EBay for Dummies (39 page)

Even though November 1, 2003, has passed, there’s still discussion about the law. Some people want to exempt online merchants if they bring in less than $25,000 per year. Others say no taxes should be imposed unless the merchant has sales of $5 million a year.

Something new is on the horizon: the
Streamlined Sales Tax Project
(SSTA). Although the name of this government project may make it sound like the states will be charging state sales tax on all e-commerce purchases, the reality isn’t that simple. The battle is ongoing — and though I don’t feel that eBay sellers with sales under $100,000 a year have much to fear, I still recommend that you do a Google search on the SSTA every once in a while to keep up-to-date.

As of this writing, the rules are up in the air. Please continue to check my Web site,
www.coolebaytools.com
, for news on the SSTA when it applies.

Rumor #2: Profits from garage sales are tax-exempt

“eBay is like a garage sale, and you don’t have to pay taxes on garage sales.” (Uh-huh. And the calories in ice cream don’t count if you eat it out of the carton. Who comes up with this stuff anyway?)

This notion is just an urban (or shall I say
suburban
) legend — somebody’s wishful thinking that’s become folklore. If you make money on a garage sale, you have to declare it as income — just like anything else you make money on. Most people never make any money on garage sales because they usually sell things for far less than they bought them for. However, the opposite is often true of an eBay transaction.

Even if you lose money, you may have to prove it to the government, especially if you’re running a small business. You most definitely should have a heart-to-heart talk with your accountant or tax professional as to how to file your taxes. If something might look bad in an audit if you
don’t
declare it, consider that a big hint.

To get the reliable word, I checked with the IRS’s e-commerce office. The good folks there told me that even if you make as little as a buck on any eBay sale after all your expenses (the cost of the item, eBay fees, shipping charges), you still have to declare it as income on your federal tax return.

If you have questions about eBay sales and your taxes, check with your personal accountant, call the IRS Help Line at 800-829-1040, or visit the IRS Web site at
www.irs.ustreas.gov
. And be friendly. (Just in case.)

State sales tax

If your state has sales tax, a
sales tax number
is required before you
officially
sell something. If sales tax applies, you may have to collect the appropriate sales tax for every sale that falls within the state that your business is in. A 1992 U.S. Supreme Court decision said that states can only require sellers that have a physical presence in the same state as the consumer to collect so-called use taxes.

To find the regulations for your state, visit one of the following sites, which supply links to every state’s tax board. The tax board should have the answers to your questions.

www.taxsites.com/agencies.html

www.aicpa.org/yellow/yptstax.htm

State income taxes

Yes, it’s true. Not only is Uncle Sam in Washington, D.C., looking for his slice of your eBay profits, but your state government may be hankering to join the feast.

If you have a good accountant, give that esteemed individual a call. If you don’t have one, find a tax professional in your area. Tax professionals actually do more than just process your income tax returns once a year; they can help you avoid major pitfalls even before April 15.

Here’s how to find out what your responsibilities are in your home state:

You may need to collect and pay state sales taxes, but only if you sell to someone in your state.

You can get tax information online at this Web site:

www.taxadmin.org/fta/rate/tax_stru.html

The site has links to tax information for all 50 states.

You can also call your state tax office and let the good folks there explain the requirements. The state tax office should be listed in the government section of your phone book.

Chapter 10

Time to Sell: Completing the Cyber Paperwork

In This Chapter

Getting ready to set up your listing

Choosing your item category

Writing your item description

Deciding on your options

Making changes after your auction has started

It’s time to make some money? Are you ready? Yes? (Call it an inspired guess.) You’re on the threshold of adding your items to the hundreds of thousands that go up for sale on eBay every day (and perhaps also shedding from your home some of the valuable things you haven’t touched in years). Some listings are so hot that the sellers quadruple their investments. Other items, unfortunately, are so stone cold that they may not even register a single bid.

In this chapter, I explain all the facets of the Sell an Item page — the page you fill out to get your auction going on eBay. You get some advice that can increase your odds of making money, and you find out the best way to position your item so buyers can see it and bid on it. I also show you how to modify, relist, or end your auction whenever you need to.

A caveat here:
To keep the marketplace vibrant, eBay’s programmers are constantly working to improve the site, and improvement means change. The listing form (as I describe in this chapter) can change from time to time, but the basic decisions you need to make will not. The selling philosophy laid out in this chapter should help you ride the waves of change on eBay — whatever they may be.

Getting Ready to List Your Item

After you decide what you want to sell, find out as much as you can about it and conduct a little market research. Then you should have a good idea of the item’s popularity and value. To get this info, check out Chapter 9.

Before you list your item, make sure that you have these bases covered:

The specific category under which you want the item listed:
Ask your friends or family where they’d look for such an item and remember the categories you saw most frequently when you conducted your market research with the eBay search function.

To find out which category will pay off best for your item, run a search and then check Completed Listings. See how many of this type of item are selling now (and if people are actually bidding on it). Scroll down to the left of the page and click the Show Only Completed Listings box. Then sort your results by highest prices first and look over the sales to see which categories they’re listed in. For more information on how to get ahead of the crowd through eBay’s search, visit Chapter 5.

What you want to say in your item description:
Jot down your ideas. Take a good look at your item and make a list of keywords that describe your item. Keywords are single descriptive words that can include the following (this is hardly a complete list):

• Brand name

• Size of the item (citing measurements if appropriate)

• Age or date of manufacture

• Condition

• Rarity

• Color

• Size

• Material

I know all about writer’s block. If you’re daunted by the Sell an Item page, struggle through it anyway. This way you’ve finished the hard work before you even begin.

Whether you want to attach a picture (or pictures) to your description via a Uniform Resource Locator (URL):
Pictures help sell items, but you don’t have to use them. (This information won’t be on the test, but if you want to know more about using pictures in your auctions, see Chapter 14.)

The price at which you think you can sell the item.
Be as realistic as you can. (That’s where your market research comes in.)

Examining the Sell an Item Page

The Sell an Item form is where your listing is born. Filling out your virtual paperwork requires a few minutes of clicking, typing, and answering all kinds of questions. The good news is that when you’re finished, your listing is up and running and (I hope) starting to earn you money.

Before you begin, you have to be a registered eBay user. If you still need to register, go to Chapter 2 and fill out the preliminary online paperwork. If you’ve registered but haven’t provided eBay with your financial information (credit card or checking account), you’ll be asked for this information to set up your seller account before you proceed. Fill in the data on the secure form. Then you’re ready to roll.

Just like the dizzying menu in a Chinese restaurant, you have four ways to sell an item on eBay. Four ways may not seem to be very dizzying, unless you’re trying to psychically decide which format is the best for you. Here’s what you need to know about each type:

Online auction:
This is the tried-and-true traditional sale format on eBay. This is what the newbies look for, and you can combine this with a Buy It Now for those who want the item immediately. Often, if you’re selling a collectible item, letting it go to auction may net you a much higher profit — remember to do your research before listing.

Fixed price:
Just like shopping at the corner store, a fixed-price sale is easy for the buyer to comprehend and complete. The only problem is that many potential buyers may lean toward an auction because of the perception that they
may
get a better deal.

A variation on a fixed-price listing is to add the
Make an offer
option. This enables buyers to think they can get a great deal — but you have the opportunity to accept the offer or make a counteroffer. Cultural leanings toward bargaining mean some buyers prefer this method. You may not. It can be fun and is just another way to spur sales in a slow retail environment.

Sell in your eBay store:
Chapter 11 covers eBay Stores — a convenient place to sell more items to your auctions or fixed-price sales.

Classified ad:
If you don’t want to put your property or other valuable item up for auction and you’d like to correspond with the prospective buyer, this is the option for you. Although this option originated with real estate, the ad format is available in many categories. The cost of your ad is $9.95 for a 30-day listing. If you’re interested in finding out which type of items you can sell with a classified ad, check out this URL:

pages.ebay.com/help/sell/adformatfees.html

Say, for example, that you want to list a good, old-fashioned eBay auction. You want to sell an item for a fixed price but are willing to let it go to auction.

To find eBay’s Sell an Item form from the eBay Home page, you can use either of these methods:

Click the Sell link on the navigation bar at the top of the page. eBay allows you to select your category and download the Sell an Item page in seconds.

Start your listing from your My eBay page. Just click the Sell Similar link (on the All Selling page) next to one of your existing items. Using the form that appears, you can change the item data.

When listing your item, here’s the info you’re asked to fill out (each of these items is discussed in detail later in this chapter):

Category:
The category where you’ve decided to list your item (required).

Title:
The name of your item (required).

Description:
What you want to tell eBay buyers about your item (required).

eBay Picture Services or Image URL:
The Web address of any pictures you want to add (optional). To add the URL of image on the Sell an Item form, you must click the Customize Form link at the top of the page and add the option to include a URL (versus using eBay picture services). Note that you get a free Preview picture at the top of your auction. Chapter 14 has more information on using images in your auction.

The Gallery:
By adding a picture, you can add your item’s picture to eBay’s photo Gallery (optional). There is no extra charge to add the item to the Gallery, but it will set you back $0.75 to have a Gallery image that gets larger when a user drags his or her mouse over it, and $19.95 to make your item a featured auction in the Gallery. (You can find more on the Gallery later in this chapter.)

Gallery image URL:
If you want to include a hosted image, you must include the Web address of the JPEG image you want to place in the Gallery (optional). (If you’re using eBay Picture Services, the first photo you upload is resized for the Gallery.) See Chapter 14.

Item location:
The region, city, and country from which the item will be shipped (required).

Quantity:
The number of items you’re offering in this auction is always one (required).

Starting price:
The starting price (sometimes called a
minimum bid
) you set (required).

Selling price:
If this is a fixed-price listing, you have to post your selling price.

Duration:
The number of days you want the auction to run (required).

Reserve price:
The hidden target price you set. This is the price that must be met before this item can be sold (optional). eBay charges you a fee for this feature.

Private auction:
You can keep the identity of all bidders secret with this option (optional). This type of auction is used only in special circumstances.

Buy It Now:
You can sell your item directly to the first buyer who meets this price (optional).

List item in two categories:
If you want to double your exposure, you can list your item in two categories. Note that double exposure equals double listing fees (optional).

Home page featured:
You can place your auction in a premium viewing section and have the possibility that your listing will cycle through the direct links from the front page (optional). eBay charges $59.95 for auction or fixed-price listings from 1 to 10 days and $179.95 extra for fixed-price items that stay on the site for 30 days.

Featured First:
You can have your auction appear at the top of the category in which you list it (optional). eBay charges $24.95 extra for this feature; $74.95 for listings that last 30 days.

Highlight:
Your item title is highlighted in the auction listings and search listings with a lilac-colored band, which may draw eBay members’ eyes right to your auction (optional). eBay charges $5.00 extra for this feature and $10.00 for the 30-day listings.

Boldface title:
A selling option to make your item listing stand out. eBay charges $2.00 ($4.00 for 30 days) extra for this feature (optional).

Free counter:
If you want to avail yourself of a free counter, indicate so here (optional).

Ship-to locations:
Here’s where you can indicate where you’re willing to ship an item. If you don’t want the hassle of shipping out of the United States, check that option only. You can individually select different countries as well (optional).

You may want to consider whether you
really
want to be in the international shipping business. Buyers pick up the tab, but you have to deal with customs forms and post office paperwork. If time is money, you may want to skip it entirely — or at least have all the forms filled out before you get in line at the post office. (Better yet, print your customs forms along with your postage from your computer — see Chapter 12). But remember that if you don’t ship internationally, you’re blocking a bunch of possible high bidders. Depending on what you’re selling, shipping internationally may or may not be worth the investment in extra time.