State, federal, and local taxes?

Question

I was thinking of making some extra cash to rebuild my beautiful home here in New Orleans, something along the lines of ebay. From what I gather, you don't necessarily need any sort of license to resell things online, even in bulk. What my question is, is how would I go about filing my taxes and doing all "fun" stuff? Would the state automatically know, or would I somehow have to inform them? I just don't want to goto jail for tax evasion ;)

Answer 1

You will have to pay federal taxes for sure,. You may have to pay state income tax also, if your state charges it. Sales taxes are a different question, not all states charge them for private parties, or if they do, there might only be a sales tax on goods sold to Louisiana residents. You need to contact the state or county agency that deals with sales taxes. As to licensing, you probably only need a business license, which you can usually get from the county government or the county court system and this is usually cheap. It's mostly a way for the state to keep track of businesses that ought to pay sales taxes. If you are selling used goods that belong to other people, you may need to have a secondhand goods license from the local police (sort of like a pawnshop needs).

Answer 2

I don't know how eBay reports the amounts you sell but if u wanna be honest this is considered your own business and gets reported on sched c of form 1040. If you become successful you have to keep records of your total sales and total cost of purchases. It sounds like you will only be receiving commissions. If it more than $600 eBay has to file form 1099Misc telling you how much you earned at year end.

Answer 3

It's really simple, if you buy things from out of your state and sell them out of your state you only need a state business license which is probably free. If you buy things out of your state and sell them in your state you need a state sales tax license you need to check with your states department of revenue on city sales tax every state has their own rules. Your federal tax return will include a schedule "C". Go to the site listed below find schedule C and get aquainted with it. Louisiana is the only State in the country that does not follow common law, they follow Jurisdictional law. You need to get in touch with your Secretary of State.

Answer 4

You would have to keep your own books and claim your profit margin. It would really be an 'on your honor' type thing unless you got really big. The IRS doesn't really have any way of making people pay taxes for what they sell on ebay.