If you’ve made the decision to take your crafty business to the next level by being “legit” and registered your biz with the government (covered in Crafty Biz 101), it’s time to think about getting your sales tax license, too.
Every state has different laws and regulations for sales tax, but in Michigan any business that has retail sales of tangible goods from a Michigan location needs a sales tax license. When you register your business as a Sole Proprietorship, Partnership, LLC, etc. you will receive a FEIN (Federal Employer Identification Number). Keep this number – you will need it occasionally, and this is one of those occasions. In Michigan when you apply for a sales tax license, you will need your FEIN.
You can apply for your Michigan Sales Tax license online at the Michigan.gov website, or mail it in by printing the booklet yourself or pick it up at your local county offices. There is no fee for these forms, or for your sales tax license.
You will receive a copy of your sales tax license in the mail soon after applying. This license is good for one year, and automatically renews each year if you pay your sales taxes, so don’t forget!
The Michigan sales tax is 6 percent of retail sales receipts, and depending on how much you make in in-state sales, you need to pay the sales tax that you owe either monthly, quarterly, or annually.
- Annually: (due on February 28) if your year’s sales tax due is less than $750
- Quarterly: (due on the 20th of the month following the end of the quarter) if your year’s sales tax would be between $750 and $3,600
- Monthly: (due on the 20th of the following month) if your year’s sales tax would be more than $3,600
How much in sales do you expect to make in Michigan (in both online sales to Michigan customers, and at in-state shows)? Take that number and multiply by .06, and you have your estimated annual sales tax for the year. Look at the above chart … where does that number fit in? That’s how often you should submit your sales taxes. Remember: You only need to pay sales tax for sales that you make to a Michigan consumer, not to a store or website that will be reselling your items!
Every state’s sales tax policy and rates are different, and there are also some local sales taxes in some states. If you plan on selling at a craft show outside of your own state, you may want to contact the fair’s organizers to find out what is required in their home state for you to sell there, as you may need a temporary sales tax license or sales permit. Within your own state, you should always bring your sales tax permit with you to craft fairs and shows, just in case anyone asks to see it.
Check out Michigan’s FAQ on Sales Tax for more information.
The information provided on is not intended to be legal advice, but merely conveys general information. Please consult a lawyer, advisor or conduct your own research before making your own decision for your business.