Hello and thanks for trusting me to help you today. I am a tax
adviser with over 20 years of experience.
First you will need to know the difference in a business and a hobby (as it relates to taxation
In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense
is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
If an activity is not for profit, losses from that activity may not be used to offset other income
. An activity produces a loss when related expenses exceed income
for hobby activities are claimed as itemized deductions
on Schedule A
With that explanation out of the way, if this is a business you do not have to have an EIN but you can apply for one even as a Sole Proprietor
. An ITIN is issued when a SSN is not allowed to be obtained.
You must register with the Illinois Department of Revenue
if you conduct business in Illinois, or with Illinois customers. This includes sole proprietors (individual
or husband/wife/civil union), exempt organizations
for Illinois employees.
Sales tax is a combination of “occupation” taxes that are imposed on sellers’ receipts and “use” taxes that are imposed on amounts paid by purchasers. Illinois Sales Tax has three rate
structures — one for qualifying food, drugs, and medical
appliances; one for items required to be titled or registered; and another for all other general merchandise.
If you are not going to be reselling your items then you would not need to have a sales tax license. You would not be required to have an EIN but some companies that sale wholesale do require the EIN when selling to the buyer.