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Starting a craft show business when you're really an artist at heart may be a rude awakening for you. Nevertheless, if you decide to turn your hobby into a business, you need to switch hats from time to time. You wear your artist hat when creating and producing your crafts, and you put on your businessperson's hat when you're running the business end. Begin successful on the craft show circuit doesn't just mean you have a great product; it also means you have a decent head for business.

Planning your craft show business

It's not absolutely essential to write a craft show business plan if you're not seeking a loan or partner, however, it can help you focus your business goals from the start. There are numerous books and Web sites on how to write a business plan, and most will fit with craft shows just fine. The most crucial elements are the financial projections'which include your estimated income and expense for the next several years'and the marketing plan. The marketing plan helps you identify your target audience and how you can best find and serve them. This is essential as you develop your craft show product and find the right shows at which to sell. If you are seeking capital or a partner, you will probably need a complete business plan. If doing this overwhelms you, contact your local Small Business Administration, Small Business Development Center, Chamber of Commerce or local universities to find help with developing a professional business plan for your craft show company. At this point, you may also seek the advice of an attorney to decide what business entity yours will be'a sole proprietorship, a partnership, a limited liability company or a corporation. You can always grow into corporate status later on, though it's advisable to at least know your options up front.

Licensing your craft show business

Most cities require any business, home-based or otherwise, to register and purchase a business license. These range in cost from $15 to $100 depending on the size of your city and are obtained from the city clerk's office in most cases. It makes your craft show company official and enables you to conduct business legally. Find out if your city requires any special-use permits for operating a home-based business. The rules may differ if you have customers, supply trucks or employees coming to your location.

You may also need to file a fictitious name statement with your county offices if you call yourself anything other than your name, such as Posh Pottery. This guarantees that nobody else in your county is using the same business name. From here your file the name with a newspaper, and then you can open your business checking account. It's highly advisable to keep craft show business income and expenses separate from personal if you are serious about being in business. Then on a regular basis, you can "pay" yourself from your business account. You can also now file your taxes as a business entity and take advantage of the many tax exemptions for businesses. Car expenses or mileage, supplies, overhead costs and more are all deductible. Find a copy of a schedule C (www.irs.gov) to see some of the expenses you can write off.

Now you have officially moved out of the hobby status and in to the serious craft show business. Actually the IRS considers your enterprise a hobby if you haven't made a profit in two out of five years that you file as a business. If that happens, it's time to rethink taking your goods to craft shows as a business venture.

You will probably need to get a resale (sales tax) license. This allows you to buy wholesale anything you will be reselling and not pay taxes, however, you need to charge tax on your crafts and then submit it to the tax board either monthly, quarterly or annually. Check with your local state board of equalization or state office of taxation to find out what their rules are. It doesn't cost anything to get a resale license.

It's helpful when starting out to set aside a savings account for your sales tax to be sure you have it when it comes due. Also check with your sales tax office if you are required to collect tax when you're selling in other states. Some show promoters collect tax from you at the end of the show, so you need to keep accurate records, which you can do by issuing a receipt with every customer purchase. Make sure you find out the amount of tax you need to charge at the show as it varies by city, county and state. Also, it's a good idea to carry your sales tax permit everywhere'you may need to pick up some supplies, and you can avoid having to pay taxes on them.

Each city, county and state has different regulations regarding licensing, so make some phone calls to find out what's required, and do this well before your first craft show.