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I am a long time small business (artist) person in Pa. so that I can give you guidance on what you need to do.
If you sell anything from anywhere in Pennsylvania, you need to register, get a sales tax number and collect tax and, of course, pay it to Pennsylvania. I report quarterly. They have different requirements as to how often you need to report and pay. It is not onerous.
As for reporting your income, you have to do so, but you can deduct any expenses. If you get to the point of making a profit, these deductions can be meaningful. You report the income on your tax return. However, you must report and pay quarterly if you are making a profit. You need the advice of an accountant if you are really serious about making money at any venture. (The accountant is a business deduction.) Depending on how much of your house is devoted exclusively to business, you can deduct a %age of your utility bills, insurance, RE taxes, repair, interest, etc.
And let's not forget your vehicle. You can deduct as a business expense mileage going to the post office to mail whatever you have sold. The business expenses are one of the nicest features of a small, in-home business. When I look at my tax return and wonder how I lived on so little income, I know that it is the deduction of expenses from my business profit that have made it possible.
I keep tellng UT to have the business take over more of the house.
If you are really serious, TALK TO AN ACCOUNTANT.
Oh, and, good luck!
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