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Net Auctions and Auction Information |
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Taxing Your eBay Profits
As a small business person-slash-advice columnist I dread the first quarter of the new year. Not because in my mind my own business fortunes start at zero again every January or because I have already dismissed every New Year's resolution I made when the clock rang out the New Year. No, the reason I dread the first quarter of the new year is that my email box floods with questions about business taxes and the IRS, my two least favorite subjects on earth. It's not that I am opposed to paying my fair share of business taxes. It's that I consider the IRS to be a little like Beetlejuice, the movie demon who appeared only after his name was called three times in a row. My fear is if I write too many IRS columns their dark agents may appear on my doorstep, ready to drag me away to an uncertain fate. Oh well, one must do his duty no matter the consequences, so here we go?. Q: I am starting a small retail business. While talking to a potential supplier last week he asked for my EIN number. I had no idea what he was talking about, so I told him I would have to get back with him because I didn't have the number handy. What is an EIN number and why do I need one? -- Robert P. A: Robert, do you remember the old Johnny Rivers song "Secret Agent Man?" There was a line that said, "They're giving you a number and taking away your name." An EIN isn't as cool as a secret agent number, but it works much the same way when it comes to your business' relationship with the IRS. Instead of identifying your business by name, the IRS identifies your business by EIN. EIN stands for Employer Identification Number and is also known as a federal tax ID number. The EIN is a nine-digit number that the IRS assigns to businesses and is used to identify taxpayers that are required to file various business tax returns. Does your business need an EIN? According to the IRS the answer is yes if: Your business has employees Your business is a corporation or partnership You file returns for Employment, Excise, or Alcohol, Tobacco and Firearms tax You withhold taxes on income (other than wages) paid to a non-resident alien. Your business has a Keogh plan Your business involves trust, estate, real estate mortgage investment conduits, non-profit, farmers' cooperatives, or plan administrators. Applying for an EIN is a relatively painless task. You can apply online at the IRS website (irs.gov), apply by mail or telephone, or if you do business in a state that participates in the Federal Employer Identification Number project you can apply through you local IRS office (sorry, Alabama is not one of them). You will need an EIN number prior to filing business returns with the IRS, so make sure you give yourself plenty of time to obtain one. For more information on EINs and your business, consult your accountant. And while we're on the subject ? Q: I made extra money selling things on eBay last year. These were items I picked up at yardsales mostly. My husband says I am responsible for paying income tax on the money I made, but I disagree. This is just my hobby, not a business. What do you think? -- Gladys A. A: With so many people selling on eBay these days this is a question I get quite a bit. In fact, I have plans for a future "eBay and taxes" column, but I believe your question is more, "is it a hobby or is it a business?" Again, I went to the horse's mouth (at least I think it was the mouth) for the answer. According to the IRS there are a number of factors that help determine if your hobby can be considered a business and thereby make you susceptible to the IRS tax rules governing business. Do you carry on the activity in a business-like manner? If you conduct your eBay activities like a business, i.e. you keep business records, track your profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is considered a business. If you put considerable time and effort into your venture, the IRS may contend that you do so for profit and not fun. It seems the folks at the IRS don't believe in doing things strictly for pleasure. My guess is, neither do you. If you weren't making money selling on eBay I doubt you'd be bothering getting up at 4am to hit all those yardsales. Then again, maybe you would? If you depend on income from your eBay activities for your livelihood, it's a business, not a hobby. There are a number of other factors the IRS considers to determine if a hobby is really a business, but in your case I think that covers the basics. For detailed answers to any tax question you should consult a qualified accountant or tax attorney. God forbid you rely on a guy who is afraid to mumble the letters "IRS" three times in a row. Small Business Q&A is written by veteran entrepreneurand syndicated columnist, Tim Knox.Tim's latest books include "Small Business Success Secrets"and "The 30 Day Blueprint For Success!"Related Links:http://www.smallbusinessqa.comhttp://www.dropshipwholesale.net
MORE RESOURCES: Hammer time: how to bag a bargain at UK auctions The Guardian Mecum Auctions returns to Kansas City this week for 30th year WDAF FOX4 Kansas City Biden administration holds oil and gas lease auctions in Wyoming, angering environmentalists Washington Examiner US kicks off a spate of oil and gas auctions just as COP28 gets ... Hellenic Shipping News Worldwide Kiwanis Club of Panama City auctions off gifts for underprivileged kids WMBB - mypanhandle.com Auction Calendar 12-1-2023 AgUpdate Kylie Kelce Auctions Off Eagles Jacket, Bidding War Ensues Between Rob McElhenney And Kaitlin Olson TODAY Portage Manor auction by Kaser to sell kitchen jail cells other stuff South Bend Tribune Limited success for large-scale PV auctions in Austria pv magazine International Lock Haven Athletics online auction at GoLHU.com is back! - Lock ... Lock Haven University Athletics Heritage Auctions' Roberta Kramer Shares Her Current Favorite Finds CS | Modern Luxury Carbon auctions, gas prices: Figures aren't oil company profits ... The Daily Herald Online EV Auction Raises $10K for Nonprofit | Automotive News8000.com - WKBT Krank tech powers Latin America's largest 100% online mining ... International Mining Galatoire Foundation to Hold Annual Christmas Auction on Dec. 4 New Orleans Magazine Auctions in New York Reflect a Dip in the Market The New York Times Commission launches first European Hydrogen Bank auction with ... European Commission Big Iron Auctions-A Pioneer In Serving Rural America With Online ... - AGInfo Ag Information Network Big Iron Auctions-A Pioneer In Serving Rural America With Online ... AGInfo Ag Information Network Have Art Auctions Become ‘Must-See TV’? The New York Times "The auction model is one that truly works in Almeria" hortidaily.com Stocking Stuffer Auctions Heart of the Rockies Radio Dealers Auto Auction of Little Rock names new general manager Auto Remarketing Did That $4 Wyeth Thrift Store Painting Really Sell for $191,000? The New York Times TREASURIES-US yields lower after housing data, auctions Yahoo Finance Trust land auctions fund mental health care in Alaska Alaska Public Media News Building Better Infrastructure Auctions | Stanford Graduate School of ... Stanford Graduate School of Business Carbon falling below EUR80 after larger auctions and lower gas prices International Cement Review Bacone to go up for auction next month to pay off over $1.5 million in ... 2 News Oklahoma KJRH Tulsa Sulphur Springs Livestock Auctions market report North Texas e-News Blake Corum selling custom cleats at charity auction FOX 2 Detroit Annual Auction for the Arts returns to Big Sky in February Explore Big Sky Brad Pitt and Angelina Jolie Lived in This New Orleans Mansion. Now It’s Up for Auction. Robb Report Online Auction of Unclaimed Property ending soon newschannel20.com Wild horse, burro auction in Florence | Daily Independent Daily Independent BOEM Schedules Oil Lease Auctions in Rice's Whale Habitat The Maritime Executive Fall auctions woo rich bargain hunters with $2.5 billion in art Crain's New York Business Open Source Gallery's Art Auction Is Open for Bidding Hyperallergic Children's Auction bidding off hundreds of items to raise funds for Lakes Region nonprofits WMUR Manchester ARC Starlight Auction raises nearly $300,000 | News, Sports, Jobs Cape Coral Breeze Silent auction to benefit City of Christmas | Daily Gate City - Keokuk ... Mississippi Valley Publishing SCC's Carolina Auction Academy graduates 22 students - The ... Stanly News & Press $140 Million Picasso Props Up New York Auctions | News Ocula Magazine Tyler Perry's former Atlanta mansion sold at auction FOX 5 Atlanta Livestock Auction Calendar 12-1-23 AgUpdate Car of the Week: This Ultra-Rare 1967 Corvette Sting Ray Could Fetch More Than $3 Million at Auction Robb Report Lynch will oversee property auctions Millbury-Sutton Chronicle |
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