carrejo wrote:I am work so maybe I won't be able to go into as much detail as I would like, but I wanted to make a couple of points on this.

Bbarsh, Its not to contradict what you are saying, but the following is my understanding:

As an individual, as long as you have a social security number, you do not need to file as a corporation, S-Corp, LLC etc., in order to be able to report and offset business expenses against business income. Here is how it works:

You file your personal 1040 income tax returns every year with all of your W-2s, 1099s, and any other income you may have. On Schedule C of these returns, you can claim income and expenses related to business transactions. In addition, you could claim any and all expenses related to your business transactions and therefore reducing your net profit (i.e. shipping, paypal fees etc.) The net profit will be included in your overall income and taxed, in addition, you will be taxed for self-employment taxes based on the profit (Schedule SE).

I am not a seller on ebay, but have done many tax returns over the years, but never one for an ebay seller, so please consult with a local tax professional with any concerns. I am the head of Internal Audit for a major pharmaceutical company, so I dont do taxes for a living, but if people are interested, I could contact the IRS and find out information, and could send in a PM to those interested.

I hope that helps.

Arrgh, I didn't want to reply to anymore of this. Ok...

Once again this advice is GENERAL DISCUSSION. I would advise anyone selling anything online to talk to a tax attorney.

I'm not saying Bbarsh is wrong.  There are more than one way to skin a cat, and for each particular situation, there may be a particular unique solotion/method that is not avalable to the exact same person doing the exact same thing.  But what Carrjo said is legit, as I have had a tax attorney (who prepared my taxes) tell me the same thing.

A LLC or similar corporation is great but not 100% necessary to sell things from home, much like you don't have to start up your own corporation to have a garage sale, sell baby clothes on ebay, sell a washing machine to your neighbor, etc.  HOWEVER, a LLC is very, very important when it comes to many things, among them shielding your personal assets from bankruptcy or legal filings, and making things "separate" from your own income or expenses.  But YMMV as it is not required to have these protections....for example, you cannot declare your business "bankrupt" without also declaring personal bankruptcy if you have not taken the trouble to form an LLC.

Also, the IRS can consider you a "business" whether you do or not, depending on your actions, income, etc.  So not incorporating or not getting a tax number does NOT shield you from the same obligations a business may have just because you don't consider your toaster selling on Ebay a "business". Chief among the red flags are income and deductions.

However, and this is where I (and my tax attorney) seem to diverge from Bbarsh, the view is generally taken that if it walk, smells and quacks like a duck, it is a duck.  So, whether or not you are incorporated as a business, if you treat your extra income as "business" income, you can take deductions.  ONCE AGAIN this does not shield you from paying taxes, and Bbarsh is right, if you want to "do the right thing" you need to declare ALL outside income on your taxes or risk big trouble. Where we apparantly disagree is the area of expenses. I"m going to say I don't know for certain you can't deduct any expenses if you don't do it full time as my situation is entirely different (this is my full time job).  I would, though, keep all my receipts for anything I thought my constitute an expense and bring it up to whoever does my taxes every year and let them decide.  You may or may not be eligible depending on circumstances.

Unfortunately as money gets tighter and more people declare bankruptcy, the IRS is going to be looking at any way to fill the coffers, which means the gloves are off on coming after Ebay and online sellers.  In years past the government turned sort of a blind eye to online sales as it was putting a lot of money in people's pockets.  With the economy in the crapper they are going to be cracking down on any income that doesn't go through their hands first, and that means the $1000 or so a year some small time sellers get from Ebay.

Is it realistic to expect the IRS to crack down on the Ebay seller who stays under $1000 a year?  Heck no, they are going to beef up their efforts against large corporations and rich guys to justify their time and effort. Does that mean anyone not paying taxes on income generated this way are in the clear? HELL NO.  I have twice seen people under the poverty line audited by the IRS (both times it was a huge mistake on their part, as the IRS ended up giving money BACK to the individuals, hee hee hee!) so it does happen.  

Once again, better safe than sorry, I'd rather pay taxes on the income and get a refund or re-file at a later date than risk getting a visit from my friendly neighborhood IRS man.....

Mike B.

bbarsh wrote:
C-

Thanks for the info. But something just does not sound quite right. Which means nothing when you start talking about the government.

But, that just sounds like an audit waiting to happen.

And I know in Michigan, if you are self-employed, there has to be an actual formed company involved somewhere. You just can't decide to be self-employed and not be registered - and pay all those wonderful taxes.

I am going to shut up about this particular topic now. Taxes give me a headache.

I personally appreciate all these viewpoints.  The bottom line for me is that I better pay some taxes and have someone knowledgeable about taxes recommending a justification.  I believe the tax code is confusing, but I come out way ahead trying to do the right thing than doing nothing at all.

It sounds like the main things I have in my favor is that I only regularly sell things half the year, and I buy a bunch of stuff as well as sell. I am not saying this gets me out of taxes, but I could see where it lowers my profile.  Thanks again for all the input.  If more people want to add in, I'm all ears.

I know people are citing smaller and smaller inventories on ebay. This actually will benefit sellers sooner rather than later. As supply diminishes, demand will increase and so will prices.



So don't be worried if the supply is dropping.



However, I would think with bad economic times, more people would be dumping to pick up some extra cash. This may start soon, or we have already been through that.

bbarsh wrote:
C-

Thanks for the info. But something just does not sound quite right. Which means nothing when you start talking about the government.

But, that just sounds like an audit waiting to happen.

And I know in Michigan, if you are self-employed, there has to be an actual formed company involved somewhere. You just can't decide to be self-employed and not be registered - and pay all those wonderful taxes.

I am going to shut up about this particular topic now. Taxes give me a headache.

I think taxes give everyone a headache
and I know that auditors can be a pain in the butt, I have been one for 15 years

mbassoc2003 wrote:The bulk of stock is screened out of searched based on your user profile, as eBay think you won't be interested in it.

I don't think any items are screened out but Ebay has a new way of ordering your results so sellers who are deemed more worther are ranked higher on the list.  You can then put them back into order by starting or ending time.

Great to hear from you Dark!

Excellent observation and even more importantly it is accurate.

An alternative is needed. It just maybe we have to use multiple venues.

Alexander1968 wrote:
As a (small) business owner, I beg to differ.

You do have a valid point about the name recognition of ebay. It is the bull in the china shop. However, an alternative could be created. That said, ebay is the place to go right now. It has no legit competitor at this time and, in general, is easy to use for the buyer. And as a buyer, you have carte blanche. How great is that?

Alexander1968 wrote:As a (small) business owner, I beg to differ. It's not enough to set up an e commerce website, buying some software, inserting the products and start selling without pesky middlemen.

I agree. There are some 'big fish' in Troll & Toad and FRP Games that have heavy eBay presence. In some ways it's better to give your payoff and be a big fish in the pond that is eBay rather than swimming alone in the ocean that is the internet.