table" shops do it til they feel paranoid and then cut back for a while, at least that' s the way it seems around here. I'm not sure that the IRS follows it all the way down to them but it would be possible.

 

Arkansas passed a law yesterday, calling it the Amazon law (pushed by Walmart)an compnay sending materials into Arkansas is goign to be required to send the state a list and total of what people bought. The news man was asking how they could enforce it and well as of yet its just passed now they have to write the rules and such. So my state thinks more bureaucracy is what is needed.

 

In my experience, folks doing cash work are usually pirating and pouring. Also, as maddening as it sounds, a lot of people who get nailed are able to negotiate paying less than they owe.

 

I have only had one issue ever with the IRS. A couple years ago they said we owed them more money! H%R block said we did not! We refiled again ....IRS said we owed it! H&R said no we didn't! IRS said yes we did! We said screw it we just paid it anyway! IRS contacts us says we do not owe this money ??? I think about a year later we get check from IRS!! I don't know who runs that outfit but they should be fired without drawing pay ....unlike Lois Lerner who is still drawing a check!!

 

Being legal sucks...Use tax, Unemployment Tax, Social Security, Federal Income Tax, State Tax, Commercial Property Tax, Equipment tax, Licenses, and Permits...it all makes for tremendous overhead. There is no sales tax in our state for taxidermy at this point, but that will soon change, and there will be another nightmare to deal with each month.

 

I have a friend that I hunt on his property had never been audited in 20 years. 5 years ago he donated money to a tea party member. An auditor spent two years going through his companies books. He said I can always find something but told my friend he has found nothing out of order. The next day a woman from the IRS came in and accused him of buying off the auditor. He is being taken to federal court accusing him of being a Hobby rancher. He's invested millions into the 25,000 acres developing it. Some years he has turned a profit. Buying 1200 heifers one year doesn't seem like he's a hobbiest. New tractors, hay bailers cost big money. I can't believe they didn't fire those people that went after tea party donars.

 

As 3bears said, here in Minnesota we collect sales tax on taxidermy work. A couple of years ago, a state of MN sales tax auditor came and went through my books on sales tax for a 3 year period. He found nothing wrong and was here over 3 hours. I asked him what other businesses in town he was going to check out- he said none. He drove 2 hours to get here, spent 3 hours looking over my sales tax invoices and drove 2 hours back- seemed like a waste of his time to check out just a one man taxidermy shop to find nothing - So they are doing spot checking, but one would think a bigger business might have been a better use of his time. Gary B.

 

They seem to target small mom & pop businesses and avoid major retailers. A snotty state auditor got ugly with my mother-in-law over the records she kept at their general store. My father-in-law told him he could like what he found or leave, but to be respectful to my mother-in-law or he would mop the floor with him! The auditor packed his $hit, left, and never returned.

 

I'm 100% for being legal and paying taxes. But, sometimes I feel overwhelmed trying to make sure I do things the right (legal) way. I have been doing work for friends and family for a few years and started getting serious this year. I feel like I've spent more time researching how to run a business than I do actually working on mounts. Anyone that knows a good place to find information on the taxes and book keeping aspect of a taxidermy business let me know. It would be much appreciated.

 

Welcome to the world of owning a legal business !!!

DP

 

I record every transaction and have a receipt to back it up. Even when my brother gives me enough money to cover costs, it gets recorded and he gets a receipt. I hired a company to do the tax stuff for me. Not just going to H&R Block, but an accountant to do the tax book keeping.

cwhite620, a successful taxidermist is someone who is a business person first and a taxidermist second. Most people start taxidermy companies backwards. Meaning learning taxidermy, opening a business and learning how to run it on the fly. It should be that you learn business first and taxidermy second and then open a business.

A below average taxidermist who is an above average business person will thrive, where as an above average taxidermist who is below average business person will crash and burn. Just think what an above average business person who is an above average taxidermist can do.

 

I'm only part time, but last year I did close to 300 mounts. This year so far I'm around 200 for the season. I want to be honest and pay taxes, but I'm not sure what all the regulations say. I add up all my taxidermy income, subtract all my materials costs and give this number to my tax person and pay income tax on it. I'm not sure what else I'm missing, but at least I try. I'm sure a lot of people don't. I also pay for a business license and city tax on that every year.

 

When I opened my taxidermy shop (part time) my wife wanted to sell a few things it there to just dress up the place and maybe make a few bucks but the complexity of the tax codes made it not worth it, in Louisiana a taxidermist is a Service provider and anything I order from McKenzie is needed to perform that service. So legally I pay state income tax but not state sales tax (if i sold anything i would have to keep up with sales tax), like that i am a sole proprietor and when i file my state and federal taxes for my regular job i include all of my expenses and profit and square up with uncle Sam then. But i can say as much as i Hate taxes it is our civic duty and if everyone would pay their share it would be a bit easier on us already pulling the wagon.

 

The Small Business Administration website is a great source.
https://www.sba.gov/starting-managing-business

One of their blog articles discusses your tax obligations.
https://www.sba.gov/blogs/just-started-business-understand-your-tax-obligations

And here are two of my own.
http://www.taxidermy-direct.com/understanding-the-tax-in-taxidermy.html
http://www.taxidermy-direct.com/what-s-the-use-...-and-other-sales-tax-questions.html

 

Thanks to everyone for the advise.