I have a small business on eBay, this is my first year, how do I go about preparing for taxes?

Question

I opened a store on eBay selling infant clothing & other baby items. I opened the store in April 2007, I was making around $1,000 a month from April until June 2007 when I put the settings to vacation settings until late August 2007. (My husband was in a car accident, I had to tend to him as well as insurance and lawsuits, so I didn't sell ANYTHING during that time period) This month, I have made around $1,100. I keep record of everything, I use a program through eBay and send everything to QuickBooks online. What EXACTLY do I need to get together and bring in when I have my taxes prepared? This is my first year doing this, and I have NO IDEA what I'm in for! I get a lot of items I resell on eBay, and they all have item numbers. Can I claim that as expenses? And can I just use the item numbers, or how does that work? Also, I am not quite sure how to print out all of my info once I'm in QuickBooks online edition. Any help is appreciated!

Answer 1

1. Your income is self-employment income. On your tax return it is to be reported on Schedule C of Form 1040.

2. You must keep track of your gross sales and expenses to figure out net profit. This net profit is subject to Self Employment tax @15.3%. For this you will file schedule SE (Form 1040) with your Form 1040.

3. Get a business license from your city/county. The fee ranges from $10 to $100 depending upon your city/county.

4. Open a bank account exclusively for your business activity. This way you can easily keep your personal and business expenses separate.

5. If you don't have any employee you don't need tax identification number. Your SS number will serve this purpose.

6. From your city/county office, find out if you are required to get sales tax permit. When you get sales tax permit, then you will add sales tax to items sold in your state, and deposit the collected sales tax with the sales tax office.

Answer 2

Hi
What you should do is open a business checking account at a bank. They automatically take all the taxes out that you need for the tax season. You made $1,000 in profit? Thats good. Were did you get the stuff to sell on eBay? What you do is when it's tax time all you have to do is go to the bank and get all your business account papers from your bank and bring it to H&R block and they can figure it out for you.

Answer 3

You'll need to have good records of your income and of the expenses for making that income. If you buy an item and resell it, the amount you paid for it is an expense - also ebay fees, packaging materials, shipping fees....

Good luck.