Member Workshop: When Does Your eBay Hobby Become a Business? - July 28 in Community Help Boards in Community

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Last Post Jul 28, 2008 11:01 AM by: deirdre@ebay.com

Replies: 102

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jun 29, 2008 11:14 PM

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Topic: Member Workshop: When Does Your eBay Hobby Become a Business?

Host: dkennedycpa
Date: Monday 07/28
Time: 10:00 a.m. to 11:00 a.m. Pacific time
Location: Workshop Board

Description: When do you have to report the money you make from a few eBay sales? Does eBay report the sales? These are some of the frequently asked questions we get again and again. Please join best selling-author and CPA Diane Kennedy to learn how to turn those sales into a real business that means you pay less tax – not more.

Cheers,

Deirdre
eBay Community Development

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Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:46 AM

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I read this workshop information yesterday, and it was full of so many things I needed to know. So thank you for that. When I did taxes for H and R Block for a year they told us in class that as a "hobby business" if you didn't make a profit for the first 3 years in a row, it wasn't considered a business. The information you give here counteracts that. have the laws changed in the last few years? Or is it just because being an LLC gives more protection and other tax "breaks" that you recommend we go that route?

I doubt that the cost of goods sold, fees, etc will ever come out to much profit if any for the overall year. Yes, I might do well on one or two things, but overall it will almost always come at a loss.

Sincerely,
Edith

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:46 AM

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Thanks Deirdre and Diane, for the workshop link, will definitely read that information.

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:47 AM

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RE: Post #88

So, for setting up an LCC when doing taxes can I still use my own tax software (i.e TurboTax) for filing IRS, or would I have to get a CPA to start doing my taxes?

TurboTax has different versions of its software. You'd need to make sure you have the version that allows you to do business entities. My suggestion is to get a CPA, though. The problem is that might not know what you don't know and miss out on a lot tax breaks.

Diane Kennedy, CPA
www.taxloopholes.com

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:48 AM

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Thanks Edith,

When I did taxes for H and R Block for a year they told us in class that as a "hobby business" if you didn't make a profit for the first 3 years in a row, it wasn't considered a business.

That was what I was wondering about also?

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:51 AM

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RE: Post #90

I read this workshop information yesterday, and it was full of so many things I needed to know. So thank you for that. When I did taxes for H and R Block for a year they told us in class that as a "hobby business" if you didn't make a profit for the first 3 years in a row, it wasn't considered a business. The information you give here counteracts that. have the laws changed in the last few years? Or is it just because being an LLC gives more protection and other tax "breaks" that you recommend we go that route?

I think that might have been an H & R Block internal policy. There are 9 factors that the IRS looks at in determining whether you have a hobby or a business. It's a moot point if the business/hobby has income. It's only applicable if there is a loss. So, perhaps that was the reason to make the only issue whether there is a profit.

Diane Kennedy, CPA
www.taxloopholes.com

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:53 AM

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I am casually selling on eBay now. Do I need to be charging sales tax to my buyers and if I were to become a business, would I need to then charge sales tax?

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:53 AM

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The way it was put to us in class wasn't as if it was an Internal policy. It was more of if they don't have positive income from the "hobby business" you don't have to claim a business on your taxes.

Let me see if I have this right now ...
So if you have a loss each year, and you aren't looking to take advantage of any "tax breaks" that it might have on your other income ... you don't have to claim the loss and can consider it a hobby business?

Edith

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:56 AM

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Also ... I sell things for other people at times. The buyers pay me through Paypal. Yet that is not my income. That income belongs to the person I sold for. It would seem that this new legislation you mentioned would report to the IRS that I had so many transactions with so much income, yet the income isn't mine. Any idea on what I'd have to do there?

Edith

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:56 AM

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Re Post 95

I am casually selling on eBay now. Do I need to be charging sales tax to my buyers and if I were to become a business, would I need to then charge sales tax?

The requirement to charge sales tax is not based on whether or not you operate a business. It's based on whether or not you sell goods to someone in your home state. If you do, you are required to collect sales tax from that purchaser and remit that sales tax to your local tax bureau.

The eBay moderator is going to post a link to a workshop done last year all about sales and use taxes - take a look through - it's got a lot of great information on this topic!

Diane Kennedy, CPA
www.taxloopholes.com

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:56 AM

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RE: Post 96

It was more of if they don't have positive income from the "hobby business" you don't have to claim a business on your taxes.

If you have a hobby, you don't get the deduction from the business. That's absolutely correct. However, many businesses have long years of losses in the beginning and so it's important that they get to take advantage of those carryforward losses for when they start taking income.

Best example is Amazon - they had 8 years of losses before they turned a profit. If they hadn't filed a return and instead tried to claim they were a hobby, that clearly wouldn't have worked.

Diane Kennedy, CPA
www.taxloopholes.com

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:57 AM

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Here's the workshop/link:

Member Workshop: 10 Steps to a Well-Structured, Well-Protected Business on eBay - Sept 20

Link

Thanks,

Deirdre
eBay Community Development

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 10:57 AM

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Thank you all for coming today. It's your participation that makes these workshops, well, work!

Here are the winners who will be receiving a copy of my e-product, 100 Loopholes in 100 Minutes. To get your copy, please email carolyn@taxloopholes.com, with the words "eBay Winner" in the subject line and let her have your "real" name and email address.

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Are you a Member of the Tax Loopholes for eBaySellers Reader's Club? If you aren’t, why not join today? It's free - simply sign up at our web site, Link. We don't share or sell names, so you don't have to worry about receiving any additional spam if you sign up. And you'll have access to extra materials and information, as well as the rest of the TaxLoopholes web site. This month we’ve got a special bonus special report you can download that goes into more detail on how your home can save you money. It’s called Ten Tax Loopholes to Get More From Your Business and it’s yours, absolutely FREE, when you join the Reader’s Club!

Diane Kennedy, CPA
www.taxloopholes.com

Member Workshop: When Does Your eBay Hobby Become a Business? - July 28

Jul 28, 2008 11:01 AM

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Great questions! Thank you for participating in today's workshop (nice seeing new faces and the 'regulars').

This concludes the "When Does Your eBay Hobby Become a Business?" workshop. Be sure to check the Workshop Calendar for upcoming workshops.

Thanks everyone for stopping by. We hope to see you again!!!!

Deirdre
eBay Community Development

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