Your Partner the Tax Preparer
Ideally, you want an accountant, not an Internal Revenue Service agent, to prepare your taxes. An accountant or, at the very least, good accounting software, should be a key player in your online auction business. If you get at least some basic training in accounting, from a class or some books, you may be able to use accounting software to help keep track of receipts, invoices, shipments, and virtually all expenses of running an auction business, including the dreaded quarterly tax payments.
Even if you do your own books, however, you will likely need assistance from an independent accountant, the Internal Revenue Service, and possibly a tax attorney. They can help you cope with such matters as self-employment taxes, state business taxes, deductible versus nondeductible mileage, projected income and expenses, and the best ways to pay yourself from your business income.
If you track your sales income, expenses, and other details on the same software package your accountant uses, you can often save time and money when she reviews and corrects your books and clarifies your tax options. Keeping your own books will also keep you more aware of where your money goes.
Take it from those who have had painful experiences with casual — okay, sloppy — bookkeeping during their early years in the auction business. When your self-employment business has a good year, you can end up owing the IRS hundreds, even thousands, of dollars in income taxes and Social Security self-employment taxes. If you have failed to make adequate quarterly payments toward your estimated taxes for the year, you can spend the week before April 15 trying every desperate measure to raise cash. That can include, unfortunately, listing some of your own household belongings and treasures for auction. Take the time to keep good books, and this will not happen.
Developing a business mindset is not difficult, but the process does require a willingness to learn new things and techniques. It can involve staying in touch with the general economy and new trends in the online auction industry. It can also require closely tracking expenses, while cheerfully serving the needs of bidders.
The bidders at your auctions will want, and deserve, quality merchandise at attractive prices. They will want, and deserve, quick, well-protected shipping. And, they will want, and deserve, to know that a caring human is at the other end of the transaction. With the right drive and approach to the online auction business, you can develop a comfortable lifestyle for you and your family. But never lose sight of the needs of your bidders, as well. Treat them as you would like others to treat you.
