Tax Information on How to Start an eBay Business

Uncle Sam wants his share, no matter what business you are in--even an eBay business. Most states require you to collect sales tax, and you are, of course, required to pay tax on how much income you make. Learn about tax information on how to start an eBay business in the guide below.

Instructions

1. You must apply for a sales tax certificate from your state. You are required to collect sales tax on all sales made in your state.

2. When you start an eBay business, you do not have to collect sales tax on any sales made outside of the state you live and sell in.

3. Generally, an eBay business is considered a hobby business, and sales tax is paid only once a year. However, if you make a certain amount of money each year, you may be required to file and pay sales tax on a quarterly basis.

4. Most states require you to pay tax on how much money you make each year. There is no strict percentage you will be paying. The tax paid will depend on how much money you make. However, it is generally recommended to save about 30 percent of your annual income to pay taxes.

5. Save receipts for every purchase you make. There are many tax deductions for eBay business owners, such as office supplies, telephone service, Internet service, postage and packaging materials. Know the tax deductions, and take advantage of them.