After paying off my initial cost to start my ebay business, what percentage should I save to reinvest?

Question

I am startiing my ebay business just to supplement income. I have some debt from buying items to sell -- after plenty of research I know I have items that will sell. My first goal will be to pay off my debt, but after that, how much should I save to reinvest into buying items, and how much should I use as "profit". What I don't want to happen is to pay off debt and then spend all I make, and then have nothing left to keep selling. Also, legally would I have to declare myself an actual business -- in Colorado -- or can I make up to a certain amount w/o having to do this? Thanks for any and all help!

Answer 1

if you start a business, you must declare from day 1.

To get the business growing, if it is a new start-up, you need to plow most, if not all of your "profit" back into the company for the first 1-2 years, treating your living expenses as "pay to an employee" You need to be willing to sacrifice for the company in the early stage, then reap the fruits of your labor once established.

Answer 2

The direct answer is "all of it" until you have a clear idea of what your expenses are and what taxes you owe. Beyond the direct cost of sales (buying stuff) you have the shipping costs, the delivery costs (if any) to the post office, phone expenses for ordering stuff, etc. If you are making a profit, you will only be able to deduct expenses on the 1040 if you fill out the Schedule C. If you do not do this, you will have to declare all the income as a hobby and not deduct anything. Read through the Sched.C to get some idea of what you should be keeping a record of and what you can't deduct.
As for the state and county, you will have to check on whether you have to pay taxes on the property you are holding for sale and whether you have to register. If you have a business name, you are supposed to (in Texas) register a Doing-Business-As with the county. The Secretary of State's office should have information on line, which they do
http://www.sos.state.co.us/pubs/business/main.htm