EBay is an online American company that sells or auctions goods and services to the cyber community. If you want to shop without leaving your house, then eBay is the place to be. You can buy clothes, cars, gizmos and the like. The best part is, you can also sell items and build your very own online store. It is truly a remarkable site. However, it does not exempt you from paying government taxes. To learn more about how to minimize eBay business taxes, here are some great and useful tips that you can easily consider.
- eBay home office deduction. Most eBay sellers conduct their business at home. The first step to easily minimize your eBay taxes is by applying "home office deduction." Since you do most of your work at your home, it is highly advisable that you make it as the primary location of your eBay store. This way, you can be able to subtract a portion of your house expenses on your tax return.
- Primary work place for eBay. In order for you to pass the first step with the IRS, it is very important that your home is where you do all your eBay work and transactions. There should be a separate place for your eBay store. If you have an extra room that is not attached to your house, the better. You can also meet your clients here on a regular basis. However, if you do not have an available, separate space, you can always use one of the rooms inside your house. You can divide a part of your living room and separate it by adding a partition. This is so it is clear to you and to everyone living with you that this is your work area. This will also separate all your personal stuff from your eBay things.
- Regularly and solely use it for eBay transactions. This means you need to spend your time at least 15 hours per week when doing eBay work and that your home office should only be used for eBay alone. The IRS is pretty much strict when it comes to this. It is highly recommended that you keep a documentation that tracks your time. This will make your work place exclusive for eBay transactions.
- Allowable home expenses deductions. As soon as you have successfully passed your eBay home office, you can now start calculating all permissible deductions. Since you are working at home, you can subtract home expenses. This includes insurance, real estate taxes, mortgage interest, utilities, security and repairs.
- The deduction amount. It is now time for you to deduct the proper percentage from your home expenses. Since you only use a part of the house, you calculate it by dividing the square footage of your office by the total square footage of your home. You will be surprised with the amount that you can save! At this stage, you have successfully minimized your eBay taxes.
Just follow these very effective steps to successfully lessen your eBay business taxes. If however you decide to hire a tax advisor, make sure it is someone that you can trust. Good luck!