E Bay Tax And Legal Issues 5 Things Ebay Sellers Need To Know

If you​ sell on​ eBay,​ it’s imperative that you​ keep up with the​ laws and guidelines that affect your online business. According to​ E-Biz attorney Cliff Ennico (http://CliffEnnico.com),​ author of​ the​ eBay Seller’s Tax and Legal Answer Book,​ staying informed and up-to-date on​ your legal responsibilities as​ an​ eBay seller can spare you​ many unnecessary problems. the​ following are a​ few of​ the​ most common issues that new eBayers often mishandle:

• EBay income taxes. Many sellers regard eBay as​ a​ hobby,​ but there are considerable advantages to​ treating your online selling as​ a​ business and filing a​ Schedule C. it​ qualifies you​ to​ take all the​ tax deductions to​ which self-employed people are entitled. And even if​ you​ lose money on​ eBay,​ you’re able to​ apply that business loss against other income,​ such as​ your day job. Advises Ennico,​ “When in​ doubt,​ file Schedule C.”

Unlike most nine to​ five jobs,​ when you​ sell online,​ you’re responsible for withholding your own taxes. That means you​ need to​ get used to​ living on​ about two-thirds of​ your gross income and setting the​ rest aside. When you​ start receiving checks and PayPal payments,​ don’t just run out and spend it​ all – start escrowing money for taxes.

• Listing discrepancies. you​ may not realize it,​ but your posted item descriptions are legally binding warranties. Your item must thoroughly conform to​ your posted description,​ or​ your winning bidder has every legal right to​ return it.

• Posting Terms and Conditions. Many eBay sellers go to​ one extreme or​ the​ other here. Some sellers scare away potential bidders by including page after page of​ Terms and Conditions. But maintaining terms that only a​ lawyer could wade through gives the​ impression that you’re hiding something in​ the​ fine print.

Other sellers make the​ mistake of​ not having a​ Terms and Conditions section at​ all. However,​ it’s important to​ clearly explain your policies and procedures. you​ need to​ tell your buyers – in​ plain English – what you​ will and will not be doing,​ and what they should expect from you.

• Drop shipping. if​ you’re having the​ items you​ sell on​ eBay drop shipped,​ you​ have no control over inventory. you​ want to​ avoid getting into a​ situation where your auctions close and you​ can’t deliver the​ items because your drop shipper has run out. That’s why you​ need to​ be in​ regular communication with your drop ship supplier. you​ always want to​ know where their inventory levels stand,​ especially for your most popular sellers. you​ can also state on​ eBay that items are “subject to​ availability”.

• Illegal selling practices. Few sellers understand the​ seriousness of​ shill bidding,​ and far too many engage in​ it. Having friends drive your bid prices up,​ when they have no intention of​ actually purchasing the​ items if​ they win,​ is​ considered a​ form of​ consumer fraud. While shill bidding can be hard to​ spot,​ eBay employs both software and employees to​ search for suspicious patterns. “Never collaborate with someone to​ artificially inflate your auction prices,​” cautions Ennico. “If eBay catches you,​ they’ll not only kick you​ off their site,​ but they’ll report you​ to​ your state attorney general for prosecution.”

EBay can be an​ exciting and lucrative venture,​ but it’s important to​ remember that the​ law still applies there. Complying isn’t difficult – it’s just a​ matter of​ being aware. Knowing how to​ deal with these issues puts you​ in​ a​ very safe position,​ so you​ can focus on​ what you​ do best – selling profitably on​ eBay.

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