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I operate my business from home under the Texas Cottage Food…

I operate my business...

I operate my business from home under the Texas Cottage Food Law. It is just me and there are no other employees. The product that I make, Cake Pops, are not a taxable item (in my understanding - as they are baked good that is sold packaged and not ready to eat - with a fork). I would like to have a Tax ID number so that I can buy supplies wholesale but I am wondering what my responsibility is once I have that tax ID number?

Accountant's Assistant: What state are you in? And have you consulted a local attorney?

Texas no

Accountant's Assistant: Has anything been officially filed? If so, what?

Nothing has been filed

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

I think that is all

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Answered in 35 minutes by:
3/20/2018
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,970
Experience: IRS licensed Enrolled Agent and tax instructor
Verified

Hi. My name is ***** ***** I will be happy to help you.

Tax ID number or EIN is an identification number, just like social security number but for your business. Applying for tax ID/EIN will not change anything about your business structure or how you run it. And if you are sole proprietor or single member LLC you will still be using your social security number for all tax related filing.

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Customer reply replied 4 months ago
Once I have this tax id will i be required to filemonthly or yearly even though I am not collecting sales tax from my customers?
I just want to make sure I am not adding a bunch of unnecessary paperwork to my workload. I have heard that this is a requirement in some states but could not find anything to support or dispute this for the state of Texas.

No. Tax ID will not change your filing requirements.

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State issue their own state ID number for sales tax purposes. Filing requirements are determined by type of business, activity, place of business and level of income, not if you have or don't have tax ID.

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Customer reply replied 4 months ago
That makes sense to me. I was just concerned after hearing from other Cottage Bakers in other states that they still had to file even if it was all Zero's. And this was required on a monthly basis.

In some states you are required to file even if you do not make any sales subjects to sales tax. For instance in GA you have to register your business and fill monthly sale tax return reporting all your taxable and nontaxable sales. Even if you do no sale anything you still need to file "zero" return.

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Customer reply replied 4 months ago
ok - that is what I was being told! But now that I know that is not a requirement in the state of TX - I will go ahead and apply for my tax ID number. Thank you for clarifying for me!

You're welcome.

emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,970
Experience: IRS licensed Enrolled Agent and tax instructor
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