posted on September 30, 2000 03:38:03 PM
Please forgive my naivete...
1. I want to buy wholesale and sell on eBay (try to stop me if you want, but I've made up my mind on this one). Do I need a tax ID #, a reseller #, both, or are they the same thing?
2. Where do I go to get these things?
3. How much do they cost?
4. Am I going to have document every time I buy supplies, travel for business, pay for postage, drop a nickel, and grunt in my sleep now?
I'm in California, if that matters at all (so please don't tell me to go to the Talahassee chamber of commerce)...
Thanks in advance to those that help and here's a great big *razzzzberry* to everybody else...
posted on September 30, 2000 03:53:37 PM
I will let a CA person tell you about the application for license. You don't need to record any expenses - just the ones you want to use as deductions to offset funds recieved. If you sell a widget for $100.00 and don't keep any records you will owe tax on $100.00. If you record your cost to buy it/ miles on your car to get it / share of phone /cost of ISP / maintaning computer/
printer supplies/ office supplies/ listing fees /FVF / box and packing/
postage/ miles to take it to Post Office etc.
They will take a smaller bite.
posted on September 30, 2000 04:09:48 PM
Check with a bookstore to see if they carry or can order a book on starting and operating a small business in California. Such a book will have all of the basics, right down to the addresses & phone numbers of state agencies with which you may need to register. I used a similar book when starting my own business.
You might also want to check with your accountant about the best status for your business: sole proprietorship, corporation, etc. That will have a bearing on the federal tax i.d. number you use. (A sole proprietor can use her/his social security number, rather than applying for a separate federal tax i.d.).
You also might do an internet search for the information you need. Many state agencies are online. You might also need a local business licence. Check with your city or county. Many of these agencies also are online.
Some wholesalers will require a resale license number, others don't even ask. A resale number will open the door to that wonderful world of collecting state sales tax.
1. I want to buy wholesale and sell on eBay (try to stop me if you want, but I've made up my mind on this one). Do I need a tax ID #, a reseller #, both, or are they the same thing?
I may not be able to stop you, but I'd stongly encourage you to think this through. If you don't yet know what you're going to sell on eBay, or where to get it, it's not likely you're headed for a successful venture. This is a very competitive business in many ways...
In order to avoid paying sales tax on the stuff you buy for resale, you'll need a Seller's Permit (also called a resale license) from the State Board of Equalization. Their number is (800) 400-7175. Once you have the permit, you'll be expected to collect sales tax on CA sales, and report them to the State Board of Equilization quarterly or annually, depending on how much you're selling.
Your tax ID # will likely be your SS#, if you're reporting your business income on a Schedule C.
Local jurisdictions dictate whether you need a business license- typically your city or county will requuire this, but not always. My City charges a small fee for a Home Occupancy permit to do business out of the home.
If you're doing business in a business name, you'll need (at a minumum) to get a DBA (doing business as) statement. This is a Ficticious Business Name Statement filing- pretty easy to get, has to be published in the local paper a few times, and allows you to cash checks in the business name.
You'll likely have to pay both income tax, and social security tax (both the employer and employee portion- total of 15%) on your income- see a tax guy or gal on that.
2. Where do I go to get these things?
Ahhh...that's the trick, isn't it? You'll find that folks around here will help with pretty much everything but good sources for stuff. The Holy Grail, and all that....
3. How much do they cost?
Again, depends on what you're selling- but if you haven't figured this out, you need to step back and reconsider the whole venture. Start with something you know- do some market research, find out what's selling well in an area you know. Then look around.
4. Am I going to have document every time I buy supplies, travel for business, pay for postage, drop a nickel, and grunt in my sleep now?
Yeah, gotta document all this stuff in order to claim it as a decuction against profits. Mileage on car, office in home....all that stuff if you choose to. Helps to keep your paper profits down, so your tax burden more is reasonable.
I visited one of my biggest competitors a couple weeks ago- he's got 14 employees and works out of a 12,000 sq ft warehouse he owns. He shows almost NO profit at the end of the year, because he rolls it all back into the business as exepnses, overhead, purchases, and the like. And he sells TONS of stuff...
posted on September 30, 2000 04:17:53 PM
I don't sell as a business, but I do collect ornaments some of which I now want to sell. In the next few months I will be selling about 50 of them. Some were gifts, most were purchased over the years at after Christmas sales.
My Question: Do I have to pay taxes on what I sell them for on ebay? I already paid tax on them when I bought them. Do I have to pay again or only if I make a profit? If I make a profit, I will be guessing, since I haven't kept records of what I've spent over the years at after Christmas sales.
I suspect that most folks in your situation wouldn't worry about it, any more than they would worry about accounting for proceeds from an occasional yard sale.
My understanding is that if you make a profit on these items, though, you're supposed to report that as income. I think you'd estimate a cost basis on these, and be liable for the sale value minus the cost. Since you might sell many for less than their original cost to you, it might be a wash.
On tax matters, though, it's always best to get real advice from a real tax guy or gal.
posted on September 30, 2000 04:46:31 PM
Wow. Thanks, Steve. That was exactly what I needed (minus the where to find stuff part, but me and my yahoo! search engine will be working on that one). Since everyone does seem to be a little tight as to where to find good stuff, I'll offer up a little tidbit here (since I'm not currently using it, of course). Every now and again this site has really good wholesale deals, but you have to check back every week. Give it a try.
posted on September 30, 2000 04:58:52 PM
When a wholesaler asks for your tax ID# he is usually refering to your resale tax number, the one you get from the state as a business.
If you are a sole owner of a business you use your SS# on your federal tax return. I've had wholesalers ask me for this and I refuse to give them my SS#. My resale number should be good enough. I never had anyone refuse to sell to me because I did not give them my SS#.
In CT you must also register with the town you do business in so that they can collect taxes on your business property. Between state and city it cost me 27.00 to get my licenses.
As far as keeping expense records, if you do it on a daily basis you are probably talking about a half hours work at most. Just set up ledger pages with each different type of expense in its own column. Keep all your receipts. When in doubt about anything - WRITE IT DOWN AND SAVE IT!
This is all the easy part. The hard part is knowing what you are going sell and where to get the best prices.
I had a retail shop for 7 years and selling through auctions is a whole new ball game.
posted on September 30, 2000 06:25:41 PM
jenniphant:
Ok we wont try to talk you out of this if your mind is made up, no problem.
total cost for this whole set up can be as little as $25 and as high as you can imagine depends on what you want where you live and who you know
frist thing to do is get in touch with someone from your local Chamber of Commerce they can inform you on all the permits required in your neighborhood for your online business.
to get your sales tax number call the state tax offices in your state they will send you all the requiered papers to fill out.
if your town or city requires a permit to run a home business usually not nessary if the buyers dont come to your home or your not running this under a different name then your own.
go to the county court house where you pay your local property taxes and they will get you started with paper work for this.
if you planing on spending tons of money on inventory up front to run this I recommend incorporateing this will separate the business from person stuff so if it fails you dont lose everything.
keep in mind there are serveral ways to buy wholesale you may need to rent storage warehouse space for some Items you can buy this way as well.this in its self can run you from $90 a month and up depending on how much space you need.
since this is a serious investment you will want two computers one for back up when you run online business your out of busines with out a computer, camera, scanner,printer, postage scale.at least two online services.
lets not forget good pitures you need one or more good digital camera tripod and booth area with nice back ground just for picture takeing. an area set up just for packing and shipping
you will want to set up a bank account just for business. buying and selling and other costs.
also remember this if you list 1000 to 5000 item for sale on ebay buyers will come they will and even if you take credit card payments through paypal and the buyer pays shipping charges paypal payments take up to 5 day to transfer. if you get 300 or 400 sales the postage charges must come from that account up front before paypal get in to the account. most banks wont allow you to write checks on personal checks deposited for up to 10 days.
you will want to order the boxes and packageing up front for a good percentage of what you list you may even want to have some of it package and ready to address in advance you my need to pay someone to help you out if you have the business permits the state will require you pay min wage even to a family member.
you will want your speard sheet set up with your inventory listed in it and your cost so all you have to do is add in your profit for each this will make book keeping much easyer you will want a file cabinet with folders you will want to get receipts for everything even gas for every fill up on your car.
and if that isnt enough you will find buyer dont like shoping cart type checkouts for auctions or auto EOAs they like personal EOA they dont want to give all there info in forms to andale or others each auction must be fallowed through personaly one buy one daily.
there is no question when is the best time to list Items when your buying wholesale to sell you will want all you can list list 24/7 the goal will be to sell it all ASAP.
by the way dont exspect to go out and get just one item wholesale to sell on line there are a few who will sell one or more items but there is no real profit doing things this way far too slow item would have to come from the wholesaler manufacturer more then likely not inside the USA many are in japan and hongkong and you must pay the shipping and handleing on this stuff better to order 50 or 100 wholesale at one time then 1 of anything to save on shipping costs over all.
drop shipping is another way to buy wholesale this isnt recommened in online auction many times you will end up selling and out of stock Item and will have to notify the buyer of a 4 to 6 week delay not to good for auction sellers.
keep in mind you more then likely will not want to be selling just one item in a dutch auction you have a better chance of being seen if you sell many items in your area of selling. its easyer to find a seller who has 2000 item listed then a seller with one or two Items listed as a dutch auction.
you also will more then likely if you dont have a feed back of 100 or more start buying alot on ebay to get the 100 and sign up to have powersellers benifits as well.
I think I have touched just the tip of the ice burg here.
if you really want to do this and be sucessfull reasearch research research study live eat sleep and breath ebay for and learn all you can out side ebay about business too
posted on September 30, 2000 06:37:12 PM
dman. wow. Thanks a lot for all that. I'll be trying my hand in jewelry, so at least I don't think I'll have to deal with taking out a storage space. One down and four million tasks to go!
One more question for the big sellers: I've noticed that there are a lot of sellers that have 6 pages worth of auctions up at one time, but only 10% or even less have bids. Is this common/profitable/just plain crazy?
posted on September 30, 2000 07:22:19 PM
if you list 300 auction and sell 10% this indeed can be profitable that would be in the neiborhood of some 30 + 0r- a few sales and if a 4 or 5 of these sales bought you $50 to $100 it would be well profitable remember some of these items they list are dutch and they may sell up to 6 to 10 Items in a dutch auction.
when you get in to the higher number of auctions you stop aiming to sell all you list and start looking at the daily turn over.thing to do is what I do scroll through these powersellers with 6 to 20 pages of sales listed and start adding up just there current bid totals for auction already bid you will find many with $1500 to $3000 in current bid if some one with $2000 in curent bids has just $400 worth of winning auction closeing daily is this worth it.pluss they are always listing and always getting more bids as well they can take the whole weekend off and they keep getting bids.
then there is alway the powersellers with the lucky week with the $13,000 current bid and thats just one of there 10% of selling items.
again this all requires research you must know whats selling and what you are selling .
Im not a big seller by no means I do sell enough to know these power sellers have very busy weeks
WWW.dman-n-company.com
