Selling for others on Ebay

[junrrob]

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!

[eleanor*rigby]

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@slippinjimmy wrote:

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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"

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Not to put too fine a point on it:

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 net profit"

Gross profit is revenue minus COGS.

Net profit is revenue minus COGS, eBay fees, PayPal fees, and whatever other expenses can be appropriately subtracted from revenue.

[slippinjimmy]

@eleanor*rigby wrote:

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@slippinjimmy wrote:

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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"

---

Not to put too fine a point on it:

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 net profit"

Gross profit is revenue minus COGS.

Net profit is revenue minus COGS, eBay fees, PayPal fees, and whatever other expenses can be appropriately subtracted from revenue.

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I agree with your definition of Net Profit which is why I used the term Gross Profit because there would be additional expenses (the "whatever") that I did not detail because they are unknown to me. Presumably those unknown expenses would be part of the normal expenses the OP would be deducting that are not directly related to a specific transaction (shipping materials for example).

But it's all good, we both understand the only tax implications are for the portion (if any) that the OP does not pass on to the consignors.

[eleanor*rigby]

My point was that "Fees paid to eBay/Paypal" are not subtracted from gross revenue to calculate gross profit, as you indicated in your post. They are subtracted out to calculate net profit.

So, just to state it correctly for the OP:

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"

Selling price $10 - report as part of gross revenue

Less funds paid to consignor - report as cost of goods

Less fees paid to eBay/PayPal and any other seller costs - report as expense

Any balance remaining is "net profit"

Or, stated a different way:

Revenue - COGS = gross profit

Gross profit - all seller expenses = net profit