Tax Guide for EBay Sellers

Many EBay sellers overlook their responsibility to pay taxes. The fact is, if you are in business, no matter where you are doing business, you are responsible for paying taxes. If you only sell items from your own home, as you would at a yard sale then you have have no tax obligation. If you are buying and selling things with the intent of generating an income, you have an obligation to keep accurate tax records and report your income.

The following article is designed to help EBay sellers get organized. Weather you keep it simple with spreadsheets, or choose to invest in an accounting program, it is important to keep good records. The categories listed below is a basic guide for sellers, no matter what product you sell.

Gross Income
Each month EBay will make a report available to you that details a number of factors including gross income. You will need to make a record of this for your annual tax reporting, as well as month sales tax reports you will make to the state.

EBay Fees
The fees you pay to EBay for advertising your products is one of your biggest expenses. Your monthly report from eBay will include this expense.

PayPal Fees
The fees you pay for all transactions processed through PayPal are also a tax deductible expense. Your monthly report from eBay will include this expense.

Inventory Expense
Your inventory expense is your biggest expense of all. Be sure to keep track of your receipts. If you can't document a purchase, you will not be able to write off the expense of that item.

Banking Fees
It is a good idea to create a bank account for your business. Your savings and checking accounts may incur a monthly fee. Make sure to keep your monthly bank statements, and document the fees in your accounting system.

Insurance
As a small business owner you will need health, dental, and perhaps vision insurance. Make sure to keep your monthly insurance statements, and document them in your accounting system.

Internet Connection
Your internet connection is an important tool for your business, and therefore a business expense. Make sure to keep your monthly internet service statements, and document them in your accounting system.

Home Office
If you have a space within your home that is devoted entirely to your business, it qualifies as a tax deduction. Let you accountant know about your home office. Save your electric bills. A percentage of your electric bills are now a tax deduction.

Shipping Expense
The cost of shipping falls right behind inventory expense, for the biggest expense you will have in running your EBay store. Make sure to keep your shipping reciepts, and document them in your accounting system.

Accounting Service
If you use an account to complete the final tax forms, the fee they charge you is a tax deduction. If you get tax help from a box, the software is tax deductible.

Mileage Record
Keep track of your milage. If you travel the mall to check out the clearance sales, record your miles. If your travel to the post office to mail your packages, record your miles. If you travel to the office supply store for more bubble wrap, record your miles. The easiest way to record your miles is with a small day-to-day planner. Keep it in your car, and record the miles every time you make a business related trip.