Talk with others about the cottage food industry in Virginia
Greetings Virginia CFO !
- January 3, 2023 at 6:32 pm #106909
I’m wondering who’s active on this forum. I’d love to hear from others in VA. I’m confused about some of our laws regarding the restriction on online sales. I have a website. I have a Facebook page. Customers want to pay at checkout when they order. Are we really restricted from collecting payment online? This is how most people make payments these days . I also need guidance on sales tax and yearly income tax. Any resources you can recommend to learn what I should be doing? I’m only five months in to this adventure.January 19, 2023 at 5:44 pm #108096
HI, Lisa. Sorry I saved the email notification, but the weeks got away from me. Unfortunately, you are correct that we aren’t allowed online sales where there is a shopping cart and payment option. I, too, have a website and a Facebook page (as well as a Google business profile and Instagram). I post my menu options in the various places and whenever I am promoting an upcoming menu, or farmers market, I comment for customers to contact me through text or direct message to set up their order.
I don’t see this restriction going away in Virginia any time soon unless there’s enough people motivated to work on getting a bill going to amend the current cottage food exemptions/restrictions. That sort of thing is happening in other states with both successes and delays/failures.January 22, 2023 at 10:32 pm #108413
You are not able to sell online under regular cottage food operations. If you would like to sell online and/or ship items (as we do), you would have to become a home food manufacturer/processor, which requires an application and inspection by VDACS. The process is rigorous but worth investing the time and effort if you have long-term business goals.
Sales tax is currently the reduced 1% Grocery Tax rate and should be submitted quarterly on the VA tax website. Some people try to avoid paying the tax but I don’t recommend it. If they find out, you will be required to pay back taxes to the start of your business and it adds up. It’s a good idea to weekly or at least monthly put the collected sales tax in a separate/savings account so you always have it to pay. This is a state tax on all food items, so it’s not optional. We’re just lucky we only have to charge the reduced rate and don’t have to charge the same rate as restaurants do. The governor is trying to get rid of the grocery tax entirely, but so far has only been able to reduce it. Tax website is https://www.tax.virginia.gov/
You will also be required to pay an annual $10 Litter Tax. It’s a ridiculous tax if you ask me, but they do charge penalties and interest on that, if not paid on time, and they DON’T send a bill for it. It’s due on May 1st each year. http://www.zillionforms.com/2006/I115384.PDF
For income tax, I recommend using the QuickBooks Self-Employed application to keep up with your expenses and income, making tax time much easier. I assume you have a separate business checking account but highly recommend getting one if you don’t. You want to keep your business and personal finances separate when possible. Then when tax time comes, you can print out reports from the QuickBooks SE app/site and use that for reporting your income and expenses. We use TurboTax Self-Employed version to do our personal and business taxes at the same time. If you have any other questions, just let me know. Good luck!
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