Guest Post
by Jane Steen
I never intended to get into the business of selling books directly to the public. Yes, the profit margin’s higher — $2 to $3 more per book than selling online or through a bookstore. But a sale online comes with a hike in my sales rank, and vendors take care of sales taxes and shipping — so why should I bother?
But I started getting invited to local events, accompanied by: “And we’d love it if you could bring books to sell.” Fine, I can do that, I thought. What would I need? A receipt book, some method for keeping records, a means of taking credit card payments, and … oh heck. I’m going to have to charge sales tax. I’m an Illinois resident, and in Illinois, there’s no lower limit under which you’re free to sell merchandise without charging sales tax. You’re required to charge it whether you sell goods as a professional or a hobbyist.
A quick investigation revealed that many writers I knew either didn’t know the rules or kinda sorta knew about them but decided that nobody was going to enforce them. That’s probably true, but I conduct my (very small) fiction writing business as just that, a business. Ignoring a business obligation might hinder growing that business, and cause me administrative headaches trying to catch up later.
I realized I could take care of the receipt, credit card, and record-keeping all in one by using PayPal Here. The app, downloaded onto my phone, would allow me to enter cash payments as well as swipe credit cards (via a triangle-shaped reader) and send receipts. Recording cash payments was for record-keeping and receipts only, and wouldn’t cost me anything; card payments would be subject to PayPal’s usual charges.
There are systems other than PayPal Here, of course. My reasons for opting for PayPal were its ubiquity as a payment system, and my familiarity with PayPal, which I’ve used for years without problems to receive and send personal and professional payments. I suspect the web/mobile-based payments industry is going to boom over the next few years, and I’ll be watching PayPal’s competitors closely — but for now, I’ll go with tried and trusted.
I decided to open a business PayPal account alongside my personal one. The app and card reader were easy to set up and use. And now for the dreaded sales tax …
I can’t say the Illinois sales tax website is user-friendly. It looks like it was designed in 1995 and definitely hasn’t embraced the age of online entrepreneurship, but I managed to work my way through the steps fairly quickly. When I began self-publishing in 2012, I set up an Assumed Business Name (aka a Doing Business As or DBA) as an imprint name, Aspidistra Press, so I used that name in my application. I discovered I had to obtain an Employer Identification Number rather than use my Social Security number, but that didn’t take long. With my EIN I completed my REG-1 (Illinois Business Registration Application) and was ready to start charging sales tax.
The whole process described in the last two paragraphs, plus setting up an email account for my new website so I could use that for my PayPal business account, took 90 minutes. I encountered a slight hitch when I received a communication requiring me to file for sales taxes right back to the date when I got my DBA in 2012 — but that was easily solved by calling the tax office and explaining that I was just trying to sell a few books for the first time, and had made no sales before this. The friendly employee canceled out all the back tax demands.
When you first register for sales tax in Illinois you’re required to file quarterly returns, and then the tax office decides whether you should be filing monthly, quarterly, or yearly. I’ve just filed my first ST-1 and paid the tax due (which took five minutes) and I’m confidently expecting that, with my low sales, they’ll switch me to yearly filing pretty soon.
So now I’m all fired up to look for opportunities to sell my books locally — not so much for the money as for the exposure. I can face invitations to speak and sell without qualms, and all at the cost of $0 and less than two hours’ work. Definitely worth it.
Jane Steen was born in England but now lives in the Chicago suburbs. She writes historical fiction. You may learn more about Jane at her website or on her Author Central page.
When my wife and I had a small, home-based business here in Georgia, we had a sales tax number. On the plus side, we only had to file quarterly due to our relatively small volume. On the minus side, we had to track it county by county, and in a metro area, one’s tax is based on where the customer is. I thought tracking all that was kind of a nightmare, so I’ve avoided direct selling of books so far. You seem to have it all under control, though.
Fortunately there doesn’t seem to be the same kind of tracking burden here! Otherwise I think I’d be avoiding it too. It’s a question of the time you need to spend versus the benefit, and that varies depending on your circumstances.
I’m just getting ready to file my first sales tax, in Texas! Thanks for making it sound less arduous. I will also look into PayPal Here. I didn’t realize they had an app that calculated sales tax and also let you enter cash sales. This is undoubtedly one of those steps in the small business dance that seems complicated the first time, but soon becomes easy.
Like most people, I absolutely hate administrative tasks like this, and will do anything to avoid having to set them up. And then I get to the point where I just can’t avoid them any longer, and I invariably find that they’re easier than I thought. Maybe I’m getting them wrong, but my experience with accounting and tax pros has been, unfortunately, that they also get things wrong.
Terrific article, Jane. After a writer friend recommended it, I started using Paypal Here the beginning of this year and have been very happy. It’s so easy, and I like having the $ go directly to my Paypal account.
I’m glad you like it too! Paypal has an odd reputation with some people, dating back, I think, to its earliest days. Its user interface is still a bit clunky at times (in the legacy areas), but they’ve created a smooth app for Paypal Here.
Thanks, Jane. Great breakdown. I’ve been using Square for remote credit cards but I like the idea of PayPal Here. I’ll definitely check into it.
I don’t see why we have to stick with one system–I might try Square and the Amazon version myself one of these days, in addition to PayPal Here!
This is incredibly valuable information, Jane, especially regarding taxes and a DBA setup. Thanks!
You’re welcome–I was hoping I could help people by showing them it’s not that scary.