ein, business questions

I am official. I now have a ein in the eyes of the irs. I did it under sole proprietor Did this for selling on ebay as Im going over the 20k tax free cap.



Question is, how the heck do I write off purchases of inventory? Ok say I buy part a 50 bucks, then resell.. Obviously no receipt I bought part a since it was cash, so how do I show this to the irs as expenses.

I been keeping a handwritten log and well over 1500 in 3 weeks in inventory. I need to be able to write this off obviously.

What else can I write off? Gas, business lunches, shipping supplies, helper labor for teardown???

I dont have a business license as it is only online sales, although essentially im a pawn shop for broken stuff. Do I need one?

And third and final, I'm not collecting sales tax. Do I need to?

Wow, a lot of questions.

First, I'm going to tell you to find your local Small Business Association office, and get all the info you need there. There are volunteers that will help you for free.

Secondly, you need to start writing your own receipts. Get a pad you can fill out with details of where/what/who is purchased, and have the seller sign it.

You can write off a lot of things. Not going to go into it all, but keep a mileage log that you use for business trips. Date, beginning mileage, ending mileage, and destination/purpose. If you get your car serviced anywhere and they have the mileage on the receipt, keep that copy in your log book as well for proof of mileage on the car.

You'll have to look into collecting sales tax for your state.

HTH

Also business license is a good idea.
Not sure what your state would catorgize it as, but for me it is vendor.

Yes, forgot about that. In my city, a Home Occupation Permit is available that you get before you apply for a business license...that's if you're working out of your home.

Originally Posted by ozzy214

Did this for selling on ebay as Im going over the 20k tax free cap.

There is no Tax Free Cap >> IRS expects you to claim all income
PayPal helps you with that by providing a 1099 if over 20K

Get yourself a good accountant.

All "legit" business expenses can be deducted and should be. There needs to be a recognized "paper trail", so get receipts for all expenses especially the cash ones. You need to be as focused on documenting cost as much as, if not more than profits. Profits are grater when you capture, document and control all expenses. Don't get caught up on "write offs", focus on controlling and documenting "real" cost.

I would recommenced that you talk to someone you know and trust that has a small business that has been profitable for the last five years. This person if willing can be a great "mentor" and help with much more as you grow. A good business accountant is the best money spent, for a small business and should become part of your "team".