First, a general disclosure that Animazement is not a financial advisory or consultant and everything written here is not to be taken as financial advice or guidance. We simply did a little research on your behalf and are sharing that information for you to use as you see fit.

Next, everyone who participates at a craft event/fair in North Carolina (every state is different) is required to have a Certificate of Registration (CoR) with the NC Department of Revenue (NCDOR) and is technically required to be able to display it if asked. The reason for this is that everyone is required to remit payment of sales tax to NCDOR, and the only way to do that is by having a COR. It does not matter if you are simply a hobbyist or a full retail business. All of the details of this are laid out on the NCDOR website. If you look it over, you can see where Animazement's responsibility lies as a special event, and where your responsibility lies as a seller. We promise we aren't doing this to be difficult; it is required by law.

Registration is free, and when registering for the certificate, it is easiest to register as a sole proprietor, as that only requires your SSN. If you are part of a studio where profits are shared, you should probably register as a Partnership (which provides legal equity and responsibility to all partners), but doing so requires a Federal Employer Tax Identification Number (FEIN) that you can register for here. If you are part of a studio only in name, and profits are otherwise dealt with on an individual basis (no profit is shared/everyone is responsible for their own sales), then NCDOR is unlikely to make a distinction and you can likely each register as a sole proprietor separately. There are other options, but we're not going to enumerate them all here; you will need to research which option is best for you.

Registering with NCDOR to get your COR does register you as a business from our understanding. However, the COR is the only aspect of the registration Animazement is concerned with, and any income reporting you may be required to do is a matter you will have to decide how to handle on your own. That said, if any profits you make from your art/craft is sufficiently low as a percentage of your total yearly income (for example, if you're simply a hobbyist and don't make that much profit), you may very well be exempt from any income reporting at all in this context. This is a discussion you should have with your tax consultant/preparer.

Finally, keep in mind that Animazement is only concerned with North Carolina laws, and not your federal/IRS status. We are only required to verify that everyone is collecting sales tax, so the COR is sufficient for our purposes. However, for those of you who have asked: As far as Federal Laws/IRS is concerned, being a hobbyist means not caring about the costs associated in creating the art. If profits and losses don't matter to you, then they don't matter to the IRS. Your craft stops being a hobby when a major part of your income is from your art/craft/etc. If you care about profits and losses, so does the IRS. So if you're one of those people, you need to fill out a Schedule C form. You can read more about there here and here.