Taxes & Accounting For eBay Sellers
By Eruwan Gerry
Here are a few tips on doing your taxes and accounting as an eBay seller:
1. Do not forget, you need to collect sales tax from buyers who live in the same state where you reside (unless you live in one of the handful of states that does not collect sales tax at all, of course). When tax time comes, you need to report to your state's department of revenue, too. If you collect payments through My eBay and PayPal, sales tax is calculated automatically for you and added to the invoices that are sent to your customers.
2. When you set up a business for yourself, whether it is a sole proprietorship or a corporation, you need professional help. A qualified tax accountant can help you set up deductions, depreciate equipment, and create a schedule by which you need to pay your taxes. The hundred or two hundred dollars you might pay for an accountant are more than made up by your savings in taxes and penalties.
3. Be aware of when you need to pay your taxes. April 15 may not be the only tax dateline you need to observe. You need to pay an estimated tax on a quarterly basis when you are in business for yourself, and report business profits or losses.
4. Keep detailed books of your sales data. Do not depend on eBay to be your only source or records. Create a database or a table in a word processing document in which you record sale prices, purchase prices, and other expenses. Make sure you record sales tax, any payroll expenses, your gross profit margin, and descriptions of the items you sell.
5. One of the best kinds of financial records you can keep is a balance sheet. This tracks your assets and your liabilities, and your income and expenses. On one side, you have your equipment and inventory, your cash on hand, and your other assets. On the other side, you record expenses, bills to pay, sales tax, payroll and other liabilities.
Learning how to manage your taxes and accounting will help you become an effective and efficient seller on eBay!
Eruwan Gerry is an Education Specialist Trained by eBay. Click here to get your FREE eBay bonuses worth $398!
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