Why You Should Consult With Professionals Before Seriously Selling on eBay

October 23, 2007

Once you have decided you really do want to have a go at starting to sell on eBay as a business, you will need to talk to the professionals. You will need to find a trustworthy lawyer and accountant to discuss what the best business structure is that you want to operate under, and the tax ramifications of each option.

We will not go into detail here about the various business structures that are available for you to choose from, as we will leave this up to the pros. We will say it is best to pick one which will offer you the most separation, and thus protection, between your own person and the company. Your lawyer will be able to explain this better.

DISCLAIMER: We are not lawyers, Certified Public Accountants (CPAs), business development experts, or any other professional entity whose sole mission in life is to give legal, expert advice about starting and maintaining a business. Because of this, we strongly recommend you consult with an attorney, a CPA and any other professional you can get your hands on before you start your business. Trust us; it is much easier if you talk to the pros BEFORE you start than to have these conversations months down the road. Save yourself the grief and do it right from the start!

If you feel you can form your business entity on your own, without the assistance of a lawyer, then we suggest you use a service such as LegalZoom. LegalZoom is a legal documentation service which allows you to take care of common legal procedures to form your business entity, such as forming a corporation or limited liability company (LLC). It is a site we have used in the past and is one we can recommend. Check them out by clicking here.

You will need to obtain the services of an accountant. There is no way around this. If you try to go it alone when it comes to tax and accounting matters, you are in for a rude shock. Save yourself the heartache and stress by consulting with an accountant BEFORE you start your business. We cannot emphasize this enough. You will thank us later for this bit of advice. Form a relationship with your accountant because they will be an invaluable source of information throughout the course of owning, and operating, your business.

After you have made that decision to plunge headfirst into selling on eBay, we truly feel that your first step should be to set up your business the correct way. And we feel that the only way to do this is to consult with professionals who are there to steer you in the correct direction. Take it from us – it is much easier to do it up front than to do it down the road.

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2 Comments

Comment by whydowork
2007-10-24 12:12:07

Does PayPal co-operate with local governments on reporting income?

I’ve always felt like its sort of a black hole.

Personally I’ve always seen Paypal as “funny money” since the paper trail for where the money came from for a specific transaction can be quite long.

Comment by Lizard Wisdom
2007-10-24 12:44:13

That is a very good question regarding whether or not PayPal reports income to taxing authorities. As far as we know, they do not do it voluntarily. It is our understanding that eBay, and we assume PayPal, will only give up this kind of information under court order.

If our memory serves us correctly, eBay Australia (and Canada?) recently announced that they are turning sales records over to the Australian government. It just goes to show that the potential is always there to have your eBay, and potentially also PayPal, dealings exposed to the government.

This is one of the many reasons that we suggest you take your selling on eBay very seriously and treat it like the business it deserves to be.

 
 

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