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Getting Started
The information provided in this article is geared toward those who want to use online auctions to generate a consistent second income, and possibly even a full time income. If you are interested in online auctions as a hobby to sell some extra items around the house or to make a little extra here and there, we encourage you to skip the information provided in this forum, jump right in and start selling. All the auction sites have online tutorials and hints that can get you started right away which should be plenty to help you accomplish your goals. The information in this area will focus on the issues that will help you turn online auctions into an actual income earning business.
This article will also focus primarily on eBay since it is by far the largest of the online auction houses. Most of the information, however, can be utilized with virtually any of the other online auction sites if you choose.
Let's assume you are here reading this because you want to make a little (or a lot of) extra money on the side and you have heard that online auctions are the place to do it. There is certainly an opportunity to make a decent second income and even build it into a full time income if you choose, but it won't be as easy as all those "earn a 6 figure income on eBay" book advertisements make it out to be. In order to make a decent amount of money, it will take the same amount of work and dedication that would be required to make a success of any business venture.
Although you may be revving to go, if you start your auction business before doing the proper foundation groundwork, you will likely waste hundreds, if not thousands, of dollars by doing so. If you are serious about making this an income generating source, then you need to take the time to get your business properly set up. This is critically important because even before you make a single dime selling items by auction, you can immediately save hundreds of dollars on your taxes. A thorough reading of the SavingAdvice.com article Starting Your Own Business will show you exactly what you need to do and how you will gain these savings.
In addition to the general percentage deductions that you will be able to claim against your home utilities and mortgage, you will also be entitled to deduct anything related to your new business. Rushing off to sell before your have considered all of the possible deductions will result in you losing money since each deduction you forget to account for and properly document will be lost when it could have lowered your taxes. Even if you don't make any money right away from the auction business, these deductions can still be applied toward your taxes assuming that your household has another source of income that is taxable.
For example, you will want to prepare a mileage log for your car. Why? Because anytime you are looking for items to sell, whether you're driving around to garage sales or to your favorite shops to search their discount corners, the mileage you drive can be deducted as an expense. The truly frugal can plan their buying trips around their daily need trips thereby making most of their car operating costs deductible. For example, if you drive to a Good Will shop to search for items to sell as the main purpose for your trip and the grocery store happens to be next door, that trip is still deductible as business mileage. Assuming that your car will not be used full time for your new Internet auction business, you will need to keep careful records of when and how far you drive specifically for your online auction business to be able to deduct this expense.
Of course, the cost of the items you want to sell will be deductible as an expense. Some other items that may be partially or fully deductible are the cost of your computer, printer, digital camera, scanner, software, computer hardware, office supplies, packing material, postage, Internet fees, phone, auction fees, banking fees, newspapers, periodicals, membership fees, books, courses, etc. This is just a small sampling. Sitting down and going through exactly what you need and the services you will be using to run this new business will give you plenty more opportunities to apply deductions towards your earnings or another household member's earnings.
Copyright Jeffrey Strain and SavingAdvice.com 2003 - 2004, All Rights Reserved. If you find anything inaccurate in this article, please email us. Also be sure to read our disclaimer.
The information provided in this article is geared toward those who want to use online auctions to generate a consistent second income, and possibly even a full time income. If you are interested in online auctions as a hobby to sell some extra items around the house or to make a little extra here and there, we encourage you to skip the information provided in this forum, jump right in and start selling. All the auction sites have online tutorials and hints that can get you started right away which should be plenty to help you accomplish your goals. The information in this area will focus on the issues that will help you turn online auctions into an actual income earning business.
This article will also focus primarily on eBay since it is by far the largest of the online auction houses. Most of the information, however, can be utilized with virtually any of the other online auction sites if you choose.
Let's assume you are here reading this because you want to make a little (or a lot of) extra money on the side and you have heard that online auctions are the place to do it. There is certainly an opportunity to make a decent second income and even build it into a full time income if you choose, but it won't be as easy as all those "earn a 6 figure income on eBay" book advertisements make it out to be. In order to make a decent amount of money, it will take the same amount of work and dedication that would be required to make a success of any business venture.
Although you may be revving to go, if you start your auction business before doing the proper foundation groundwork, you will likely waste hundreds, if not thousands, of dollars by doing so. If you are serious about making this an income generating source, then you need to take the time to get your business properly set up. This is critically important because even before you make a single dime selling items by auction, you can immediately save hundreds of dollars on your taxes. A thorough reading of the SavingAdvice.com article Starting Your Own Business will show you exactly what you need to do and how you will gain these savings.
In addition to the general percentage deductions that you will be able to claim against your home utilities and mortgage, you will also be entitled to deduct anything related to your new business. Rushing off to sell before your have considered all of the possible deductions will result in you losing money since each deduction you forget to account for and properly document will be lost when it could have lowered your taxes. Even if you don't make any money right away from the auction business, these deductions can still be applied toward your taxes assuming that your household has another source of income that is taxable.
For example, you will want to prepare a mileage log for your car. Why? Because anytime you are looking for items to sell, whether you're driving around to garage sales or to your favorite shops to search their discount corners, the mileage you drive can be deducted as an expense. The truly frugal can plan their buying trips around their daily need trips thereby making most of their car operating costs deductible. For example, if you drive to a Good Will shop to search for items to sell as the main purpose for your trip and the grocery store happens to be next door, that trip is still deductible as business mileage. Assuming that your car will not be used full time for your new Internet auction business, you will need to keep careful records of when and how far you drive specifically for your online auction business to be able to deduct this expense.
Of course, the cost of the items you want to sell will be deductible as an expense. Some other items that may be partially or fully deductible are the cost of your computer, printer, digital camera, scanner, software, computer hardware, office supplies, packing material, postage, Internet fees, phone, auction fees, banking fees, newspapers, periodicals, membership fees, books, courses, etc. This is just a small sampling. Sitting down and going through exactly what you need and the services you will be using to run this new business will give you plenty more opportunities to apply deductions towards your earnings or another household member's earnings.
Copyright Jeffrey Strain and SavingAdvice.com 2003 - 2004, All Rights Reserved. If you find anything inaccurate in this article, please email us. Also be sure to read our disclaimer.