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Selling for others on Ebay

Hi there! I have been approached by some close family members wanting me to sell items for them on Ebay. I have no problem with selling for them, and I have no desire to earn commission for them. I understand the risks for selling for others and sending them the money, but I am more than willing to take that risk. My question is related to taxes.

 

Say if I sell something for a friend for $10, after fees and shipping I have $7.25 left and send that entire $7.25 to the friend who gave me the item to sell, am I required to report that income on my taxes as income earned for my ebay business? I believe i'll have to claim money earned from ebay seeing as how i've probably done over $600 this year, but will money earned solely for other people need to be reported on my taxes? Thank you for taking the time to read this post!

Message 1 of 19
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Selling for others on Ebay

"Say if I sell something for a friend for $10, after fees and shipping I have $7.25 left and send that entire $7.25 to the friend who gave me the item to sell"

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Are you aware that after you've paid your friend, it is Your account that could lose that 10 dollars,

 

because Paypal allows buyers 180 days of buyer protection and returns?

(and eBay allows 30 days)

 

Thanks

Lynn


Lynn

You love me for everything you hate me for


.
Message 2 of 19
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Selling for others on Ebay

Besides what the previous poster stated about returns; Yes, report all gross sales, then deduct the $2.75 (fees/shipping etc.) and $7.25 (cost of goods). Keep some type of reciept for that 'cost of goods' (either send them money via paypal etc.) 

Message 3 of 19
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Selling for others on Ebay

If your family members are physically able to handle packing and shipping items out, I would decline. Have them open their own eBay account.

Message 4 of 19
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Selling for others on Ebay

If you give the $7.25 to a friend, that is the cost of goods sold so it would deduct from your income.

 

If I were selling for others, I would take, at a minimum, 20% of the selling price plus expenses for my labor and risk.   Also, I would not pay my friend until 10 days after the item shows delivery.   Any returns I got past the 10 days would then be my item and I could resell it or whatever.  Returns that came within the 10 day window would deduct from the payment to your friend.

Message 5 of 19
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Selling for others on Ebay


@junrrob wrote:

I understand the risks for selling for others and sending them the money, but I am more than willing to take that risk.


@junrrob 

 

As @18704d already mentioned, any proceeds from an eBay transaction aren't really "free and clear" for six months after the purchase date. That's how long a buyer has to request a refund from a seller. Are your family members willing to wait six months for their money? Or are you willing to lose that money for a family member? I'd be thinking twice about this . . .

 


@junrrob wrote:

Say if I sell something for a friend for $10, after fees and shipping I have $7.25 left and send that entire $7.25 to the friend who gave me the item to sell, am I required to report that income on my taxes as income earned for my ebay business? I believe i'll have to claim money earned from ebay seeing as how i've probably done over $600 this year, but will money earned solely for other people need to be reported on my taxes? Thank you for taking the time to read this post!


Yes. Your eBay business, your income. The IRS doesn't accept "sold it for a friend" as a reason not to pay income tax on your eBay income.

Message 6 of 19
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Selling for others on Ebay


@corvettestainless wrote:

Besides what the previous poster stated about returns; Yes, report all gross sales, then deduct the $2.75 (fees/shipping etc.) and $7.25 (cost of goods). Keep some type of reciept for that 'cost of goods' (either send them money via paypal etc.) 


^^^  this

 

A very good point. Receipts may become vital to back up any deductions claimed.

 

@junrrob 

Message 7 of 19
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Selling for others on Ebay

Very few eBay sellers will sell on consignment because it is too expensive.

 

Most buyers are unhappy that they are asked to pay all fees (including a Paypal fee on sales taxes processed by eBay) not realizing that fees can take up to 20% of the selling price. When the seller is being paid, he usually takes a commission for his labour (it takes 15-30 minutes to prepare a OOAK item for sale in my experience), insurance against returns and losses, and packing materials.  This anecdotally comes to about 40% of payments.

So the buyer only sees about 40% of the selling price.

 

And the seller, having put in the labour and risk, is usually not happy with only about 40% of the selling price.

 

Which tends to destroy relationships.

 

I have been selling off a friend's library for nearly 15 years now. I have all the books in my hands and he lives on the other side of the continent. He never looks at eBay and is pleased when I Paypal him money. I've never successfully sold for anyone else.

Message 8 of 19
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Selling for others on Ebay

Before agreeing to act as an agent for someone, you should check any legal requirements in the area where you are located.  In some states, while it is perfectly legal to sell items that you own at auction, to sell those of someone else requires an auctioneer and/or auction business license or both.

 

Another thing I would highly recommend is to have a written agreement spelling out all the details of your business arrangement with the owner of the goods.  Include details as to how you are to be compensated, who is responsible for fees, returns and refunds and every other possible contingency.  Remember Murphy's Law states that whatever can go wrong, will.

 

Make sure to include a clause that details and lists what items are to be sold and what is to be done if an item is damaged and/or the owner changes his mind about selling it.  I recommend that all items be turned over to you and that you inspect them thoroughly before accepting them for listing.  Remember that the safety and security of the items is your responsibility while they are in your custody.

 

Personally, I would recommend having your attorney draft a standard agreement for use in these cases.  Having things in writing will go far in settling things should things go south.  (Remember Murphy's Law)

 

Of course, when dealing with relatives, it can get a bit tricky and you should remember that if things go awry, family relations are not easily mended.  Be careful if you value family harmony.

"It is an intelligent man that is aware of his own ignorance."
Message 9 of 19
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Selling for others on Ebay

I have sold for others on occasion.

 

I will not do it anymore.

 

Sold some boots for my brother. Gave him the proceeds.

He didn't really care how much he got.

 

Couple weeks later I get a message from the buyer saying the boots are too big.

Listing clearly gave measurements, but buyers do not read.

 

Dodge the bullet on them.  No case was opened. Buyer was from Mexico,  had them sent to a US address, and forwarded, or picked them up to take back.

 

Sold some things for someone else on commission. In the long run, I did not charge enough. Same guy now retired,  approached me again about selling all his tools.  Passed on it. I don't think he would have been pleased with the offer I would have to make. Only way I sell now is by purchasing outright with the other person then out of the equation.

 

Message 10 of 19
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Selling for others on Ebay


@junrrob wrote:

Hi there! I have been approached by some close family members wanting me to sell items for them on Ebay. I have no problem with selling for them, and I have no desire to earn commission for them. I understand the risks for selling for others and sending them the money, but I am more than willing to take that risk. My question is related to taxes.

 

Say if I sell something for a friend for $10, after fees and shipping I have $7.25 left and send that entire $7.25 to the friend who gave me the item to sell, am I required to report that income on my taxes as income earned for my ebay business? I believe i'll have to claim money earned from ebay seeing as how i've probably done over $600 this year, but will money earned solely for other people need to be reported on my taxes? Thank you for taking the time to read this post!


To answer your specific question without all the other garbage warnings........

 

 

You sell an item on "consignment".....

 

Selling price $10 - report as part of gross revenue

Less Fees paid to eBay/PayPal - report as expense

Less funds paid to consignor - report as cost of goods

Any balance remaining is "gross profit"

 

If you are paying out everything except fees paid to your consignors (relatives) then your net profit is ZERO. You should still report the amounts along with the sales of your own goods. Although the bottom line (net profit) doesn't change if you were subject to an audit you don't want to have to try to explain why you took in more money that you reported.

 

 

Paranoia strikes deep
Into your life it will creep
Message 11 of 19
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Selling for others on Ebay


@lex-talon wrote:

If your family members are physically able to handle packing and shipping items out, I would decline. Have them open their own eBay account.


Definitely this ^^^. 

 

Give them coaching, insight, even a helping hand, but make it their sale, not yours, by having them open an account and showing them how to photograph, write a description and upload the listing(s). Be sure that they're not going to go trying to sell smartphones or laptops up front, and encourage them to ask you any and all questions in case anything is unclear or seems a little off in any way. You can point them here as well. 

 

Just don't get yourself involved as a middleman or a consignment seller. Show them how to do it themselves, and then stick around as a mentor, nothing more.

Message 12 of 19
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Selling for others on Ebay

My question would be why?

 

The negative consequences outweigh the positives but a huge number. 

 

Also, people don't realize that most of what they think is valuable...won't even sell on ebay...my wife thinks her Beanie Babies still have value.

 

Sell only what you own. If it really is good stuff, a better idea would be to make your friend a wholesale offer for everything. 

 

 

 

 

 

 

Message 13 of 19
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Selling for others on Ebay

I did consignment on a large scale many, many years ago.  I would not do it now.

 

At this point I would want 80% of the selling price with a minimum of $60 per item, owner pays all the expenses and I hold his few remaining pennies for 6 months in case of return. I don't think I'd get any takers. 

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Successful and experienced seller since 1997, over 70,000 feedback, boardie since the boards were begun.
Message 14 of 19
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Selling for others on Ebay

The simplest solution for all the questions about taxes, family relations, return risks, etc. is for you to just purchase these items outright from your family members and then list them for yourself.

Message 15 of 19
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