Tax help would be appreciated regarding ebay sales

lightningboy

This is the first time I have exceeded the sales/volume requirements that earns you a 1099-k from paypal. My concern now is tracing back all the costs of the cards that went into the final sales figure (fees, grading, envelopes, tape etc). Not to mention I have bought sets or collections of cards and sold off in pieces over 2 or sometimes 3 calendar years. Any advice on what I should do to be as forthright without having the endless task of trying to trace back every single card sold? Of course good future advice would be to keep better records

Thanks, Tom

PMKAY

What works for me is I pay for all my card business expenses with either a dedicated credit card or paypal. At the end of the year I have 12 mastercard bills and 12 documents printed off from my paypal account. When I do pay cash, I make a note of it and include it in my records I send to my accountant. I'm in Canada so rules all may be different but does getting over whatever the limit is to get that 1099-k from paypal also allow you to call yourself a home based business and write off all household expenses like internet, phone garbage pick up etc etc?

brendanb438

Canada is completely different than dealing with the IRS in the United States. You try to write off household expenses like garbage pickup and itemized out internet/phone and even a % of the rent or mortgage for say a dedicated room for the business you are opening yourself up to be flagged and audited. Nothing wrong with this if you have all other records in order but you do not in this case.



Tom if most of what you have flipped via PayPal was purchased online say with PayPal at least the papertrail is somewhat there for the original costs involved. Now when it comes to trying to add in anything beyond grading fees, eBay/PPs cuts and shipping fees you had better start creating some sort of log or spreadsheet in case you get audited.



First thing I would recommend is use a CPA this year. $200 to $400 is well worth it in this case and see what they recommend and if they include some sort of additional help for this fee if you do get audited.



If you are doing things 100% by the books you need to have solid numbers to back everything up including inventory value at the beginning and end of the year (basically those sets/collections you bought in past years) along with logs of say mileage when going out to buy them if in person and for each trip to the Post Office to mail out packages and a ton of other things.



A CPA will probably tell ya to take it easy at first with deductions but if you plan to continue to do this type of volume year over year that you need to keep records of everything. Over a 3 year timeframe I was doing 200+ and $40,000+ in sales via PP. The first year I only claimed the stuff I could easily prove if audited and did a way better job record keeping for the 2nd and 3rd years. Also you may want to start a legit LLC. so you have a tax ID and some protection if you somehow run the company into the ground (whether on purpose or by accident.)

PMKAY

Originally posted by: brendanb438
Canada is completely different than dealing with the IRS in the United States. You try to write off household expenses like garbage pickup and itemized out internet/phone and even a % of the rent or mortgage for say a dedicated room for the business you are opening yourself up to be flagged and audited. Nothing wrong with this if you have all other records in order but you do not in this case.

Tom if most of what you have flipped via PayPal was purchased online say with PayPal at least the papertrail is somewhat there for the original costs involved. Now when it comes to trying to add in anything beyond grading fees, eBay/PPs cuts and shipping fees you had better start creating some sort of log or spreadsheet in case you get audited.

First thing I would recommend is use a CPA this year. $200 to $400 is well worth it in this case and see what they recommend and if they include some sort of additional help for this fee if you do get audited.

If you are doing things 100% by the books you need to have solid numbers to back everything up including inventory value at the beginning and end of the year (basically those sets/collections you bought in past years) along with logs of say mileage when going out to buy them if in person and for each trip to the Post Office to mail out packages and a ton of other things.

A CPA will probably tell ya to take it easy at first with deductions but if you plan to continue to do this type of volume year over year that you need to keep records of everything. Over a 3 year timeframe I was doing 200+ and $40,000+ in sales via PP. The first year I only claimed the stuff I could easily prove if audited and did a way better job record keeping for the 2nd and 3rd years. Also you may want to start a legit LLC. so you have a tax ID and some protection if you somehow run the company into the ground (whether on purpose or by accident.)

Canada rules. And yes I do use an accountant.

brendanb438

When it comes to taxes yes Canada rules. Seems to be a lot more friendly towards small businesses than the good ole IRS here in the States. Any chance if things get crazier here in the States Canada will annex say Michigan and Ohio?

ChiefsFan1st

Originally posted by: brendanb438
When it comes to taxes yes Canada rules. Seems to be a lot more friendly towards small businesses than the good ole IRS here in the States. Any chance if things get crazier here in the States Canada will annex say Michigan and Ohio?

They can have New York and California

..of course, that aint very fair to Canadians