You worked fourteen shows this season across three states, took home a cash box full of twenties plus a steady stream of Square deposits, and felt like it was your best year yet. Then January arrives with three problems at once: a sales tax notice from a state where you sold for exactly one weekend, a Form 1099-K whose total is thousands higher than what actually landed in your bank account, and a shoebox of booth-fee receipts with no record of which show made money and which one just felt busy. None of that means the season went badly. It means the bookkeeping never caught up with the business — and for a craft fair or festival vendor, that gap is where real money quietly leaks out.
This guide closes it. You will learn how to handle sales tax when you sell across show lines, which show expenses are deductible and where they go, how to track cost of goods sold for handmade inventory without drowning in spreadsheets, and how to reconcile your Square reports to your 1099-K so tax season holds no surprises.
Sales Tax When You Sell Across Show Lines
Here is the rule that surprises most vendors: in general, if you sell taxable products at retail, you must collect sales tax from your buyers — and one weekend in another state can be enough to trigger that obligation there. Every state handles temporary sellers differently, so "I was only there for two days" is not a defense until you have checked that specific state's rules.
Start with your home state. If you sell taxable goods, register for a sales tax permit in your home state before your first show. Then, for every out-of-state show, check the destination state's requirements for temporary or special-event sellers. Common patterns include:
- Temporary or single-event permits. Many states offer a permit valid only for the duration of the festival. You collect tax during the event and remit the full amount afterward. Colorado, for example, has a single-event license for vendors doing one show and a multiple-events license covering a two-year period.
- Special event tax returns. Illinois lets one-time out-of-state vendors remit through a Special Event Tax Collection Report instead of holding a full Illinois permit — and state agents sometimes collect right at the event to make sure the correct locality gets its share.
- Organizer-collected tax. In Arkansas, vendors pay the sales tax they collect to the event organizer daily, and the organizer remits to the state within 30 days. Always ask your organizer who remits before you assume it is you.
- Short-visit exceptions. Georgia does not treat an out-of-state seller as a dealer when its in-state presence is limited to convention and trade show activity of no more than five days in twelve months, provided net income from those activities stayed under the statutory cap. Exceptions like this exist but are narrow — verify, do not assume.
- Extra registrations even when you already hold a permit. California requires vendors already holding a seller's permit to register a sub-permit for the event location, and organizers must verify every vendor's permit before renting space.
Collect at the event location's combined rate — state plus county plus city plus any special district — not your home rate. And remember the five states with no statewide sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), though Alaska allows local sales taxes, so even there you check the locality. When in doubt, ask the festival organizer: many states require organizers to give vendors sales tax information, and the organizer usually knows the exact rate for the fairgrounds.
One more trap for vendors who hold a regular permit rather than a one-time special-event permit: in most states that permit obligates you to collect on all sales to buyers in that state, not just show sales. If you also sell online, that weekend booth can pull your shipped orders into a filing obligation. Track which states you hold which kind of permit in, and calendar every filing deadline — a zero-tax-due return you forgot still draws a penalty in many states.
The Deductible Show Kit: Booth Fees, Mileage, and Everything Else
Nearly everything you spend to get your tent up and your tables full is an ordinary business expense, deductible on Schedule C where it reduces both income tax and self-employment tax. The most commonly missed ones:
Booth and jury fees. Booth rental, craft fair entry fees, and juried-show application fees are business expenses in full — never itemized deductions. If you exhibit in galleries between shows, those commissions and exhibition fees are deductible the same way.
Mileage — and 2026 has two rates. Driving to shows, to pick up materials, and to the post office with online orders all counts at the IRS standard mileage rate. For 2026 that rate is split: 72.5 cents per mile for travel from January 1 through June 30, and 76 cents per mile from July 1 through December 31 after a midyear increase. A vendor who drives 8,000 show miles evenly across the year gets roughly a $5,940 deduction — but only with a mileage log showing the date, destination, business purpose, and miles for each trip. Reconstructing a season of driving from memory in April is how deductions die; log each show on the drive home.
Card processing fees. Every percentage Square, Stripe, or PayPal keeps is deductible. These add up fast on card-heavy show days, so record fees as their own expense line rather than netting them against revenue — your 1099-K reports the gross, and your books should too (more on that below).
Display, tent, and supplies. Canopy, tables, tablecloths, signage, bags, business cards, and packaging are all deductible. Big-ticket items like a commercial tent or display fixtures may qualify for Section 179 expensing.
Meals and lodging on the road. Meals while traveling overnight for a show are 50% deductible; hotel stays for multi-day festivals are fully deductible. Day-trip meals with no overnight stay generally are not.
Materials and tools. Clay, yarn, lumber, findings, glaze, printer ink for your patterns — anything consumed in making what you sell feeds into inventory and cost of goods sold, covered in the next section. Tools you reuse across many pieces, like kilns and sewing machines, are equipment, potentially Section 179 property.
Per-Item COGS for Handmade Inventory
This is the section that separates vendors who know their margins from vendors who guess. The core rule is simple: materials you buy for pieces you will sell are not an expense when purchased. They become inventory first, and the cost moves to cost of goods sold only when the finished piece sells. Buying $2,000 of silver wire in December and selling the last bracelet in March means the deduction belongs in the new year, not the old one.
The textbook formula still rules your Schedule C:
Beginning inventory + purchases − ending inventory = cost of goods sold.
For a handmade business, "purchases" means the materials that went into finished pieces: beads, fabric, wood, leather, glaze, clasps, and the packaging the piece sells in. Take a physical count of finished goods and raw materials at year-end, value them at cost, and the formula does the rest.
Three refinements that matter for craft vendors:
Small vendors get a simpler option. The general rule says sellers of merchandise must keep inventories and use accrual accounting for purchases and sales — but qualifying small business taxpayers may use the cash method even when they sell merchandise, and may account for inventoriable items as non-incidental materials and supplies instead of maintaining formal inventories. IRS Publication 334, Tax Guide for Small Business, lays out the election. Most solo vendors qualify; the point is to pick one method, apply it consistently, and document the choice.
Your own labor is not COGS. Your hours at the wheel, the loom, or the workbench add no deductible cost to a piece — your compensation is the business's net income itself. Price as though your time matters, because it does, but do not invent a labor cost in your books. (Paying an assistant or contractor to help produce pieces is different: those payments are real deductible costs.)
Track cost per piece, not just totals. A per-SKU materials list — this necklace uses $6.40 of beads, $1.10 of wire, and $0.35 of packaging — is what lets you price confidently, spot the design whose materials quietly doubled, and answer the only question that matters at checkout time: which pieces earn their table space. A simple spreadsheet with one row per design, updated when supplier prices change, beats a perfect system you never open.
Reconciling Square Z-Reports to Your 1099-K
Every January, card-selling vendors compare their 1099-K to their bank deposits, find a gap of hundreds or thousands of dollars, and assume someone made an error. Almost always, nobody did. The form and your bank simply measure different things, and the bridge between them is your show paperwork.
Box 1a is gross — aggressively gross. Form 1099-K reports the total dollar amount of reportable payment transactions with no adjustments whatsoever: no subtraction for processing fees, refunds, chargebacks, shipping, or discounts. It includes sales tax and tips collected on card payments. Cash sales are not included at all. Your bank deposits, meanwhile, are net of fees, refunds, and holds. The gap between the two numbers is mostly money taken out along the way — and most of it is deductible.
Build the bridge per show, not per year. After each event, pull the Square sales summary (your Z-report equivalent) and record four numbers: gross card sales, sales tax collected, tips, and refunds/voids. Add your cash count — counted and logged at closeout, not estimated later. The reconciliation for the whole year then reads:
1099-K Box 1a − fees − refunds/chargebacks + cash sales = total show revenue.
When each line ties to a report you saved, an IRS notice asking about the mismatch gets answered with a one-page schedule instead of a panic.
The 2026 threshold, and why it barely matters. For 2026, federal law requires third-party settlement organizations to issue a 1099-K only when a payee exceeds $20,000 in payments and 200 transactions — the pre-2022 threshold, permanently restored after years of phasedown attempts. But several states impose far lower thresholds, some as low as $600, so you may receive a 1099-K well under the federal line. And receiving no form at all changes nothing about what you owe: every dollar of show income, cash included, is taxable whether or not anyone reported it. The vendors who get hurt are the ones who treated "no 1099-K" as "no income."
Keep the fee and refund trail. Because Box 1a ignores fees and refunds, your deduction for both lives or dies on your records. Save each show's fee summary and refund list with the sales report. If Square sends a backup-withholding notice over a mismatched taxpayer ID, fix it in the dashboard immediately — 24% withholding on card sales will wreck a show weekend's cash flow.
The Ten-Minute Show Closeout That Makes All of This Work
All four systems above run on one habit: closing out each show the day it ends, while the numbers are warm. Before you pack the tent:
- Run the card sales summary and save or screenshot it.
- Count the cash box twice and write the total down.
- Note refunds, voids, and any comped pieces.
- Log the mileage home plus any tolls and parking.
- File the booth-fee receipt with the show name on it.
Ten minutes per show buys you a per-event profit-and-loss — revenue by payment type, booth fee, mileage, and card fees — that tells you exactly which shows to rebook and which to drop. The vendor doing twenty shows a year without per-show numbers is flying blind on the single biggest decision in the business: where to set up next season.
Common mistakes to purge while you are at it: deducting booth fees as hobby or itemized expenses instead of Schedule C business expenses; collecting another state's sales tax without registering (or registering and then forgetting the return); expensing December material buys instead of carrying them as inventory; leaving cash sales out of revenue because "Square didn't see them"; and pricing pieces off materials alone while card fees, booth fees, and sales tax each take their cut. Every one of these is a bookkeeping fix, not a business-model problem.
Keep Your Show Season Books Clean From the First Booth
A festival season is really a dozen small businesses — one per show — sharing a single set of books. Tracking each show's revenue, booth fee, mileage, and card fees separately is what turns a busy summer into numbers you can plan next year around. As your season grows across state lines and payment types, maintaining clear financial records only gets more essential. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in. Get started for free and see why developers and finance professionals are switching to plain-text accounting.
