Marketing On The Internet

Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I'm still confused if the IRS rules apply to me. Can you tell me more? -- Norman L.

A: Last week's column on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.

Several folks argued that just because their little eBay hobby generated a little cash, that didn't make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I've always been amused by folks who try to impress me with talk about their "little side business" but when the subject turns to taxes they suddenly refer to it as "my little hobby."

All kidding aside, the conclusion that I came to after reading each email was always the same: while you may think selling on eBay is just a fun pastime and the money you're making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you.

It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you're going to come to the dance you have to pay the fiddler.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay.

In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.

In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.

As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business.

These factors include: - Do you carry on the hobby in a business-like manner? - Do you spend considerable time working on the hobby? - Do you depend on income from your hobby for your livelihood?

If the answer to any or all of these question is yes, you're running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.

What's eBay's take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS.

Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.

Furthermore, under it's current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.

You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.

Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Here's to your success!

Tim Knox Entrepreneur, Author, Speaker, Radio Host Check Out Tim's New Radio Show! =>http://www.timknoxshow.com Preorder Tims New Book =>Everything I Know About Business I Learned From My Mama http://www.timknox.com/amazon/ Article Source: http://EzineArticles.com/?expert=Tim_Knox

There are some reviewers, literary critics, and traditional publishers who believe that self-publishing (SP), in all its varieties, is for the unprofessional and untalented author. Self-published authors have not faced any critical review of their work, and the companies that do self-publishing are motivated by money rather than the quality of the work! me There is definitely some truth to this but it applies equally to some of the traditional publishing houses. These houses have, over the last 10 years or so, maintained an unhealthy fixation on "Best Sellers" and on the "bottom line"--none of them have said they are not interested in making money. Many in the publishing industry are concerned about this trend and about the trend that the bigger houses have become too removed from the general writing population.

Clearly there are differences between self-publishers and the major publishing houses. The major houses have editors who edit the books. The major houses pay for the production costs, start to finish, for their authors. The major houses have good distribution systems and will heavily advertise books they feel will break through and beco "Best Sellers."

It is naive to think that authors taken on by the major houses are not paying for their books to be published. These authors do pay to get their work published--and pay and pay and pay. They receive royalties (as low as 10%) on actual book sales. The author also loses a great amount of control re copyright, editorial, graphic, and marketing decisions. The accounting practices of some major houses have left some authors waiting for months to be paid or to have recalculations and holdbacks on their advances. It is not until you become an important and saleable author that you can negotiate to make the traditional publishing houses deals more equitable.

After sorting through all the debate, there are some valid criticisms that can be directed at self-publishing authors and firms. Those valid points are: Unprofessional editing, formatting, and printing.

Who Should Self-Publish?

Authors who want to receive a higher financial reward and maintain control over their material; i.e., not signing away copyright to a publisher. Traditional publishers, as mentioned above, are notorious for paying low royalty fees and for slow payment.

An author who has written a book that will appeal to a very small but important audience. Traditional publishers have no interest in esoteric and overly specific books--the economics of their distribution and pricing system make them a non-sector from the start.

People who have specific expertise and offer consultations and/or seminars to their clients. Usually the volume of sales, in this case, would be too low for traditional publishers. It is an excellent way to reinforce your "expertise" and make additional money after the seminar.

Authors of books that deal with subjects or material considered too controversial for traditional publishers. Traditional publishers are litigation-shy and have a big stable of titles to defend. They don't want to jeopardize their stable for a book that is too close to the edge.

Authors who have talent and a good product but haven't been able to match up with a traditional publisher interested in new talent. Most publishers are mega-corporations and, like such beasts elsewhere, adopt formulas of success; i.e., "best-seller syndrome" and are very reluctant to try out an untested author.

Authors who want to avoid the bureaucratic and slow machinations of the large publishers.

Who Should Not Self-Publish?

Authors who firmly believe they have a book of wide appeal and great saleability. The backing of a large publishing house partnered with extensive distribution makes this a virtual no-brainer for the confident. The economics of self-publishing favors small production runs, reducing the availability and eventual profitability of a successful book.

Authors who are unable or unwilling to champion their own work. Believe it or not there are writers out there who would be afraid to ask their own friends, relatives, and colleagues to buy their books..

Authors with limited financial assets. The cost of self-publishing does not have to be high; it can be less than $500 if properly set up by the author. (The usual cost will be around $1500.) Some struggling authors would not have this cash:JK Rowling, who was on social assistance when she wrote the first Harry Potter book, is a good example.

A.G. Landels web site is at http://www.edit-pros.com Article Source: http://EzineArticles.com/?expert=Alex_Landels