posted on August 22, 2001 04:41:33 PM
I think I'm at a threshold here, but I'm not sure.
How do you know when your eBay 'habit' has morphed from a hobby into a small business? How do you know when it's time to take the plunge and go 'legit'?
I'm starting to daydream about what I might put on a business card. I'm thinking about things like a mileage logbook for the car. I'm wondering what it would be like to be a 'proprieter'.
Are these just idle fancies, or am ready to do the deed and become a 'business entity'?
Any thoughts? Suggestions? For those of you who have crossed over, at what point did you know it was time? What made you file the forms?
posted on August 22, 2001 06:09:55 PM
I am right in the middle of trying to set up my former "hobby" as a business. I knew it was time when I got a separate bank account for the ebay money and when I knew every person by name at my post office.
But, I am stumped, I think I need to meet with an accountant to help me set up. My problem is inventory, I buy a pile of stuff at the Goodwill, but it's not priced individually, it is sold by the pound, so How do I account for that?
posted on August 22, 2001 06:39:38 PM
"I have traded with 26 countries and had fun. It is just a hobby ..."
What an idea... ham radio operators try to "work all states" for a certificate and work 100 countries for a certificate (DXCC). We ebayers might try to "sell" 100 countries ("S100C".
So when we do, who do we apply to for the certificate?
posted on August 22, 2001 08:39:39 PM
That just kills me when I hear somebody say "it's just a hobby" and they practically have a store set up in their basement and are running 50 auctions on eBay.I mean really we all know what a hobby is and we all know what a business is.Like the other poster said if you profit from it you are in business simple as that.It is not like we are selling our personal effects.You buy an item because it is cheap and you know you can make money on it.The thing that really burns me is all these people out there who say "oh its just a hobby" and pay absolutely nothing in taxes and are competeting directly with those of us who do.It makes a competitive market even more competitive but unfairly so.I say if you are buying to make a profit you are in business.If you build models in your basement to put on a shelf thats a hobby.
posted on August 22, 2001 09:08:45 PM
Technically speaking $600 income in a year is considered the line in which Uncle Sam considers it reportable. Practically speaking, it's largely a waste of time to call income at that level a business as your accounting fees can equal 50% of that-just declare the income. $1000 income in which you make a real profit is more practically a good place to knuckle down and start treating it as a business.
Unlike Amazon, most businesses need to show a profit most years, otherwise it is really more likely to be considered a hobby by the government.
posted on August 23, 2001 05:57:11 AM
Thanks for the input!
I don't have any problem paying income taxes on the money I make here... we're supposed to report <i> all</i> income anyway, aren't we, even if it's from a hobby, right?
What I've been waffling about is the leap from hobby to business. Collecting state sales tax is the only really big difference as far as taxes goes, I think. I know that as a sole proprietor I'd be reporting income/loss on the Schedule C part of the 1040.
I called my local Small Business Development Center yesterday. I was told that since I'm not going to have a B&M business, just a 'virtual' business, I don't need any zoning permits or retail permits, just a NY state sales tax collector's number. She's mailing me the form, along with a "DBA" form ... "Doing Business As". I fill that out, then trot down to the County Clerk's office & file it with them. The only snag there would be if I'd chosen a business name that's already on file with them. Otherwise, $25 bucks and I'm in business...literally!!!
Much simpler than I'd thought. The SBDC rep also told me that I didn't even really have to have the DBA, but if I wanted to open a business bank account, the bank would require one. That's definitely something I plan to do, because it seems that it would be easier to keep track of things.
I'm planning to call a CPA about all this, too. Maybe I can go through the preliminary steps beforehand, and then have my setup in hand to show him, rather than going in there and needing him to tell me the little bit I already know. Save a few pennies, perhaps?
Huh. You know what? I think I've made up my mind. Guess all I have to do now is come up with a good name for my business!
Thanks for letting me air my brain here, and all your remarks/suggestions.
Should I start a new thread to talk about business names???
posted on August 23, 2001 06:04:17 AM
I always thought the government allowed $400 a year including all other income as the cut off point for declaration.
For example, if your spouse works and you file jointly, hopefully his income would be more than $400, so your income from auctions, no matter how small would put you over that mark. After 3 years of no profit, the gov't considers your business a hobby.
Even if you don't declare yourself as a "business," with a DBA, you should file a schedule C. It helps you not to pay as much in taxes. The only taxes you collect over the internet is your state sales tax if the person lives in your state. Otherwise, you don't collect (yet).
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