Monday, October 4, 2010

eBay and Home Business Tax Deductions

(Disclaimer - I am not an accountant, financial adviser, nor do I have expertise in advising on tax issues. This is just general information to point you in the right direction.)

I see this question a lot, "What kinds of expenses can I deduct on my taxes if I have a home eBay business?" According to my accountant, here is the answer:

Rule of thumb – if it is related to your business, keep track of it. You can probably write it off. Start gathering and tracking this information NOW before the holiday selling season starts. You are going to be busy with holiday selling, your own family holiday, and everything that happens in the 4th quarter. Don't wait until January to start scrambling. Here is a list of the types of expenses you should track.

Business license fee
Cell phone, internet usage
eBay fees (can be pulled from eBay sales reports)
Membership fees (auction templates, eBay groups,, Terapeak, Skype, etc.)
Paypal fees (can be pulled from eBay sales reports)
Professional fees (accountant, attorney, consultant, web design, etc.)

Office Supplies
Digital camera batteries
Printer ink
Shipping supplies (bubble wrap, boxes, tape)

Book Scanner / cell phone app for pricing
Digital Camera
Furniture (storage shelving or tubs, desk chair, etc.)
Postage scale

Computer Related
Computer repair
Hardware (mouse, flash drives)

eBay classes
eBooks, books, audiobooks, instructional mp3 downloads, online courses

Use of Home Office
The IRS allows you to write off a percentage of expenses for your home based on the sq footage your office space occupies. If you have a 2,000 sq foot home, and your office space takes up 200sq ft, you can write off 10% of your utilities, home repair, mortgage, etc. Keep track of:

Home repairs
Utility bills

If you do not have an accountant and are doing this yourself, check these helpful resources:

You may also want to consider operating as a DBA (Doing Business As) entity.Check Legal Zoom for the advantages of becoming a DBA.

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