It is my understanding that when you sell online you must collect sales tax when you sell to people
within your own state.
Etsy has a sales tax component now that figures it in when you make a sale, you just have to set it up in your account settings. I do not know about other venues as I don't use them. If you have your own website, same thing, you must collect from within your own state - how you go about that will differ depending on what software you use. Some websites simply ask you to add the (blank)% sales tax if you live in the same state.
Have you read up here?
Small Business Administration -
http://www.sba.gov/Good resource and may answer some of your questions.
Also -
SCORE "We are America's premier source of free and confidential small business advice for entrepreneurs. We offer advice online and in-person at one of our 350 offices nationwide"
http://www.score.org/I'm afraid I don't have much else to offer. I did register as a business about a year ago when I decided I wanted to begin selling. I got a business license and a tax ID number and I keep ALL records. I file quarterly with my state online, it only takes a few moments.
I don't know about LLCs though I know a few people who went that route and it didn't seem like a HUGE ordeal.....
Re: the legalities of hobby vs. business - that varies from state to state. So check with your local business/tax offices. For instance, some states allow you to do so many shows a year and maintain 'hobby' status. Go over that and you need to register. Most shows and events are required to give a list of vendors to the state - and promoters/organizers may allow hobbyists and then they usually hand out one time use sales forms.
That is about the extent of my knowledge - slim pickin's huh?
