For years, people have migrated from the Saturday morning garage sales and newspaper classifieds to the world of online selling. Sites like eBay, Amazon, and Craigslist have made it easier for individuals to sell products. In fact, many people have made this their main source of income. Although it may seem like an incredibly simple and inconsequential way of making money, the world of online selling gets a bit murky when it comes to taxes. If you’re unsure about what goes into taxes when it comes to online selling, Song & Co CPAs can help. As an incredibly experienced CPA firm, we’ve been at the forefront of all the changes that our clients and the world at large face. Below, we’ve outlined a few important tips to keep in mind when it comes to taxes and online sales.

For the sake of this post, we will focus on the most popular online personal selling site. You can sell anything from an old VHS copy of We’re Back or vintage leather jackets to used car or boats online. In fact, most people use this site to sell random knickknacks intermittently throughout the year or when they require money. eBay and Amazon can be seen as an online garage sale and income made from garage sales doesn’t need to be reported to the IRS so the same rules tend to apply to online sales. Other sellers make their living selling online. If you run a business through eBay and Amazon, then you’ll be required to report the income to the IRS. This is because not every sale on eBay is subject to income tax, although most sales are.

People only tend to have garage sales once per year or when they move from one home to another. This same logic can be used for most online sales. If, however, your online shop can be considered a business or hobby, you’ll be required to report any expenses on your tax return. If you consider your online shop to be a business, you’ll be able to use any losses as a deduction to reduce your other business income. It may sound confusing but that’s where our CPA firm comes into play. With the help of Song & Co CPAs, you’ll be able to continue building your online empire without worrying about tax issues. Give us a call today to learn more about how we can help!

In addition to our core tax services, we offer the following for wholesalers and distributors:

  • Accounting systems design and implementation
  • Break-even analysis and profit maximization
  • Business plan development
  • Cash flow management
  • Evaluation of transportation modes
  • Financial forecasts and projections
  • Lease/buy considerations
  • LIFO inventory valuations
  • Overhead containment