How to Handle Taxes on Your Ebay Income

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By cbbanana
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A few tips on dealing with taxes on your ebay income

Difficulty: Easy

Instructions

Step 1

Keeping tax records for you ebay business isn't has difficult as you may think. I'll lay out a few guide lines for doing this.
Step 2

Speak with a bookkeeper or CPA first and foremost. They'll get you up to speed with the best ways to prepare for tax time. The last thing you need to do is start your ebay business off on the wrong foot.
Step 3

Keep records. They don't have to be fancy or complicated; they just need to be accurate. Every time you make a purchase or a sale related to ebay (yes, even postage supplies are included), keep a record of this. You can print out the receipt and save it away in a file.
Step 4

Organize the records. To beat the headaches associated with tax time, I suggest staple or clipping all invoices and receipts together per month.

Tips & Warnings

Keep in mind that the difference between your costs/expenses and your sales is your income and is taxable. You are actually self-employed, running a small business. Thusly, being self-employed, you can set up retirement accounts, and take advantage of the other benefits self-employed people have. However, you'll have to pay your fair share of taxes, including FICA, and medicare taxes. If you have employees, you'll also have FICA and additional medicare taxes. Even as large of a headache taxes and record keeping is, don't neglect to deal with your taxes. The small headache of tax filing is small potatoes to the headache of Uncle Sam breathing down your neck. It costs much more to pay penalties and interest than it does to do it right from the very beginning. One last thing, there is one exception on paying taxes on your ebay income. If you are filing as a single individual and your total income, (job, ebay, other combined) was below the required filing amount, then you don't have to file. The same is true if you're filing jointly with a spouse. If together your income falls below the filing requirement, you don't have to file. As always and as mentioned in point one, be sure to consult a bookkeeper or CPA first.

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