Getting my business license after selling a bunch of stuff?
I've sold about probably...50 items on Ebay over the past several months. They were things purchased from yard sales, thrift stores and estate sales...typically in cash. It was more of a hobby then. Tomorrow, I'm planning on checking with my city because I need a business license. I've discovered certain ways of making hundreds of dollars per week through buying online estate sale coin lots and other various wholesale coins and re-selling. It's working (in spite of various people who once told me it wouldn't). I've thought up potential names for my home business as a sole proprietor. I know that I need a business license, a state tax id (for selling to people in my state and collecting sales tax) and possibly an internet auction or re-seller license, too.
I plan to probably open a business checking account and maybe even get a business credit card. Yet my income is half-funded currently by my full-time job. So when I buy something to re-sell, I charge it to a personal credit card or buy it with my personal debit card. But since I'm mid-stride into selling some stuff...how do I just "change over" into the home business if I get the license, state tax id, re-sellers certificate, etc.? I've sold stuff before, but I am going to need to wipe clean and open a new Ebay account under the trade name/DBA company name I plan to use, establish a checking account under that name and probably give myself some kind of cash deposit (which will HAVE to come from my personal funds, it seems...not sure how I should figure that one out) into the business checking account.
The previous 50 or so Ebay sales...Ebay/Paypal have records of what it sold for, but I have no receipts. The "Outright" program keeps track of it. I need to pay state taxes (for a few previous transactions...don't have a state ID to charge people in my state sales tax when I sell to them on Ebay currently). So I needed to charge sales tax but didn't really have a legal way to or a way to pay the state for it since I wasn't a business. But that still counts as income, whether I make a new username or start up a new home business or not. I want to get EVERYTHING on my taxes. Yet I still have some stuff purchased under my personal credit cards/debit card that was purchased online (so no real "receipt") on Ebay...but may be sold after getting my business license. That presents an interesting problem. Should I just say the other stuff under the other Ebay username was just personal stuff that I sold and count it as income when I do my taxes, paying tax on it? It seems like a freaking headache.
I certainly plan to keep meticulous records from now on under the new Ebay username, checking account, etc.. But when I buy something on Ebay to re-sell...they don't give a receipt. I'm not sure that a "printed" receipt is considered acceptable if I ever got an IRS audit and needed proof of purchase vs re-sell price.
- Yahzmin ♥♥ 4everLv 77 years agoFavorite Answer
As long as you can present SOME type of documentation, IRS should be satisfied. So for my business, I always print out my 'receipt' emails and hold on to them as verification of my costs.
My suggestion at this point would be this: since it is so close to the end of the year, hold off on "incorporating" your business until after January 1st. This way, you can claim anything you did THIS year as "hobby" income and just pay the taxes on it. Then you can start fresh next year with all the legal stuff in place without any worries.
- PhyllisLv 44 years ago
Check with your local health department, you'll most likely need to have the kitchen where you bake the goodies certified for health and safety. You'll need to get permission from the city to conduct business in the park. I do believe that you will need a business license if you plan to use city property.