posted on November 16, 2003 04:07:52 PM new
Hi popnrock,
I believe it changes from a hobby to a business when stop selling your personal belongings and start purchasing things specifically for resale.
You definitely will want to have a separate checking account and credit card, and you should probably set up a separate PayPal account if you plan to use it for buying or selling things as your business. Do keep your personal PayPal account for purchases that are not business related. You don't have to have business name (a "dba" ) if you don't want to--you can be a sole proprietor under your own name. Unless you want to incorporate and fill out a business tax return, you will just be completing a Schedule C for your personal Federal tax return, and you will also be filing Schedule SE (Self Employment tax) if your total profit is over $400 per year.
If you are paid as an independent contractor for your sales rep work (i.e. you get a 1099 form at the end of the year instead of a W-2), you will be filling out a Schedule C for each business. If you do not use a business program like QuickBooks, I strongly urge you to use at least Quicken or MS Money. The ability to categorize all of your income and expenses as you go saves a massive amount of time when it's time to fill out your taxes.
You may know most of this information, but I put it here for those who might need it.
Not lurkyloo on eBay
[ edited by lurkyloo on Nov 16, 2003 04:08 PM ]
posted on November 16, 2003 04:30:31 PM new
It looks like you are already a business.
If you get a 1099 for your sales rep business, you may want to combine the two into for tax purposes under a business simply called "sales". This will simplfy the paperwork. Get seperate accounts for business & personal checking. And quikcen or MS money or any bank with on-line access to you account is fine for record keeping. Use a good tax program, like Turbo Tax, and you will be surprised how many things are deductable. Also you can set up a Self Employeed IRA or Keough for big tax savings.
posted on November 16, 2003 07:11:49 PM new
Technically, all income needs to be reported, even if it is just a couple of things. You definitely have a business going if you are making $3000 per month on this, I think someone already mentioned the $400 threshold for self employment tax.
It is not that scary of a move to make it a business, the nice thing is that there are so many things that you can legitimately write off that you may not have had already been doing, that reduces your taxes.
As far as forming a corporation, beware of the fees. A lot of companies say they will do it for a very low price, but then all these extra fees start sneaking in. I have a city business license, pay county taxes, and am registered with my state as a business. It's really not as large of a step as it may seem...
posted on November 16, 2003 11:10:37 PM new
Setting up a subchapter S is not difficult & you have several options on paying taxes etc.
I have a friend who did this at age 65. Made his wife president & paid her a large salary while he took a smaller salary & collected SSI. Of course all of that has changed, but that was 10 yrs ago.
