When you want to turn your hobby into a profitable venture, consider selling at craft fairs. Craft fairs are a place to showcase your goods with minimal investment. A typical space at a craft fair may only cost you between $50 to $300. Besides knowing what products to sell and how to price them, you should figure out what you need to launch your business for success.
As with any business, you must start your crafting business with a plan and know what legal requirements you must follow. While you may not need a formal and detailed business plan, you should understand your costs to produce and sell your items and know what you need to sell them for to make a profit. Additionally, consider licensing, taxes, and liabilities before starting any business.
Do I Need a Business License To Sell at Craft Fairs?
If you craft for fun without thought of profit, you may have a hobby. However, if you are selling your handmade items at a craft show, that is a business. The IRS has guidelines on what is a hobby or business. If you have a business, you will need a business license. A business license is permission to operate in your area, such as a city or county.
Do I Have To Charge Sales Tax on Sales at Craft Fairs?
Most states require a seller of goods to charge sales tax on sales and remit that tax to the state. Alaska, Oregon, Montana, Delaware, and New Hampshire do not charge sales tax. However, for those states that do, there may be a temporary sales tax exemption or rules where you do not have to charge sales tax if your sales are under a certain threshold dollar amount or number of transactions. Check with your state about sales and use taxes. And talk to the organizers of the craft fairs about any exemptions they know about.
Do I Need an LLC?
If you are making and selling handmade products yourself, you are a sole proprietor—any profits you make you include on your personal income tax form. However, there is no liability protection as a sole proprietor. If someone is injured and wants to sue, they can go after you personally. For example, if you make soap with natural ingredients but someone has a severe allergic reaction to it, they may try to sue you personally, which could put your home, car, and other assets at risk. Many sole proprietors choose to set up a limited liability company (LLC) for their small business. The advantage of an LLC is that it is similar to a sole proprietorship in taxation but also separates your personal assets from any business debts, lawsuits, or liabilities. So, in the above example, a customer could only sue your business.
10 Tips for Selling at Craft Shows
Once you've organized your business and know about your licensing and tax requirements, you can now focus on the fun part — selling your crafts! Here are some tips to make your booth appealing and attract customers.
- Make Your Booth Visually Appealing. Keep your space organized and clean. Use a nice tablecloth and arrange your handmade crafts as best as possible. If you sell jewelry or clothing, have a mirror handy so your customers can see how they look wearing it.
- Use Clear Signage. When naming your business and designing signs, make it clear what you are selling.
- Provide Business Cards. Keep business cards and other marketing materials on your display table for people to take. When bagging up purchases, add your business card.
- Accept Credit Cards. Your customers want the convenience of paying with a credit or debit card. It is easy to do with a card reader attached to your phone. There are several options for this, such as Square. Since merchants charge a fee for credit cards, you can always offer a discount for cash.
- Offer Different Price Points. Some customers may love the sweaters you crochet but can't afford them. However, if you have lower-priced items such as a scarf, they may buy it.
- Offer a Giveaway. Consider giving a prize to attract attention to your booth. In exchange for someone's email address, you enter them in the contest. And you can build an email list to send invitations to your next craft market.
- Display Price Tags. Not only will you cut down on many questions, but people want to know what your products cost. Research ahead of time to know the market price of an item. You do not want to be too high to turn away business but too low to cut into your profits.
- Check Out Other Crafters. Pay attention to what other types of crafts are selling at neighboring booth spaces. Notice what are the best sellers. Is there a seasonality? For example, if the fair is before Christmas, potential customers may be looking for ornaments or holiday decorations.
- Get to Know the Organizers. If this is your first craft show, ask the organizers many questions and show your appreciation. Follow the rules so they have a favorable impression of you. You may benefit from that at future shows, for example by getting a better booth location. The organizers may also volunteer information about other local craft fairs they are planning.
- Advertise. Let people know where your show will be through social media posts. And post photos from the day to share with your followers.
You may not sell much at your first craft fair, but do not get discouraged. Use the experience to learn what was successful and what you can do to improve your business. But make sure to follow licensing regulations and protect your personal assets from your craft business activity.
Related Resources:
- Do You Need a Business License To Sell on Etsy? - FindLaw (Law and Daily Life)
- Starting a Business - FindLaw (Learn About the Law)
- Business Formation Made Simple (FindLaw Legal Forms and Resources)
