| If you are selling products on eBay, you know it's a | | | | placing an order, you should collect sales tax. However, |
| powerful way to earn money and that many people | | | | if your purchaser is from Wyoming, you need not |
| have created successful businesses selling on eBay. | | | | collect Wyoming sales tax. That tax should be paid by |
| However, did you know that there is all kinds of tax | | | | your customer in the form of use tax on their own tax |
| information that every eBay seller should know? Sales | | | | return and is not your concern at all. |
| tax, income tax, self employment tax, all these things | | | | The next tax to consider is self employment tax. |
| are very important and need to be paid and | | | | Again, if you are just a casual seller, you needn't be |
| accounted for in your prices when you sell on eBay. | | | | concerned. However, if you are running a business |
| So let's take a look at some of these taxes and see | | | | where you sell goods all the time on eBay, you will |
| what you should be doing with them. | | | | need to pay this tax. In essence, when you work for a |
| Sales tax: Whenever you walk into a store and | | | | company, a portion of your money comes out of your |
| purchase something, the price does not include local | | | | check for social security taxes. Your employer then |
| sales tax. This can be range from 10.75% (parts of | | | | pays an equal amount to the government on your |
| California) to nothing at all in several states, such as | | | | behalf. When you work for yourself, you are required |
| Alaska which have no sales tax whatsoever. While | | | | to pay the full amount of the social security taxes, |
| technically, all sellers, even those selling things at a | | | | totaling around 15%. |
| garage sale, must collect and pay sales tax to the | | | | Speaking of working, here's another bit of tax |
| local authorities, the practical reality is that if you're just | | | | information that every eBay seller should know: |
| selling a handful of items on your eBay site, you won't | | | | income tax is required to be paid on all income earned. |
| have to collect and pay sales tax. Not only that, but | | | | Technically, this even applies to casual sellers of nick |
| you probably wouldn't be able to since it can't simply | | | | nacks from around the house. However, there is an |
| be added on to your tax return at the end of year. | | | | important loophole. You only pay taxes on the profit |
| Instead, you will need to register with your city and or | | | | you made, so if you are a casual seller, you may be |
| state as a business which collects the taxes and then | | | | exempt simply because you are likely selling something |
| deposit them with your local government once per | | | | for less than what you paid for it and therefore losing |
| quarter (i.e. every 3 months). | | | | money. However, you should keep documentation |
| One final note about sales tax: You are only required | | | | available on what something cost and what you |
| to collect sales tax in your home state. In other words, | | | | earned just in the unlikely event of an audit. |
| if you live in Ohio and someone from Cleveland is | | | | |