Taxes, LLCs, and sales tax for estate sales

Setting up the business itself is the least glamorous part of starting an estate sale company, and it’s the part new operators most often get wrong or skip. The stakes are real: you’re taking on liability by handling other people’s homes, and you’re collecting money from the public, which almost always means a sales-tax obligation. Getting the entity and the tax setup right protects your personal assets and keeps you out of trouble with your state.

This page covers forming the business, the free EIN, and the sales-tax obligation that catches new liquidators off guard. It is not tax or legal advice — confirm the specifics for your state with a local professional.

Should you form an LLC?

Most operators form an LLC, and the reason is liability separation between the business and their personal assets. That separation matters more in this trade than in many, because the public walks through homes you’re responsible for and money runs through your hands. If something goes wrong, an LLC helps keep the claim against the business rather than against you personally.

LLC filing fees run about $50 to $500 depending on the state (per TRUiC 2025), and some states add an annual fee. It’s not legally required — you can operate as a sole proprietor — but a short consult with a local attorney or accountant usually pays for itself in getting the structure right the first time. Weigh the modest filing cost against the protection it buys in a business built on handling other people’s property. This is not legal advice.

Get a free EIN

An EIN — Employer Identification Number — is your business’s tax ID, and it’s free directly from the IRS at irs.gov, issued immediately online. Get one for two reasons:

• It keeps your personal Social Security number off contracts and tax forms.
• It lets you open a business bank account, which you’ll want for clean separation of business and personal money.

Never pay a third-party site for an EIN. The IRS never charges for it, and the sites that offer to “help” for a fee are selling you something you can get free in a few minutes. This is one of the easiest wins in setting up — do it directly, keep your number private, and open the business account it enables.

The sales-tax obligation people miss

Here’s the one that catches new operators off guard. In most states with a sales tax, selling tangible goods to the public means you must register, collect sales tax at the sale, and remit it. Running estate sales is selling tangible goods to the public, so in most sales-tax states, you have an obligation.

A few things to understand:

• The rules and rates vary by state and locality — there’s no single national answer.
• A casual, one-off private sale may be treated differently from a professional company running many sales — and you’re the professional company.
• Register with your state’s tax authority and confirm your obligation before your first paid sale, not after.

Getting this wrong isn’t a small thing; back taxes and penalties on uncollected sales tax can wipe out the margin on jobs you already ran. Sort it out up front, build the tax into your checkout, and remit on schedule.

Keeping the books for a commission business

Because you handle funds on behalf of families, your bookkeeping isn’t just good hygiene — it’s the record that proves you paid everyone what they were owed. Keep the client’s money and your own cleanly separated, and record every sale, commission, and expense per job so each settlement reconciles and your year-end taxes aren’t a shoebox.

The discipline that matters:

• Separate the client’s money from yours. Their proceeds pass through you; don’t commingle them with operating cash.
• Record every sale, commission, and expense per job, so each settlement stands on its own.
• Reconcile each sale so the settlement you hand the family matches the register, and your own income is clean for tax time.

This is the same accounting rigor that runs through the whole trade. Tidy per-sale records aren’t only about taxes — they’re the proof, item by item and dollar by dollar, that the money was handled honestly.

Where the record-keeping gets easier

Per-sale, per-family accounting done by hand is where errors and stress pile up — especially once you’re running several sales and tracking sales tax on each. This is precisely where a tool that records the money without taking a cut earns its place: TagLot logs every sale and produces a settlement statement per job, plus a year-end pack — a per-year summary of every settled job and an accounting-ready CSV, off the same figures you already issued. Tax season stops being a reconstruction project.

Keeping the client’s money and yours cleanly separated, with a record you can hand to an accountant, is the boring backbone that lets the business scale. Which is exactly the next chapter: scaling to a crew.