Thanks for this advice. I didn't realize there was a specific order I needed to follow. So how long does it typically take to get a sales tax permit once you apply? Can I still sell during that period or do I have to pause my store?

Most states will issue permits within 2-3 weeks, though some can take longer. You can absolutely continue selling during this period - you don't need to pause your store. You'll just need to account for any sales made before you start collecting properly. Keep good records of all sales by state during this transition period so you can accurately report them when it's time to file.

This is such a good point! I got audited because I had inventory sitting in an Amazon warehouse in California but wasn't collecting California sales tax. Cost me nearly $12k in back taxes and penalties.

Is getting an EIN difficult? I'm concerned about making things more complicated. Does it change how you file taxes?

Getting an EIN is actually super easy - it takes about 5 minutes online through the IRS website. You get the number immediately. It doesn't complicate your taxes at all. You'll still file the same Schedule C with your personal return. It just means you can use your EIN instead of your SSN on W-9 forms and invoices, which helps protect your identity when dealing with multiple clients. Many banks also prefer seeing an EIN when you're opening a business checking account.

I've been using it for about 3 years now. It's definitely worth it for me. The mileage tracker alone saves me hundreds in deductions I would've missed, and it automatically categorizes transactions from your bank account. The quarterly tax calculator and payment reminders are super helpful too.

Thanks for the info! The mileage tracker sounds especially useful since I do a lot of driving between client sites. Do you find the automatic categorization is actually accurate or do you spend a lot of time fixing its guesses?

What about property taxes paid over the years? Do those count as part of the basis? And if she doesn't have receipts for improvements made a long time ago, is there any way to still claim them?

Property taxes paid over the years unfortunately don't increase your basis - they're either deducted as an expense in the year paid (for investment property) or taken as an itemized deduction on Schedule A (for personal property). For improvements without receipts, you're not completely out of luck. You can create a reconstruction of costs using reasonable estimates. Take photos of the improvements, get statements from contractors who did the work if possible, or find comparable costs for similar improvements during the same time period. The IRS prefers documentation, but they recognize that records from many years ago might not be available. Just be reasonable with your estimates and be prepared to explain your methodology if questioned.

The capital gains tax rates are the same for vacant land vs. houses - it's based on your income and how long you've owned it, not the type of property. The big difference is you can't claim the primary residence exclusion ($250k/$500k) on vacant land since nobody lived there. Also, undeveloped land typically has fewer improvements you can add to the basis compared to a house where you might have done renovations, replaced a roof, etc. But things like clearing, grading, utility connections, surveys, and access roads still count!

For point #1, doesn't the recipient keep your basis though? So they might get hit with bigger capital gains tax when they sell? I thought that was one reason people wait to transfer at death - the step-up in basis.

You're absolutely right about the basis issue. When you gift assets during your lifetime, the recipient keeps your original basis (with some adjustments for gifts that have decreased in value). In contrast, assets transferred at death get a "step-up" in basis to fair market value, which can eliminate capital gains tax on all the appreciation that occurred during your lifetime. This is a critical consideration when deciding between lifetime gifts versus transfers at death. The best strategy often involves a mix - gifting some assets (especially those with minimal appreciation or those expected to grow significantly in the future) while holding other highly-appreciated assets until death to get the basis step-up. This gets pretty complex and is definitely one reason why people use estate planning professionals instead of just making outright gifts.

This is so true. My sister's ex-husband would have gotten half of her inheritance if my parents hadn't used a trust. The trust protected it as separate property that wasn't divided in the divorce.

There's also special needs trusts for disabled family members. Direct gifts could disqualify them from government benefits but a properly structured trust won't.

Would an Offer in Compromise work if I've already set up a state payment plan? Also, does this affect your credit score the same way a payment plan would?

Yes, you can still pursue an Offer in Compromise with the IRS even if you already have a state payment plan in place. The IRS will take your state tax obligations into account when evaluating your offer. In fact, having a state payment plan might strengthen your case by demonstrating your limited ability to pay. Regarding credit scores, an accepted Offer in Compromise can actually be better for your credit in the long run than a payment plan. While the tax lien itself may impact your credit, resolving the debt through an OIC shows resolution. In contrast, a long-term payment plan means you'll have outstanding debt for a much longer period. Just be aware that the OIC process can take 6-12 months, and you'll need to be compliant with all filing and payment requirements during that time.

This is terrible advice. Credit card interest rates are way higher than IRS interest rates. The IRS rate is like 7-8% right now while credit cards are 18-29%. A 401k loan is slightly better but you lose all that potential investment growth.