posted on February 15, 2001 09:42:21 AM new
At what point am I a business and not just selling my old junk on ebay? What are some good sources for learning about being a business?
posted on February 15, 2001 09:56:58 AM new
The IRS will tell you when your profits reach a certain level you owe self employment taxes. Reach another level income taxes. So if you are selling on a regular basis you should be registered with your state for sales tax purposes and they will tell you all you need to know. That if you are selling for a profit you are a business. Even if you are selling as a hobby you will still have to pay taxes. Best to keep records never know when the tax man cometh.
posted on February 15, 2001 10:43:56 AM new
State sales tax and federal/state income tax are two different things. States that have a sales tax theoretically require that you collect it...period. Doesn't matter how much you sell, or how often.
Federal income tax applies to net profits after expenses are deducted, which means that for most people, their eBay gross sales are not all taxable (you get to deduct fees and other expenses).
Self-employment tax (the equivalent of social security and medicare taxes) apply on the first dollar of net profit. Income taxes don't come into play until later, depending on your overall earnings. If you have a regular full-time job where you earn wages and have income tax deducted, your total income includes your wages AND eBay profits. If all you do is sell on eBay and you have no other income (and you don't file jointly with another person who does have income), you may end up paying little or no actual income tax.
The short answer to your question is to get your hands on the IRS publications regarding small businesses and taxation, and/or one of the H&R Block or Lasser books that explain this in detail. It would be extremely wise to pay the $50 or $100 to have a professional consultation with a tax pro to show you the ropes. You can probably do your own taxes, but getting that advice up front is invaluable.
posted on February 15, 2001 03:02:17 PM new
Thanks for all the good advice! I guess first I'll hit the library, check out some books and then probably fall asleep on them. Then I'll go to someone for advice!
