Taxes

[jieyinl_2]

I'm thinking of selling more seriously on eBay (as in selling a higher volume of products and potentially setting up a business account). What are the steps I should take?

Also, I know that I would probably have to report taxes when I sell in a higher volume. Does eBay automatically charge sales tax, or do I have to fill in the sales tax table? Will I collect the sales tax and pay it at the end of the year?

There's also the resale certificate aspect. Can some of you experienced business sellers provide me with information on how this process works? Thanks!

[gkyn29]

You should consult a tax professional in the area you live.

No one can or should provide information regarding taxes; in fact, ebay doesn't even do it. 

"Do I have to pay taxes when I sell on eBay?

Sellers are responsible for paying taxes associated with their eBay sales, in accordance with all applicable laws. eBay can't give tax advice, so talk to a tax professional with any questions."

[nobody*s_perfect]

The rules about business licenses and sales tax are State-specific, so you should check with the website of your state's finance office or small business administration.  Each eBay seller must set up their listings according to the policies of the state(s) they operate in.

As far as IRS and income taxes go, regardless of the scale of your enterprise, if you make a profit on your eBay sales, then that is considered reportable income. If you are selling used items for less than you originally paid, then you are not making a profit and don't have to report anything.

Here's the IRS basic Help page for "online auction sellers":

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

[slippinjimmy]

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@jieyinl_2 wrote:

I'm thinking of selling more seriously on eBay (as in selling a higher volume of products and potentially setting up a business account). What are the steps I should take?

Also, I know that I would probably have to report taxes when I sell in a higher volume. Does eBay automatically charge sales tax, or do I have to fill in the sales tax table? Will I collect the sales tax and pay it at the end of the year?

There's also the resale certificate aspect. Can some of you experienced business sellers provide me with information on how this process works? Thanks!

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eBay doesn't have anything to do with Sales Tax, you would need to register with the appropriate agency of your State governement. You appear to be in California so start here:

https://www.boe.ca.gov/info/reg.htm

As far as Income Tax, if you purchase even ONE item with the intent to resell you are operating a "business" and must report income to the feds on your annual tax return.

The ONLY exemption is for people who are selling personal possessions they originally purchased for their own use (even for that there may be limits).

[tealt]

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@jieyinl_2 wrote:

I'm thinking of selling more seriously on eBay (as in selling a higher volume of products and potentially setting up a business account). What are the steps I should take?

Also, I know that I would probably have to report taxes when I sell in a higher volume. Does eBay automatically charge sales tax, or do I have to fill in the sales tax table? Will I collect the sales tax and pay it at the end of the year?

There's also the resale certificate aspect. Can some of you experienced business sellers provide me with information on how this process works? Thanks!

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@jieyinl_2

In California the state agency governing state sales tax is here:

https://www.cdtfa.ca.gov/

You will need to go to that site and apply for a state resale number.  A resale number allows you the honor of charging, collecting, and remitting sales tax on your eBay sales in the state of California. 

[ Be warned,  whether online sellers will be required to collect & remit sale taxes to states other than their own (in which they do not have a physical presence} is an issue in a state of flux.  There is currently a case before the US Supreme Court which may have significant bearing on this issue.]

The site linked to above will then give you a date(s) when you need to submit the California state sales tax you have collected.  I pay mine once a year, due on January 31.

[luckythewinner]

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@jieyinl_2 wrote:

I know that I would probably have to report taxes when I sell in a higher volume.

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Generally speaking it is the nature of your selling - not the volume - that subjects you to taxes.  If you are selling items with the intention of making a profit, you are a business. 

[duggmills]

"Can some of you experienced business sellers provide me with information on how this process works?"

Yes and it works real well.

We're all inspired by you enthusiasm. We hope it's contagious.

May I suggest you gain experience and knowledge through transactions. After a few hundred sales a month, everything will begin to fall into place and you'll be teaching us how to be most successful.

Thanks for being part of our little community. I'm sure  I could could use a hearty dose of inspiration and direction.

[m60driver]

Regarding incme taxes, "If you make more than $20,000 in gross sales and have 200 or more transactions on eBay, you should receive a 1099-K form reporting this income to the IRS."  That is gross sales so you need to keep really good records of all purchases as you are only taxed upon net profit.  That being said, if you do pass that $20k mark and, being self-employed, you best hire a CPA for at least the first year to see how it is done and to have a professionally finished 1040 to use as a future template.  And you might want to think about a 25% rate as a working tax rate on those profits to set aside so you don't get caught behind in April.

[nobody*s_perfect]

Those thresholds only apply to PayPal's obligation to send you (and the IRS) a 1099-K.  They are NOT a threshold below which you don't need to report your income. Also, some states have their own thresholds, as low as $600.

[femmefan1946]

DON'T CHARGE SALES TAXES UNLESS YOU ARE REGISTERED TO COLLECT AND REMIT SALES TAXES!!

Other than that, ask your commercial banking manager for the name of a trustworthy tax accountant who is familiar with online selling.

You already have a commercial bank account right? And a business plan?

[faithfashionfriends]

Not true. Paypal only reports sales that exceed $20,000. I called and asked them. Make under $20,000 and they don't report anything. I have been selling for 4 years and 2017 was the first year Paypal reports my sales. It is VOLUME that counts,nothing else. Your a business if you advertise,have a business car,business cards,etc. Your not a business just because your on Ebay.

[slippinjimmy]

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@faithfashionfriends wrote:
Not true. Paypal only reports sales that exceed $20,000. I called and asked them. Make under $20,000 and they don't report anything. I have been selling for 4 years and 2017 was the first year Paypal reports my sales. It is VOLUME that counts,nothing else. Your a business if you advertise,have a business car,business cards,etc. Your not a business just because your on Ebay.

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Please stop posting this misinformation! You can if you wish take the risk of having the IRS on your case or in your case losing your disability (depending on the type of disability you are recieving) but do not post here things which are NOT true.

Anyone who buys goods for the purpose of resale (profit or not) has reportable income from the very first Dollar.

[gew6463]

Thank You !!!!!  It is frightening that this advice is being given to someone new to Ebay.  

[gew6463]

Please take the advice given by many here, and consult a tax specialist. This is something that could be very problematic if done incorrectly. I wish you future selling success! 

[twnpopcards]

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@faithfashionfriends wrote:
Not true. Paypal only reports sales that exceed $20,000. I called and asked them. Make under $20,000 and they don't report anything. I have been selling for 4 years and 2017 was the first year Paypal reports my sales. It is VOLUME that counts,nothing else. Your a business if you advertise,have a business car,business cards,etc. Your not a business just because your on Ebay.

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Actually you need to learn when to not say anything as you are now giving tax advice, which by the way is incorrect, without having the proper credentials to do so.  By law, to give tax advice you must have a minimum number of hours of tax preparation classes as well as having passed a test on tax preparation.  You also must take a certain number of hours of continuing education each year in order to maintain this license to practice tax return preparation.  Please do not continue to give out advice  regarding taxes and potential tax liabilites unless you have the qualifications to do so.  This is in addition to CPA's and other tax professionals who also have the ability to give tax advice due to the nature of their professions and the requirements of said profession.

This person should seek help from a tax professional in your area and preferably one that understands online sales as some firms do not have that understanding and only deal with B & M stores.