Tax & Social security

[dinkin-flicka]

Hi.  New to selling.  Only sold a few thing so far, but I plan to buy invetory and  list regulary, through the year.  I will have to do taxes, but need to know hpw to set up quarterly taxes (as I would have to estimate what I could make this year - and I just started listing a couple weeks ago. ) I read I will have to do a schedule C.   and learned about outright and intuit. Butb a few   questions.

1. How do we get started with quarterly payments to irs?  

2. How do we pay State & local income taxes?

3. Do we have to pay social security?  And if so, How do we do that? / figure out how much to pay?

4.  Are we considered Self Employed  or Small Business?  (when I looked at intuit, it had different apps for each).
     Thank you for you help

[gracieallen01]

Your best bet would be to consult with a CPA in your state, as there are going to be a number of varibles - starting with 'is this your sole income'?  State taxes are generally different for each and the IRS determines whether you have to do quarterly payments, usually according to amount of income.

Talk to someone that knows.

[dinkin-flicka]

Thank you. yes, this will be my sole income until I find employment.

[beautybylynn]

also contact you local taxing authoraties about a FEIN and to register as a small business

[gracieallen01]

As sole income, were I you, I would take a couple of days to read the seller and buyer forums.

Yes, it is the down side of ebay - however, why would those who don't have a complaint bother to come here (other than to help out those who do)?

You will get an idea, if you don't have one set in your mind, of some of the hazards and pitfalls associated with selling full time here and whether or how much you want to commit to inventory before you know how things might work out.  And be sure to read ALL of the rules, policies, User Agreement and Terms of Service.

Also, a CPA will be able to help you set up the books correctly for YOUR situation.

(personal opinion - your mileage may vary)

[phcd1]

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@dinkin-flicka wrote:
Thank you. yes, this will be my sole income until I find employment.

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Good Luck.

I wouldn't purchase a lot of inventory unless I was sure I could sell it. It's a lot of work, 24X7. Many have failed that have come before you.

[partial*eclipse · Accepted solution]

Yes, you will do a Schedule C; you are self-employed.  At the bottom of Schedule C you'll see the line amount which transfers to IRS Schedule SE so you can figure your Social Security contribution.

Quarterly reports are just estimates and we're already in the third quarter.  Don't worry about too much precision; just don't submit a serious underestmate.

Most state income taxes just utilize specific numbers that you already figured out on your IRS-1040.  Check you state's website for income tax. They will also tell you how to register if your state has a sales tax that you must collect when you purchase items for resale.  

The IRS and most state sites have helpful information for small businesses.  Here is the IRS page especially for "online auction sellers":

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Tips-for-Online-Auction-Sellers

I have found TurboTax to be very user-friendly.

[dinkin-flicka]

Thank you. Much appreciated. I will.

[dinkin-flicka]

Thank you. yeah, I will go little at a time.

[dinkin-flicka]

Thank you. Very appreciated! and thanks so much for the link!

[faithfashionfriends]

First of all there are alot of Trolls who will try to scare you,but don't stress out. Paypal doesn't send ANYTHING to the IRS unless you make over $20,000 and second of all the IRS is more worried about people making over 100K then people selling a few things here and there on Ebay. There isn't enough employees at the IRS to take care of 10% of Ebay Sellers. It wouldn't be worth their time especially if your like me when you purchase as much as you sell. So just enjoy your Ebay selling!

[duggmills]

Oh, here's and opinion.

May I suggest you spend your days going out and looking for employment.  Yes, that means going from place to place and present yourself in person with business owners and filling out applications like they do at Home Depot and other places or on line.

Dress nicely, be polite, search your talents and present those attributes to people who do the hiring to help them understand how you will be an asset to their business.  Present a resume where appropriate and not just drop one off to a receptionist or clerk.  They don't do the hiring.  Managers and owners do the hiring. Be sure to get a contact name and number and follow up with a phone call.

Dose this sound like you're selling something? It is. You're selling you. Don't invest in inventory.  Invest in yourself first.

Then spend your evenings researching those products you are planning on selling to see if they really do have the potential for selling and at what kinds of margins you can realistically verify.

Don't worry about income taxes until you have some income.  The profit you've made on what you've sold to date barely cover the postage to file a tax return.

[penguins_dont_fly]

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@faithfashionfriends wrote:
First of all there are alot of Trolls who will try to scare you,but don't stress out. Paypal doesn't send ANYTHING to the IRS unless you make over $20,000 and second of all the IRS is more worried about people making over 100K then people selling a few things here and there on Ebay. There isn't enough employees at the IRS to take care of 10% of Ebay Sellers. It wouldn't be worth their time especially if your like me when you purchase as much as you sell. So just enjoy your Ebay selling!

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@faithfashionfriends

A concientious seller comes here asking how they should take care of their taxes and your answer is "don't worry about it" ???

SMH

PayPal sends a 1099 at $20,000 and 200 transactions because that is the threshold at which the IRS requires them to send one.

And ... in some states, the threshold is lower ... Vermont and Massachusetts sellers get 1099s when they cross those thresholds.

Just because you don't get a 1009 doesn't mean that you don't have to report your income under $20,000 to the IRS.

[faithfashionfriends]

Ebay doesn't need people like you making their selling experience stressful. Are you not selling enough or is your Ebay not working for you? Don't take it out on other Sellers by trying to stress them out. I won't even put a thread on here because of all the Trolls on this site. I know what I am doing and I get all my information from the most reputable sourcs,Ebay and Paypal. They are the ones who are in control of our taxes and tax info. Have a nice day!

[faithfashionfriends]

You can report anything you want to the IRS. Have at it. Good luck! I hope you pay all your taxes too. Funny,you only report taxes on PROFIT,NOT SALES. Maybe you should see another CPA.