Please take this post with a grain of salt. I hope I have correctly repeated all the information I received. As with any profession there are vast differences in opinions, so one accountant may not agree with mine, but then again, this is free advise.. If you have any questions please contact a tax professional because I only play one on T.V.... ;-) OH yeah.. this is long so grab a cup of coffee or tea or a margarita....
My Morning With My Bean Counter :-)
Collection of State Sales Tax?
YES, DO IT... Collect for the state you live in and it is optional to collect for the states you sell to, which in our cases would be all the states. There is a section on the Income Tax Form that says something along the lines of Use Tax (I am am not sure of the exact wording he was talking fast and it was not something I will be doing). If you do not there is a flat option that is based on your income that is usually the best option.
Possible New Law- Requirement to Collect for Sales Tax ALL States?
There is a HUGE push right now to get this stopped and buried, but it is not looking real good. It appears to be looming on the horizon. If all things line up, it will be law and we will be paying Sales tax to each state of the purchaser. The paperwork will be a handful. Get ready. That will be a year or two away.
PayPal 1099's?
They are coming and so are 1099's for anyone who you do business with for over $599.99 as of December 31, 2011, more to come later. All I will say now is DOCUMENT, DOCUMENT, DOCUMENT!!!!
Write-Offs?
There are 2 different groupings for us today, I am sure there are several others, but for todays sake we are dealing with 2. First is: % of Square Foot or Home Office and Second is : % of Use or Depreciation. We will start with Home Office. First you need to determine where in your home you do eBay solely, by that I mean ONLY eBay, nothing else. No guest room, No laundry room, No garage, No Dining Room Table... eBay ONLY.. For example your home is 1200 square feet and you use a 3rd bedroom for your “eBay room” it is 120 square feet. Then 10% of your homes square footage is solely for eBay. Make sense?. If your home is 2000 square feet and you use your family room and that is the only thing you do in there and it measures out at 400 square feet.. You have dedicated 20% to an “eBay room”. You can deduct 20% of the following from your taxes as a “Home Office”. The Home Office items include: Mortgage, Property tax, Home Owners Insurance, Home Repair, Electric, Gas, Internet etc......... Now for the % of Use that is for purchases that are used up within a year or will depreciate. That would include a computer, fax machine, desk, chair, paper, ink, cell phone, computer repair, etc. On this one you need to determine how much use is personal and how much is business and this decision is iffy. Example. Cell Phone. I don't use my phone as much as you all for research. I would only deduct maybe 25% for business, where you all who do tons of research while thrifting might live by the phone might take 75%. The computer purchase, if I buy a new computer it will be mainly for eBay so I will take 90% deduction..
Gas Mileage? Record Keeping?
What the govt pays for mileage changes through the year. It had changed 2 times this year already. It was .55 and now it is .50. The best way to keep track of mileage is the old-fashioned way. Keep a notebook in the car and write a beginning and an end or keep it in a Day Planner. At the end of the week put a total in the corner, then at the end of the month put a total at the end of the page and circle. Then when you go into the Accountant you only have 12 numbers.. Keep mileage for trips to the Post Office, Thrift Store, Yard Sales, Staples, UPS, Computer Repair, Accountant, Bank, etc
Business Checking Account vrs. Personal Checking Account-
We came to the conclusion it is by far a better option for ME to open a Business account. It will have my store name as the primary name then I will be a signer and my hubby will be also for shopping trips. I will change PP and make it my default account in PP. I do not like the fact that PayPal is linked to my personal checking account and I don't like the lack of a paper trail. As this nightmare called Govt. gets a hold of our money more and more, we will need to prove where our money came from. So I have officially gone to my Courthouse and gotten a DBA (Doing Business AS) and I will be going to the bank in the morning and opening my first Business Account. I will do it at the same bank I have my personal account so I can access all the accounts online, but that way I will have a little system and it will go this way. Money from sales will be in PayPal, I will keep a set amount in there approx $100.00-200.00, anything over that I will transfer to my new business account. I will leave a cushion in there for emergencies (refunds, pay subscriptions, monthly fees also to get it away from the dreaded PP holds) THEN the extra if there is any...;-) I will write a check to myself with personal draw written in the memo section.. That will be my paycheck with a paper trail attached.
How to keep track merchandise purchased at Yard sales, no receipts?
Buy a cheap little receipt book and when you get to your car write down the item and the price you paid and the date, if you can write down the address for added verification. If Obama has his way, after 12-31-2011, we will need to get Name, Address and Social Security Numbers or Federal ID # on all purchases we make no matter the dollar amount because although it is not over 600.00 it MIGHT total 600.00 before the year is over, including yard sales. So to protect us dummies they are requiring us to get the info ahead of time just in case. Or there will be a fine. There is a HUGE fight now in DC about this. BUT it is a possibility. My Accountant truly believes this will not pass because of the MASSIVE amount of paperwork that will be created and the computer overload that will happen over night, but there is a chance.
Just keep educated. I would highly recommend getting an accountant, they really are not that expensive and they will save you a ton. I have had one for over 10 years and even on unemployment he has found me thousands ever year, no kidding. With this business I would never dream of doing it without him..
I AM NOT A PROFESSIONAL. I JUST HAD A VISIT WITH MY PERSONAL BEAN COUNTER AND AM PASSING ON THE INFORMATION I GLEANED AND HOPEFULLY I TOOK THE NOTES CORRECTLY. PLEASE CONSULT YOUR OWN ACCOUNTANT WITH ANY QUESTIONS YOU MAY HAVE... PLEASE TIP YOUR WAITRESS ON YOUR WAY OUT..;-)
