DIY

Why economic nexus is a diversity issue + Etsy Goes To Washington Recap

This is probably a good time to sit down with a cup of coffee, tea or beer.  There are changes coming at an increasing rate that will probably affect you.  While recent policy changes I’m learning about most greatly impact micro-businesses (fewer than 10 employees), it affects other businesses and consumers in the long run.  I am not a tax expert, but have been told by enough people that I have helped them find the resources to further their own research, so I’m sharing what I have compiled here with the help of Etsy. It is by no means comprehensive and any questions should go to a professional tax preparer.  TLDR: We live in a New Economy.  Retail has shifted to a greater percentage of online purchases and States are trying to recover sales tax that is not collected outside of the seller’s storefront.  Changes are happening fast, mostly uncoordinated with each other.

 

There are presently 9,998 sales tax jurisdictions in the United States of America.

Taxpayers were reluctant to report Use tax on their income tax forms with their state, even when estimates can be calculated.  IMO: Probably because it is super confusing?

in 2018, South Dakota (a state with historically low # residents, businesses) went to court against Wayfair to demand sales tax collection by online marketplaces with a threshold disclaimer.  They won, set the precedent for all online marketplaces with multiple shops (like ebay, amazon, wayfair and Etsy) to collect and remit sales tax to each state where the consumer had their purchase shipped.

Without a federal solution regarding sales tax collection, states have independently passed “economic nexus laws” and “marketplace provider laws” with varying thresholds (#quantity or $ amount of sales in state per year), that require sellers to calculate, collect and remit sales tax to each state.  Right now, there are 34 different policies.

Example: Since Pennsylvania (PA) is where my production studio is and operates from, I have had to apply for a sales tax permit for in person and online sales, download tax tables for calculating the tax rate for online purchases in each zip code, collect sales tax per transaction, and then remit it quarterly.  I’ve been consistent about this. I requested to reduce the frequency of administrative work created by reporting to twice a year, but it was denied, possibly because my business’ sales are relatively low as compared to corporations.  Nonetheless I persisted and just when I thought I had it figured out, I learned that marketplace facilitators, like Etsy, were going to calculate, collect and report sales tax for online sales to PA AND now Washington State (WA) in my Etsy shop.  My fellow PA Etsy shop owners freaked out, needless to say.  There were no clear answers for what we should do since we were already filing in the state, and would continue to have transactions for in-person sales and on our own websites.  I’ve concluded to temporarily categorize all Etsy transactions as non-taxable in order to continue reporting the gross sales, and calculate as taxable all non-Etsy sales from in-person sales or on my own website going to PA residents.

Yeah, it works, for now. But does your brain hurt yet?  Mine does.  What if I was just starting out?  What if I sell beyond a threshold in another state(s)?  Where am I going to find time for 9,998 tax tables?  Filling out their forms?  Filing potentially quarterly sales tax returns to ALL THOSE PLACES?

I am eternally grateful for the labor that Etsy provides (which come at the expense of fees), but it doesn’t apply on other platforms, including independent websites. But, if Etsy is worried that the current system isn’t manageable with their staff of 800 people, I am pulling out my hair being a staff of 1.05 (a friend helps 3 hours a week).  While I’m over here juggling tasks from selling wholesale to 40 stores around the country, attending trade shows, local pop-up markets, fulfilling orders on my own website – in addition to my Etsy shop, I can barely keep up with PA sales tax.  It appears as though this policy change favors states sales tax collection at the time of transaction – and whatever whim that jurisdiction has – at the expense of micro-businesses.

 

It was an honor to join 20 Etsy sellers and staff from around the country in lobbying to create a simple, clear federal solution that is fair for all.  We split up into 3 groups and our North Eastern group visited with the Office of Representative Nydia Velasquez (D-NY),  Senator Ben Cardin (D-MD),  Senator Chuck Schumer (D-NY), Congressman Steny Hoyer (D-MD), Senator Kirsten Gillibrand (D-NY), Senator John Thune (R-SD), Representative Mike Doyle (D-PA), Senator Bob Casey (D-PA), Representative Jerrold Nadler (D-NY), Representative Jim Sensenbrenner (R-WI) and Christina Sevilla, Deputy Assistant to the United States Trade Representative. Years ago, I’d met directly with the PA representatives before, on behalf of the rights of people who ride bikes on and off the road and I found it interesting to be received entirely by staffers this time around.  They were mostly receptive and understanding of our position as constituents, while there were a couple folks that refused to discuss the tax issue or spent the conversation tuning out by looking at their phone, which I took as an indication of a biased agenda.  Hearing other sellers’ stories, it was more pronounced how health care, student debt and living low income have additional impacts on one’s ability to sustain a business, let alone make a trip to Washington.  For many, not having the foresight and language to ask the right questions presents an unfair business advantage in favor of large corporations. I am unaware of notices being sent out to micro-businesses regarding these policy changes, risks and penalties.  Clearly, this was important to us and we didn’t want to be silenced.

Nonetheless, I have been trying to figure out why they felt it was not important to their office.  With the stats Etsy provided:$2.3 trillion is online retail (25% increase from 2016), 2.1 million Etsy Sellers worldwide, 87% of which were women and more than half ship internationally.  On the smaller scale, micro-businesses have fewer than 10 employees, work more than 40 hours a week and frequently invest their savings in their business in order to fill a need for creative innovation that is not already supported by large corporations. Surely, those numbers and altruistic goals make us significant – but could they also make us an easy target because of the implicit diversity comprising small business owners?  Is it possible that those who oppose a simplified federal sales tax solution WANT to make it even more difficult for the over-worked demographic to share success without a penalty across state lines?  The idea of that makes me angry.  And that’s why I won’t let micro-businesses become obsolete.

 

WHAT CAN YOU DO?

In addition to trying to make sense of it all, you can build awareness in your community, write to your representatives in Congress (use the links above), talk with your local legislators so that they understand how this affects the future of business in their territory and fill out this form: https://action.etsy.com/USzxeDP*

 

*Please note that this form does not presently include Mx. (non-binary prefix in place of gender), but requires selection from limited prefixes in order for the petition company handling the data to send your contact information to the corresponding office.  I am also advocating to remove this qualification on petitions in order to maximize vocal representation.  Prefixes are universally required on petitions, so this means a huge portion of constituents are not able to sign petitions on issues that directly affect them. In an era where votes and input is claimed to be equal, gender should not be relevant.  Let’s commit to this and repeal gender classification on petitions!

March Adventure Challenge

JOIN IN!

What are we doing? 

Using people power, we are working together to share outdoor experiences with others, improve photography skills, enhance environmental awareness and grow our community along the way.

Kinds of images

Use the DAILY THEMES below for inspiration when you are outside and share on Instagram. Your images can be anything outdoors, sports, nature or travel related, taken at ANY point by YOU in March 2018.  Try to tell a story with your image, not just words. Bonus: avoid post-editing, cropping or filtering

Are there rules?

Nah, how about suggestions instead? Have fun! There are no prizes other than enjoying the fresh air, making new friends and learning some new skills. One request: please do not use branding or sales information for the sake of hashtag integrity. Don’t forget! Use hashtag #marchadventurechallenge for your INSTAGRAM posts. Follow @apothecarymuse for tips, ideas and to see what other folks are posting.

Download INSTAGRAM here: follow @apothecarymuse

You can click here or the image below for a printable calendar which you can take with you on your adventures or post on your wall.  It includes lunar cycles and some important dates for quick reference.  You can click here for just the list or the second image below:

Download MarchAdventureChallenge_Calendar2018

Download MarchAdventureChallenge_LIST_2018

#MarchAdventureChallenge – 2018

List:

1 Horizon

2 Miniature or Micro Landscape

3 Lifecycle: Plant, Trees, and/or Fungi

4 Reference scale (temp. installation)

5 Diversity in Outdoors (people)

6 Distant Landscape or Lookout

7 Favorite Tool for Outdoors

8 Climate Extremes

9 Natural Frame

10 Action Shot (still or Boomerang)

11 Sunrise (Daylight Savings)

12 Parts of a plant (arrange a collage)

13 Secret or Hidden location

14 Color

15 Wild edible (unharvested)

16 Water or reflection

17 Wildlife

18 Sunshine

19 Stewardship

20 Something new learned today (Spring Begins)

21 Goals

22 First time

23 Favorite Sport or Activity

24 Your “3rd Place” (outside work and home)

25 Bringing the inside, outside (books, knitting, etc.)

26 Old, abandoned  or historical

27 Shadows

28 Picnic

29 Next generation

30 Weather

31 Dusk/Sunset Silhouette

 

6 Reasons Why "Handmade" is Worth It

First off, this is my opinion based on my own experience. I believe buying locally crafted goods supports the economy tremendously and transparency in communication facilitates informed shopping choices.  I think ongoing awareness is especially important to consider when the item is something one puts on or in their body on a daily basis, as it can affect overall health.  I encourage everyone to make the opportunity to talk to a person who grew or made the products that provide their sustenance.

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  1. A lot of crafters begin their pursuit out of sheer fascination with their materials; it is a hobby.  They purchase their beloved materials when and where they first see them – and they probably aren’t thinking about starting a business right off the bat.  They buy only a small amount at first and in their learning process, identify the features that give it its quality and made it stand out to them in the first place.  At this scale, often the smallest amount of materials that is not cost-prohibitive from engaging in the hobby will be enough to fulfill the curiosity.  Of course, as the hobbyist’s expertise in their chosen materials increase, often demand follows.  If the hobbyist chooses to share their craft, they become accountable to other people’s demands.  They may still be purchasing their high-quality materials at consumer prices, while they are creating a business persona.  There’s even more expense if they are cultivating their materials from scratch, but this makes it all the more lovely, in my opinion.
  2. Even as the budding crafter looks for suppliers with reduced cost for their materials, often the timeline and quantity of the demand will dictate how much room they have to negotiate price.  They are often not paying themselves a salary or equating their administrative time in their end product, so other priorities (job, kids, school, etc.) will compete.  They will often have to be satisfied with finding the right amount of product available in the right geographic location that is within their out of pocket budget.
  3. As the aspiring small business entrepreneur begins to note the cost of their product, shipping and packaging materials along with the time spent making it; they will factor in the cost of the “privilege to do business”.  Even if you put all your profits back into the business, it is wise to include an hourly rate for your time to accurately project sustainability.  Collecting and reporting sales tax, product liability insurance, fees for retail space and maybe even memberships in promotional networks become new expenses challenging the bottom line.  It’s not just a hobby anymore – and the expense does not just account for the cost of the materials, either. If the crafter chooses to continue to offer to the public, the product inspired by their creative hobby, they must include all these costs into their product.  More about pricing craft products in the Etsy Seller’s Handbook.
  4. The craft-based business will also need to create a short and long-term task list (which lends itself to a business plan), so that they can maintain a work-life balance without using money designated for personal expenses, for the business.  It’s one thing to make a bunch of gifts for friends and family at one’s own expense – that’s thoughtful.  But it’s another to conduct a transaction with total strangers, not collect or report sales tax, while potentially entering into a saturated market.  Not to mention, you might actually be giving away your time, which is not so good for the work-life balance.
  5. While some large companies often have expensive advertisement campaigns that drum up awareness in people to buy their product; this doesn’t necessarily mean more quality went into the product materials.  The more a company buys, the lower the cost in materials, and often the supplier needs to cut corners on quality to ensure shelf life and marketability on their scale.  For both the supplier and manufacturer, this puts more money towards staff, marketing expenses, etc. which helps consumers find their product.  Which appears cheaper to the consumer, when in fact, they’re getting less of the quality to begin with.  Think of it as a factory farm versus your own vegetable garden in the backyard. Here’s more about “True Cost“, from the sustainability perspective.
  6. Handmade is not necessarily a Hipster marketing trend. A lot of the time it isn’t trendy at all, because it isn’t getting the same kind of media attention as those corporations that split their expenses with big marketing campaigns. If an informed consumer recognizes the time and money put into something made in small quantity and by hand, they may make an effort to tell their friends and family about it because it means something to them.  It is quite the opposite of “hipster”.  The product continues on a meaningful path, beyond its intended – and practical – function.  And personally, I am grateful to be surrounded by people who are able to look at a product and see all the layers of work that went into its creation, and are willing to support the underdog.

Thanks for reading!  Feel free to leave any comments here or on my social media pages where you may have found this link.  And share if you like.

Lots of new items to try!

I’ve been working pretty hard to refine products and packaging for the holidays, stocking up on supplies, ingredients, sleep and even preparing food in advance so I don’t have to take as many breaks.  I’m definitely working more than 40 hours a week, now that I’m a small business owner!  Over the weekend, I had a successful kick-off and reinvested my profit into future event fees, more supplies and ingredients.  I feel so fortunate to be able to buy such quality ingredients, be the first to test them out and finally, share them with you.  Next stop, Small Business Saturday!

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My new items include a Winter Balancing Act Facial Toner, Sinus Care Aromatherapy Roller, Holiday Soap and the return of the Meditation Mixer and Bike Face Soaps.  My from-scratch winter soap base has begun to include moisture-retaining oils like castor and shea butter, and as always, I list all the ingredients per FDA guidelines on plantable paper.  They are a little more creamy and less hard as a result, never containing the typical and bubbly sodium laurel sulfate.    Woodsy Warrior, Chef’s and Gardener’s soap will be making a comeback in the Spring, when fresh, seasonal herbs are available again.  If you want these updates as soon as they become available, please consider joining my email list.

I’ve been having fun taking product photographs for my Etsy shop in addition to the Gift Basket for last weekend’s Pittsburgh Vegan Festival and my process for checking pH of the Bike Face soap prior to cutting into bars.

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