Taxes on ebay?

Question

Hello,
I live in Chicago, IL. I would like to start selling on ebay as a business. I would like to buy from wholesellers and resell. The problem is, I dont know anything about taxes. How much in taxes will I have to pay (%)? What's the maximum income i can make without being taxed? Do i need any resale licenses? Any help would be greatly appreciated.

I know about ebay fees. I mean taxes to the state or IRS.

Answer 1

You will have to claim your earnings if you are selling on eBay depending on how much you make. What you will have to pay (or not pay) in taxes really depends on your overall expenses and income. It would be very wise for you to consult with an accountant as they will most likely be able to save you a ton of money. Just keep good records and keep track of EVERYTHING. i.e. milage to and from post office, shopping for merchandise to sell, supplies etc. Keep all receipts (even for pens & paper, etc) There are a lot of things you can write off so keep this in mind throughout the year.

Also, check out The Small Biz Assoc. for Illinois: http://www.sba.gov/il/

Answer 2

To get a resale license you would apply to the state. It allows you to buy from others without paying sales tax. If your state has sales tax you are responsible to pay that tax on all sales you make at the rate for the place where the sale takes place (usually your house). You make collect from you customers. As a very over simplification the taxes you pay to the IRS are the same as any business in which you sell something. The amount earned on the total sales (income) minus the cost of goods and any expenses you had to make that sale. This is normally accomplished on a Schedule C and transferred to your regular 1040 tax return. If you sell one item for one cent you would be required to report that if you were otherwise required to file a tax return. If you did not do so on a very small amount you would be joining thousands of others who fail to report that type of income. While it is very unlikely that the IRS would do anything about it, my telling you not to report that income is a violation of federal law and I could join you in federal prison if they do!!

Answer 3

How much you'll have to pay in taxes will depend on how much you make. I think the minimum income you can make without being taxes is somewhere around $600 for the whole year but I'm not sure. I wouldn't plan on making a living from ebay and not paying taxes. You will definitely need a resale license from you state. Many states refer to it as a reseller's certificate.

I recently made a post on my blog about getting information on buying from wholesalers. Please watch out for scams. Most of the info on the internet is junk. You can check out my blog post at http://www.imdebunked.com/wholesale-sources-beware-of-the-scams.html

John

Answer 4

You will need a resale license - you get them in your local county or city. You will have to pay taxes on your income just like you would from a job - but on the other hand, you get to deduct your expenses from this income.

You only charge sales tax on those items that you sell to buyers in your home state. That gets turned in to the Tax Dept in IL not the IRS.

Hope this helps!

Answer 5

You need an Illinois resale license to buy products without paying sales tax. You need to collect Illinois sales tax on sales that you make that are delivered in Illinois, or that are sold to people for resale by them. The income tax questions depend on how much you make and if you're married, have kids etc.

Answer 6

Hi
http://pages.ebay.com/help/sell/fees.html

Go here it should tell you everything you need to know.
Good Luck! :D