ebay store question about taxes

[250rmanfmf]

hey guys I have a question about the ebay stores. If you open one up are you considered a business and have to pay taxes off of it. I buy n sell trikes as a hobby. I was looking into a ebay store for one because it works out being cheaper for me with my amount of parts. but sometimes the dollar amount can be real high and dont want to get sited and pay taxes on them when in fact its a hobby not a business.

any info on this subject would be great.

Thanks
Tyler

[XTrumpX]

Well, by law, ANYTHING you sell should be taxed. Do we pay? Of course not. Well, before someone tries to correct me, I'm not talking about taxing the sale, I'm talking about gains tax when it comes to uncle Sam's day in April (or every 3 months for s-corps). If someone buys from you from out-of-state, then you do not have to charge a sales tax.

Anyway, if you have an ebay store that you currently run through a business and pay taxes on and you want to sell your trike stuff "on the side", then you should open another store. If you ever get audited and you have them both mixed together, they'll ask where the money when from sale "ABC" and how come you didn't claim it as income. You want to keep your "hobby" seperated from your business. Does that make sense to you? And if you are taking payments thorugh DD, Paypal or checks, you should have them go to a seperate account. I know people out there that set their kids up with an account and the money goes to them. Uncle Sam doesn't audit minors too much :)

It's like selling a house, if you make money off of it, you have to pay a gains tax right? It's not a business but they still nail you (Unless it's exempt)

[jason 32]

yea i think so-
but i think your ok untill a certain amount of money is made- it put you in a different tax bracket- also i think there are tax right offs in owning your own store--

[250rmanfmf]

I dont have an ebay store right now, I just run regular auctions, I was looking into doing ebay stores since that system works out for me better for selling my atc parts. I think I am safer with regular auctions but was just woundering if I could do a ebay store and not claim as income cause its a hobby and some months I dont get rid of anything but some I do

Tyler

[TimSr]

Sales tax is regulated by each individual state, but one thing that will not fly in any state is calling it a "hobby". If you obtain goods to sell at a profit, it is a business. They only differences I know of are between personal property sales, which each state regulates differently. Most do not require the collection of taxes on the sale of personal property other than on motor vehicles and items requiring titles or permits. Personal property is property obtained for personal use.

As far as actual enforcement, the likelyhood is mostly based on volume. If you are making a few hundred extra bucks a month on ebay you are probably safe. If you are shipping out hundreds of dollars worth of stuff each week, youll probably catch somebody's attention.

All sales for profit, personal or business, are subject to state and federal income tax, though again, actual enforcemnt will mostly depend on volume and dollar amounts.

Whether you sell on an ebay store, or on ebay auctions, they are subject to the same regulations.

[XTrumpX]

Tim said it right, depends on volume and amounts your doing. My wife is a corporate accountant and said if you really want to hide it, open another bank account or 2 that you don't use when you're figuring out your taxes. That way you can split the income over 2 accounts and keep the activity low and the amount of money transfers under the radar. If you do the 2 accounts, make sure they're different banks other then your regular one. She's saw it done before when she did personal taxes, but she doesn't recommend it ;)