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Member Workshop: Tax Structure for Your eBay Business - December 22nd
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Last Post Dec 22, 2005 11:05 AM by: deirdre@ebay.com
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deirdre@ebay.com
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Nov 30, 2005 12:17 PM
Topic: Member Workshop: Tax Structure for Your eBay Business - Part I

Host: DKennedyCPA
Date: Thursday 12/22
Time: 10:00 to 11:00 PST
Location: Workshop Board

Description: Ever wondered about the income tax and sales tax ramifications of your eBay sales? Then this is the workshop for you! Best-selling author and CPA Diane Kennedy will tell you what you need to do to keep good records, and provide tips on how to keep your taxes under control. This is the first of a series of five monthly workshops Diane will host regarding accounting and tax issues for eBay sellers.

Cheers,

Deirdre
eBay Community Development
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:06 AM
Hello. My name is Diane Kennedy. I’ve been a CPA and Tax Strategist for over 25 years. My specialty is working with small business owners and real estate investors. My tax education company, Tax Loopholes, teaches people through books like Tax Loopholes for eBay Sellers, tapes and seminars on how to take advantage of the legal tax loopholes available to everyone. First though, the stuff that our lawyers makes us say: Laws and practices vary from state to state and if tax, accounting, legal and other specific expert advise is required, the services of a professional should be obtained.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:07 AM
Let’s get started. What is a tax loophole? It’s a government incentive to promote public policy. Loopholes, in the way we’re going to talk about them, are legal and safe. There are two things that the government wants you to do: (1) Start a business and (2) Invest in real estate.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:07 AM
In our time here together, I’d love to show you how to take advantage of the legal incentives that the IRS provides for small business owners. These are the same things I show my clients that saves them $5,000, $10,000….even as much as $90,000 per year in taxes. It’s the very same principles, no matter how much money you have. You still save tax money, it just might be a little bit less.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:08 AM
As we go through this program, I’m sure you’ll have some great questions. I want to answer them. We’ll cover as many questions as we can in the time allowed.

Oh, one more thing, eBay has generously set aside time for me to present this tax-related session on a monthly basis through tax season. Mark your calendars!

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:09 AM
Tip #1: Make sure you’re running your business like a business. First of all, let’s cover “why.” If your business isn’t a business, then you don’t get to take advantage of a business loss that might occur. Now, let’s cover some definitions.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:09 AM
A BUSINESS LOSS can be a good thing. Let’s start there. You might be thinking, “Hey, I didn’t get involved in eBay to LOSE money.” And, you’d be absolutely right. A business loss, though, means your business income less all of the hidden business deductions you probably are already spending money on. The difference is that with a business you’ll be able to turn these after tax expenses into before tax expenses. More on that in Tip #2.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:09 AM
A BUSINESS RUN LIKE A BUSINESS means that you have a profit motive and follow the IRS’s nine guidelines. It doesn’t mean that you have to make money and pay tax after a certain period of time. For example, a commonly recited fact is that you must make money from a business venture 3 out of 5 years or 3 out of 7 years, depending on who you ask. This is a myth! You can have a business loss year after year. In fact, there are cases of business losses that go on for 20 years or more and are perfectly legal.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:10 AM
A BUSINESS RUN LIKE A BUSINESS means that you have the intention of making money. If you’re not making money now, you’re getting education, hiring experienced advisors, getting mentors or just in general doing something different that means you will have more money in the future.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:10 AM
If you don’t have a business that is run like a business, it’s called a hobby. You have to pay tax if you do make money, but if you lose money, you can’t take the deduction

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:10 AM
One of my favorite sayings for new clients at my CPA firm who ask how they can save money right away, is to clean out your garage. eBay tonight….less tax tomorrow! That’s because if you do it right, you have a business. And a business gives you the deductions to reduce your taxes. That leads us into the next step.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:11 AM
Tip #2: Look for all of your hidden business deductions. First of all, what is a business deduction? The IRS tells us in Code Section 162 that a business deduction is something that is ordinary and necessary to the production of income. No, you don’t need to memorize the code section. I just used it to prove how easy it is for an expense to qualify as a business deduction.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:11 AM
Now remember this isn’t a “get out of jail free” card. You must be able to prove why the expense is ordinary and necessary to the production of income if you’re ever questioned by the IRS. Also, you’ll need to be able to prove you paid the expense with good record-keeping including keeping copies of bank statements, cancelled checks (if you get them back from the bank), credit card statements and invoices or sales slips.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:11 AM
Now, let’s make it fun! Think about what you spend money on. In just a few minutes, I’ll ask you to tell me what you’d love to have as a legitimate deduction. First, the disclaimer. Not everything is going to be deductible. In Hawaii, a junk yard was able to get a write-off for their dog. Because, of course, every junk yard needs a dog. So some stuff will be deductible. I once did a seminar in Reno, NV where one of the participants wanted to figure out how he could write off his bed. I decided to NOT ask if it was ordinary and necessary to the production of income in his business…and instead just told him that it wasn’t a deduction. Is your expense going to be deductible? The answer accountants love is, “It depends!”

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: Tax Structure for Your eBay Business - December 22nd

Dec 22, 2005 8:11 AM
Let me get you started with what I call the Top Three Most Frequently Missed Deductions for eBay sellers. #1: Contributed items to your business. If you’ve got a legitimate business, chances are you’ve contributed things to your business to get it going. The fair market value of those items is deductible. Don’t forget the computer you might have bought with personal funds before you started, your cell phone, home office furniture, even office supplies. Figure out the current fair market value and have your new business write a check to pay you back (even if you have to loan money to the business to pay for it) You’ve now created an audit trail. It’s a deduction for your business.

Diane Kennedy, CPA
www.taxloopholes.com
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