Sales Tax for Craft Fair Vendors: A Plain-English Guide
If you sell at craft fairs, you probably have to collect sales tax. That money belongs to the state, not to you. This guide covers the steps to get set up, what to track, and the mistakes that cause trouble later.
One caution first. Sales tax rules differ by state, and sometimes by city or county. This is general guidance, not tax advice. Your state's department of revenue has the final word, and a local accountant can answer questions specific to you.
The basic idea
When you sell a taxable item, you add sales tax to the price. You hold that tax for the state, then report and send it in. You are the collector, not the payer. If you collect it, it should never be mixed up with your income.
If you forget to collect it, you can still owe it. That means it comes out of your pocket, and that is the situation you want to avoid.
Step 1: Find out whether your products are taxable
States don't all tax the same things. Some treat food differently from other goods. Some treat clothing differently. Skincare, candles, soap and crafts are usually taxable, but check for your state rather than assume.
The easiest way to find out is your state department of revenue website. Look for a page for new sellers or small businesses. If it's unclear, call. They get this question all the time.
Step 2: Get your permit before you sell
Most states that charge sales tax ask sellers to register first. The document might be called a seller's permit, sales tax license, or vendor license, depending on where you live. Fees and rules vary.
Do this before your first market, not after. Many markets ask to see your permit when you apply for a booth. Some ask for it on the day.
Step 3: Know which rate applies
The rate is often a combination of state tax plus local tax. It may depend on where the sale happens, not where you live. If you sell at markets in different towns or counties, you might have more than one rate to track.
Ask these questions of your state:
- Is the rate based on where I make the sale or where the buyer is?
- Do I report by city or county, or just one total?
- Is there a lookup tool for the exact rate at a market address?
- If I sell at a market in another state, do I need a permit there?
That last one matters if you travel. Selling in a neighboring state usually means following that state's rules, which can include its own permit.
Step 4: Decide how you show prices
You have two choices. Both are fine as long as you are consistent and clear with customers.
- Add tax on top. Your sign says $X and tax is added at checkout. This is the most common approach and the easiest to track.
- Include tax in the price. Round numbers are faster at a busy booth. The catch is that you have to back the tax out when you do your books.
To back tax out of a tax-included price, divide the total by 1 plus the tax rate written as a decimal. The result is your actual sale. The difference is the tax you owe.
If you go with tax-included pricing, post a small sign saying so. Some states have rules about how it must be shown, so check.
Step 5: Keep a clean record of every sale
At the end of a reporting period, you will need to know your total sales, your taxable sales, and the tax collected. If you sold at several markets, you may also need to split by location.
Record these for each market:
- The date and market name
- Total sales
- Tax collected
- Any sales that were exempt, and why
A notebook works if you stay on top of it. A phone app is better because you won't be tallying receipts at midnight. The Mind the Booth booth register works offline, so it still records sales when the market has no signal. Whichever method you use, record at the booth or the same day.
While you're tracking each market, it's worth checking whether the market paid off. Our free "Was this market worth it?" calculator helps with that, and it's easier when you know your sales net of tax.
Sales to shops: resale certificates
If you sell wholesale to a shop that will resell your product, you generally don't charge that shop sales tax. Instead, the shop gives you a resale certificate or exemption form. Keep a copy on file. If you are ever audited, it is your proof for why you didn't collect tax on that sale.
Rules for the form and what you must keep differ by state. Ask before you rely on a handshake.
Online sales and shipping
Selling online adds questions. Tax may depend on where the buyer lives. Some marketplaces collect and send in sales tax for you, and others leave it to you. Whether shipping is taxable also varies.
If online sales are a small part of your business, start by checking how your state treats them and what your platform handles. Don't assume the platform covers everything.
Set the money aside
Sales tax is easy to spend by accident because it sits in the same cash box or bank account as your real income. Two habits help:
- Move the tax you collected into a separate savings account after each market or each week.
- Treat it as a bill you already owe, because you do.
Filing is usually monthly, quarterly or yearly, depending on your state and your volume. File on time even if you had a slow period. Many states want a return even when the amount is zero, and late filings can bring penalties.
A short checklist
- Check whether your products are taxable in your state.
- Register for a permit before your first market.
- Find the correct rate for each place you sell.
- Pick a pricing method: tax on top or tax included.
- Record every sale, with tax shown separately.
- Keep resale certificates for wholesale buyers.
- Set the tax aside and file on schedule.
Questions people ask
Do I need a permit if I only do a few markets a year?
Often yes, but it depends on your state. Some states have special rules for occasional sellers. Check with your department of revenue before your first sale.
Should I charge tax if a customer asks me not to?
If the item is taxable, you generally have to collect it. A customer asking doesn't change that, and you would owe the tax yourself if you skipped it. Be friendly and consistent, and post a sign explaining that tax is added.
Do I pay sales tax on the supplies I buy to make my products?
Often you can buy ingredients and materials that become part of the finished product without paying sales tax, usually by giving the supplier your resale information. Rules vary, and tools and packaging may be treated differently. Ask your state or an accountant what applies to you.
Mind the Booth helps makers keep track of markets, sales and costs in one place, and it's free to start. You can sign up here.