To point #1 for the most part yes, that's great that you have that. The lawyer/accountant/tax pro can advise you on valuation. Generally cost basis is what you go with. You may also be able to aggregate the inventory as a whole into your new business and not have to deal on a one off basis for each item. Depends on if your inventory is high $$$ or not, or a mix.
2) You will have social security tax on an net income. The amount is 15.3% I believe, but it's not based on 100% of the income and I think is around 92% of the net income and capped at around $145K income. But about half of SSI tax comes back as a credit elsewhere on your tax return so what that is worth depends on your tax bracket.
To both points it will pay to learn some accounting tricks for the sole proprietor. Bottom line is take every legal deduction and tax credit to which you are entitled and always keep good records!
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Originally Posted by Gusturd
Thanks for this. I will definitely engage a professional before starting. A couple things I was wondering:
1) I have kept a spreadsheet for about the past 10 years of what i've spent on most of my significant purchases. Can I use that to inventory my collection? I have virtually no receipts except for maybe old invoices for items won from auction houses. For items not on the spreadsheet, can I estimate what I paid?
2) If I only sell on ebay, do I have to pay self employment tax? That seems to be another sizable chunk out of the pie and makes me wonder what's left for me.
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