EBay for Dummies (38 page)

Always keep track of the exact amount. Here’s why (you’re gonna love this): An item that is sold for $37.89 will show a final value fee of $1.67 on the View Account Status page (and in other areas where final value fees are displayed), although the exact amount of the final value fee is $1.670275. For display purposes the additional digits are rounded to the closest cent on invoices and other pages. However, the
exact
amount ($1.670275) —
not the displayed amount
— is used to calculate the total amount due on your invoice. Therefore, if several items have been sold, multiple line items showing final account fees that have been rounded to the nearest cent will appear on invoices and other pages, and the correctly calculated total balance will appear to be off by one or a few cents. (In other words, eBay charges you those fractions of a cent.) Here’s where you can get further details:

http:// pages.ebay.com/help/sell/invoice.html

Because of the sliding percentages, the higher the final selling price, the lower the commission eBay charges. (I guess math can be a beautiful thing, when applied for my benefit.)

Optional fees

You don’t have to pay a license fee and destination charge, but setting up your auction can be like buying a car. eBay has all sorts of options to jazz up your auction. (Sorry, eBay is fresh out of two-tone metallic paint — but how about a nice pair of fuzzy dice for your mirror?) I explain how all these bells, whistles, and white sidewalls dress up your auction in Chapter 10.

As a hint of things to come, Table 9-5 lists the eBay listing options and what they’ll cost you.

eBay also charges an upgrade fee when you use the Buy-It-Now option on your listings. Table 9-6 shows how Buy-It-Now upgrade fees break down.

Keep current on your profits

When you’ve finished all the legwork needed to make some money, do some brain-work to keep track of your results. The best place to keep watch on your eBay sales is on your My eBay page, a great place to stay organized while you’re conducting all your eBay business. (I describe all the functions of the page in Chapter 4.) When it comes to calculating your bottom line, it’s best to get used to using a program like QuickBooks.

Here’s a checklist of what to watch out for after the auction closes:

Keep an eye on how much you’re spending to place items up for sale on eBay.
You don’t want any nasty surprises, and you don’t want to find out that you spent more money to set up your listing than you received selling your item.

If you decide to turn your eBay selling into a business, keep track of your expenses for your taxes.
(I explain Uncle Sam’s tax position on eBay next. Stay tuned.)

Make sure that you get refunds and credits when they’re due.

Double-check your figures to make certain eBay hasn’t made mistakes.
If you have any questions about the accounting, let eBay know.

Find an error or something that isn’t quite right with your account? Use the form at
pages.ebay.com/help/contact_us/_base/index_selection.html
to get your questions answered.

Uncle Sam Wants You — to Pay Your Taxes

What would a chapter about money be without a discussion of taxes? As Ben Franklin knew (and we’ve all found out since), you can’t escape death and taxes. (C’mon, it’s not a cliché; it’s traditional wisdom.) Whether in cyberspace or face-to-face life, never forget that Uncle Sam is always your business partner.

If you live outside the United States, check the tax laws in that country so you don’t end up with a headache down the road.

As with offline transactions, knowledge is power. The more you know about buying and selling on eBay before you actually start doing it, the more savvy the impression you make — and the more satisfying your experience.

For more details on taxes and bookkeeping, check out my book,
Starting an eBay Business For Dummies
(Wiley).

Two wild rumors about federal taxes

I’ve heard some rumors about not having to pay taxes on eBay profits. If you hear any variation on this theme, smile politely and don’t believe a word of it. I discuss two of the more popular (and seriously mistaken) tax notions running around the eBay community these days.

The U.S. government uses two laws on the books to go after eBay outlaws. One is the Federal Trade Commission (FTC) Act, which prohibits deceptive or misleading transactions in commerce. The other is the Mail or Telephone Order Merchandise Rule, which requires sellers to ship merchandise in a timely manner or offer to refund a consumer’s money. The FTC is in charge of pursuing these violations. If you have a question about federal laws, you can find a lot of information online. For example, I found these three Web sites that keep fairly current lists of U.S. law and federal codes:

www4.law.cornell

www.ftc.gov

www.fourmilab.ch/ustax/ustax.html

Rumor #1: E-commerce isn’t taxed

One story claims that “there will be no taxes on e-commerce sales (sales conducted online) for three years.” No one ever seems to know when those three years start or end.

Some people confuse state sales tax issues with income tax issues. You don’t pay Internet sales taxes, but that’s not the same as not reporting income from the Internet or selling within your home state.

Congress’s Internet Tax Freedom Act stated that until October 2001, Congress and state legislatures couldn’t institute
new
taxes on Internet transactions. President Bush signed a unanimously approved law that extended (through November 1, 2003) a ban on multiple and discriminatory Internet taxes and Internet-access taxes. (The moratorium did not apply to sales taxes or federal taxes.) The legislation also lengthened the “Sense of the Congress” resolution that there should be no federal taxes on Internet access or electronic commerce, and that the United States should work aggressively through the EU (European Union) and WTO (World Trade Organization) to keep electronic commerce free from tariffs and discriminatory taxes.