Starting an Ebay Business

[Gusturd]

Originally Posted by hcv123

3) THE important question - are you looking to sell your collection or really start a business? Probably not worth starting a business with the sole purpose of selling your collection. You need to give some serious thought to this.

This is something else I've been pondering quite a bit lately. My goal here is to simply realize as much money for my collection as I legally can. But quitting the hobby cold turkey seems a little too extreme at this point (to me...not my wife. She's 100% ready for me to sell). I figure piecing it out, would be a gentler exit, allowing me to downsize and free up some of the money, while not quitting overnight.

We've always viewed this collection as a means to someday enjoy retirement, travel, etc...so I'd like to choose the route that benefits us and that goal the most.

[Aquarian Sports Cards]

Originally Posted by Gusturd

This is something else I've been pondering quite a bit lately. My goal here is to simply realize as much money for my collection as I legally can. But quitting the hobby cold turkey seems a little too extreme at this point (to me...not my wife. She's 100% ready for me to sell). I figure piecing it out, would be a gentler exit, allowing me to downsize and free up some of the money, while not quitting overnight.

We've always viewed this collection as a means to someday enjoy retirement, travel, etc...so I'd like to choose the route that benefits us and that goal the most.

Problem is you just said two different things as goals.

1. Do it gradually and enjoy the process.

2. Sell it as a means to raise money and enjoy retirement.

There's a time value to money. The same reason the lottery offers you more if you take your win over time applies here. Again to use your round numbers $100,000 today is worth a lot more than $10,000/year for 10 years.

[Gusturd]

Originally Posted by Aquarian Sports Cards

Problem is you just said two different things as goals.

1. Do it gradually and enjoy the process.

2. Sell it as a means to raise money and enjoy retirement.

There's a time value to money. The same reason the lottery offers you more if you take your win over time applies here. Again to use your round numbers $100,000 today is worth a lot more than $10,000/year for 10 years.

I see what you're saying and have considered that as well. I don't think either approach checks every box. I'm just trying to figure out which one checks the most.

I guess the unanswered question for me is, can you sell for 10 years making 10K per year without the IRS saying hey wait a minute...You're a business. I don't know if they're as concerned about that scenario. At the end of the day, isn't the hobbyist paying higher taxes than a business would (assuming equal sales)?

If that's the case and if the net result (ie net gain) of one over the other is relatively close, but one saves me a lot of additional record keeping, then I guess I'll have my answer.

[Aplyon86]

Originally Posted by Aquarian Sports Cards

Problem is you just said two different things as goals.

1. Do it gradually and enjoy the process.

2. Sell it as a means to raise money and enjoy retirement.

There's a time value to money. The same reason the lottery offers you more if you take your win over time applies here. Again to use your round numbers $100,000 today is worth a lot more than $10,000/year for 10 years.

Somewhat of an easy question to ask to help you decide. Do you think your collection will appreciate more or less than whatever portfolio allocation you'll put this into. As everyone has also said, even if your collection grows more, the taxes could be more, too, which could net to less.

Also consider how un-diversified your nest egg could potentially be by not selling if your collection makes up a material portion of your retirement. Nonethess, enjoy your retirement!!!

Sent from my SM-G991U using Tapatalk

[TobaccoKing4]

I think it would only really benefit you to become a business if you were going to continue to purchase cards with the intent to sell them so that you could write off the purchase price as a business expense and not wait until you sell the card to make this official tax wise. If you're just selling off cards that you already have I don't think it will benefit you much.

[RL]

do not try to avoid the IRS. they will catch you eventually

[Gusturd]

Originally Posted by RL

do not try to avoid the IRS. they will catch you eventually

Thanks for the sound advice, but at no point did I or anyone responding imply that was the intent. The goal here is to make sense of the options I have before me. I've been a collector most of my life. Now I'm just trying to figure out how you go about getting rid of it legally while maximizing the value of your collection. People always get squirrely when this topic is brought up. Makes it very hard find useful information.

[RL]

Originally Posted by Gusturd

Thanks for the sound advice, but at no point did I or anyone responding imply that was the intent. The goal here is to make sense of the options I have before me. I've been a collector most of my life. Now I'm just trying to figure out how you go about getting rid of it legally while maximizing the value of your collection. People always get squirrely when this topic is brought up. Makes it very hard find useful information.

No way I took it as you were trying to beat IRS. I do apologize that you may have taken it that way.

All payment processors issue a 1099k and report to IRS when certain thresholds are met. Some people mistakenly think if they did not get a 1099k they are exempt from claiming the income.

If you decide you want to be a business seller instead of a hobby seller, register as a sole-proprietor or a LLC, and you can use schedule C when you file your tax's. Lots of things you can write off. Hobby sellers can not file a schedule C.

Whatever way you go, good luck with your venture.

[Leon]

Originally Posted by Gusturd

Thanks for the sound advice, but at no point did I or anyone responding imply that was the intent. The goal here is to make sense of the options I have before me. I've been a collector most of my life. Now I'm just trying to figure out how you go about getting rid of it legally while maximizing the value of your collection. People always get squirrely when this topic is brought up. Makes it very hard find useful information.

When I sold my first collection 5 yrs ago, after collecting it for around 20 yrs, I had a cost basis for each card. I then gave that and the final tally sheet from the AH I consigned it to, to my CPA. He did the rest. It was easy.
.

[Gusturd]

Originally Posted by Leon

When I sold my first collection 5 yrs ago, after collecting it for around 20 yrs, I had a cost basis for each card. I then gave that and the final tally sheet from the AH I consigned it to, to my CPA. He did the rest. It was easy.
.

That does sound easy, but I believe the rules have changed within the last 3 years. Would your cost basis be the same today?

[chalupacollects]

If your state has the option, set up the business as an LLC. That way you can net out your expenses, profit and losses and your profit would be taxed as part of your regular income so your gains would be taxed at your normal 1040 rate. No capital gains to deal with... depends on your state though.

[birdman42]

Originally Posted by TobaccoKing4

...if you were going to continue to purchase cards with the intent to sell them so that you could write off the purchase price as a business expense and not wait until you sell the card to make this official tax wise.

That's not how it works. When you have a business, anything you buy goes into inventory. You only get to "write off" the cost of what you sell during the year.

Man, there's a lot of misinformation out there. I need to work up a business plan.

Bill

[BobC]

Originally Posted by birdman42

Man, there's a lot of misinformation out there. I need to work up a business plan.

Bill

You've got that right. It is downright scary what some people think they know, and then what they don't know.