How to Organize Sales for a Craft Business

Two Methods:Craft Business OrganizationCraft Sales Organization

Running an independent craft business can be a fun way to turn your hobbies or art into a profitable venture. Many people start selling occasionally at craft shows or on Etsy. Any income generated by craft sales must be reported on your tax returns. By keeping accurate records of expenses and sales, you can ensure you pay the correct amount in taxes and identify what sales channels are the most profitable. You can use bookkeeping software, receipt books, spreadsheets and more to improve your craft bookkeeping. Find out how to organize sales for a craft business.

Method 1
Craft Business Organization

  1. Image titled Organize Sales for a Craft Business Step 1
    Create a business plan from the beginning. While a craft business may have more flexibility, especially if you are doing it in your spare time, you should have a document that itemizes for products, marketing efforts, selling strategies and finances.
  2. Image titled Organize Sales for a Craft Business Step 2
    Figure out what items you plan to sell. Starting with a few products and expanding after you see growth in sales is a good way to keep start up costs low. It will also be easier to organize your business.
  3. Image titled Organize Sales for a Craft Business Step 3
    Research your competition. In order to sell online and in your community, you will need to get an idea what similar products are being sold for. Price your items according to competition, quality and production costs.
  4. Image titled Organize Sales for a Craft Business Step 4
    Set costs for your supplies and equipment. If you are making large quantities of items, consider looking for wholesale suppliers online or in catalogs instead of going to local craft stores. This will help you to increase your profit margin from a sale.
  5. Image titled Organize Sales for a Craft Business Step 5
    Figure out where you will sell your products. You may choose 1 or more of the following options:
    • Set up your own website. You will want to create a logo, brand and promotional schedule in order to maximize profits from this expense. Pay attention to the shopping cart services, and make sure it keeps good track of sales, returns and refunds.
    • Sign up for an account on Etsy. This craft marketplace is perfect for people who have less start up capital, but want an attractive site with an excellent secure checkout process.
    • Go to local farmer's markets and fairs. Choose your fairs carefully based on the other crafts available, the cost of a booth, the timing and the clientele. Going to every market in your area is likely to leave you with disappointing sales.
    • Ask a popular craft seller to sell your crafts on their website or at their store. This outlet may ask for a portion of the profits. If so, keep track of that percentage on all sales so that you will have accurate bookkeeping.
    • Sell on eBay and Craigslist. You can post and sell for almost no cost. However, remember that all income from these sales must be reported to the tax authorities as income.
    • Sell customized versions of your products in bulk to companies, schools and organizations. You will have to develop wholesale contracts and workout the profit margin you would like from selling in bulk with a discount.

Method 2
Craft Sales Organization

  1. Image titled Organize Sales for a Craft Business Step 6
    Research your state's sales tax. You will need to figure out the rate and collect it on all sales in your state to submit in the future. Read your state's laws on collecting tax for online sales.
  2. Image titled Organize Sales for a Craft Business Step 7
    Produce a receipt for all your sales. Buy receipt books from office supply stores that have carbon copies. Give the white copy to your customer and save all carbon copies for bookkeeping purchases.
  3. Image titled Organize Sales for a Craft Business Step 8
    Invest in inventory and accounting technology. If you make more than a couple of sales each year, you should have a program that organizes your costs, inventory, prices, sales and more for easy bookkeeping.
    • Buy bookkeeping software, such as Quickbooks to keep your information all in 1 place. You can also try the online bookkeeping sites, Stitch Labs or Outright, which is intended for craft sellers. You can keep track of your sales from all venues, inventory, expenses and business contacts for a monthly fee of $10 to $25 per month. The advantage of these products is that they keep a double-entry system, the standard for accurate accounting.
    • If you do not make enough in sales to warrant the expense of bookkeeping software, keep very detailed spreadsheets. Keep a sheet for every month of the year. List reoccurring expenses, variable expenses, each individual sale and tax collected. Calculate your income on an ongoing basis, instead of waiting until the end of the month. If you do not know how to work formulas in a spreadsheet program, sign up to take a class with a community college, lifelong learning center or public library.
  4. Image titled Organize Sales for a Craft Business Step 9
    Open up a business checking account and a business credit card. Once you have a dedicated account, you are able to pay for expenses through the account and deposit your sales income. Your online statement will give you an opportunity to double check your accounting work to ensure your check book balances according to your spreadsheet or bookkeeping system.
  5. Image titled Organize Sales for a Craft Business Step 10
    Enter your receipts into your spreadsheet or software program after fairs or after a week of online sales. Don't allow your bookkeeping to get too far behind, so enter sales as soon as possible. Save your receipts in a file folder in chronological order.
    • If you use an online bookkeeping system, you may want to invest in a free online receipt tracking site like You can scan all your receipts from both expenses and sales and save them under headings. This will eliminate the risk of losing your receipts, if you have them in 2 places.
  6. Image titled Organize Sales for a Craft Business Step 11
    Keep a separate spreadsheet for each venue that you sell. List the sales individually under the venue. Then, input the expenses associated with each individual fair, seller or online site to figure out the profitability of that venue.
    • Online and software bookkeeping programs should allow you to do this automatically by associating each sale and expense with a type of account. Use your spreadsheet or program to regularly assess your income and remove any channels that aren't profitable.
  7. Image titled Organize Sales for a Craft Business Step 12
    Reconcile your bank account, online marketplace and spreadsheet/bookkeeping records every month. Do not wait until the end of the year to find mistakes that can cost you money or put you at risk for an audit by the Internal Revenue Service (IRS).
  8. Image titled Organize Sales for a Craft Business Step 13
    Keep a regular schedule of submitting sales and income tax. If you have large revenue from craft sales, you may be required to submit quarterly or bi-annual returns as well as yearly returns. Although this may take more time, it can allow you to pay taxes slowly, instead of in 1 lump sum.
  9. Image titled Organize Sales for a Craft Business Step 14
    Consider hiring an accountant. If you have a large amount of sales, receipts and expenses, then a tax professional is more likely to help you pay accurate taxes. By having a strong grasp of small businesses, an accountant may be able to save you money through tax credits and exemptions.

Things You'll Need

  • Business plan
  • Spreadsheet program
  • Accounting/bookkeeping software
  • State sales tax
  • Receipt books
  • Business checking account
  • Business credit card
  • Online receipt storage
  • Accountant

Article Info

Categories: Sales | Selling Arts and Crafts