I came across this story this morning and it seems like the IRS wants your eBay profits. One exciting thing about the article was that it said that in difficult economic times people try to sell the things in their closets and attics. The gist of the story is that you are supposed to report any profits to the IRS and it’s a voluntary process.
As the saying goes:

One man’s junk is another man’s treasure!

This might not sound like good news to you, but you are already one step ahead of the crowd or herd. eBay is such a great platform because as

“We’re uniquely positioned as a great resource in strong times to find good items, and in counter-cyclical times we can be used as a way to sell goods people no longer need to make a few extra dollars,” said eBay spokeswoman Kimberly Rubey

You are interested in learning how to sell on eBay and probably making some decent money on the side already and if not that’s why you’re reading this blog.

I know some of you are doing better, and are making a part-time or even full time income from your sales on eBay. If you’d like to find out more about how to sell on eBay take a look at Auction Selling Revealed.

We’ve been hearing that we’re in a recession, no we’re not, yes we are. It doesn’t matter that much to me what the “offical word” is if we are in a recession or not. I can see the price of gasoline at the pump is running full speed ahead towards $5.00 a gallon, and the costs for everyday goods are continuing to go up. To me, the times they are a changing.

It applies even more now that we have rising costs for gas …

Oil jumps $5 on shrinking stockpiles

Price of food and other household needs are rising

Fed: High energy, food prices keep economy weak

I’m sure one of the reasons that the IRS is more interested in your eBay profits is because if the economy is slowing down they are looking for other places to get increase their revenues.

The story goes through the 3 types of sellers:

The casual seller – sells once in a while, usually at a loss; only report any profit they make but cannot deduct expenses. Use Schedule C

The Hobbyist – seller whose income can be offset by losses; those who do more than a few sales but whose motive is not solely for profit. Use Schedule D

The business – can write off losses, for profit intent, check with your accountant for proper filing process

Please check with an accountant for your individual needs. This is not intended as advise or legal consel but for informational purposes only.

When you are new to ebay selling, you may wonder if these people ever pay taxes. The answer depends on whether you are having an ebay business where you pay for the items to sell on ebay. Then you are required to pay taxes. Just like any ordinary business, you are require to pay your taxes. But when you are not into ebay business and just selling stuff that you want to get rid of from your own home, then you don’t have to pay taxes since this is not considered as a business but a loss. As an individual, you need to apply for a sole proprietorship using your SSS ID under the self-employed category. For sales tax, get a tax ID from your state for collecting and submitting taxes from buyers who live in your state. Online business requires taxes but you may reduce taxes by stating necessary expenses with your transactions. Some of these include, office supplies, office and equipment, phone charges, car gasoline used for business, online advertising, inventories, shipping fees and even ebay fees. These are tax deductible expenses.

1.)    Bidder A bids 3 items at $8

2.)    Bidder B bids 6 items at $7

3.)    Bidder C bids 3 items at $4

4.)    Bidder D bids 2 items at $9

In this case, the lowest successful bid is $7.  What happens is, Bidder D turns out to be the higher bidder and will win 2 items at $7, Bidder A wins 3 items at $7 and since there are only 5 items left, Bidder B wins only 5 items at $7.  If you notice, the lowest successful bid which is $7 becomes the price of each item.  In dutch auction, the winners may refuse partial quantities which usually happens to the lowest successful bidder.  If in this case, bidder Bidder B refuses to take only 5 items as compared to his bid amount which is 6 items, Bidder C has the chance to become the lowest successful bidder. Dutch auction selling, the winners are determined under certain circumstances.  If you play well, you get lucky. 

Ebay offers features that will help sellers manage their business effectively. Ebay developers continuously enhance software and release newer versions. The newest software ebay has developed is the Blackthorne 3.2 version which has just been released. The Blackthorne is downloadable software helps medium to high volume sellers. It has a monthly subscription price of $24.99. It comes with the Selling Manager’s Pro which can be viewed online and shows the summary of your monthly sales. On the productivity inventory section you will notice it shows you if you are out of stock or low of stock. The SMP will particularly help you evaluate the current status of your business and serve as reminder of the things you have to take care of in your ebay business.

Feedback: 20 points or more

ID Verified: $5 charge

Paypal: good standing account

Create a brand and logo.

The first thing you need to do once you qualify for an ebay store is to create your own brand and your own logo. These two features must reflect the description of your business. It is the identity of your business so it is important that you give emphasis to it. Make a simple and unique brand that can easily be identified by buyers.

Design and customize your store.

Ebay store allows you to easily design your store. There are a number of templates that you can choose from depending on the look and feel you want for your store. Create a layout, content and imagery and a buyer- friendly environment.

Manage your store categories.

Ebay allows you to put your products in different categories. The number of categories that you can make for your store depends on the subscription you get from ebay. The higher monthly fee you have for your store, the more categories you are allowed to create for your products. Make use of all categories that you are allowed to have. This will drive traffic to your store.

Always provide something at your markdown manager section.

Your markdown manager is where you put discounted prices. Always offer sale from time to time to get buyer’s attention and give interest to your store

Sometimes, the products are being liquidated are brand new and manufacturers simply made too many of them. Sometimes they are inventories that did not make a great sale and got stuck with a lot of extras. It might possibly be merchandise that the company wants to get rid of for reasons ranging from overruns, to canceled orders, to mistakes, to returns or bankruptcy or lots of possibilities.

In liquidation buying, you may have to find the manufacturer yourself. Make a list of their contact numbers and use your connections. You may write letters to these companies and check their prices in volumes.

You may also try to be a broker. If you know a lot of manufacturers, you may find buyers and just be the middleman. In this, you will not cash out so much money. You just refer the buyer to the seller and you are out of the transaction.

Your competitors on this business are regular liquidators that manufacturers have been dealing with for years. When you are new to this, you will have a hard time convincing manufacturers to transact with you. But as always, patience pays off. So try hard and persevere. Once you start making business with one manufacturer, that will be a start of your liquidation buying business.