It’s the most commonly asked legal question on eBay’s discussion boards for sellers, “I’ve been selling on eBay for a while, but I don’t know if I should treat it as a hobby or a business.” Sooner or later, every eBay seller has to make this fateful decision: Should I do this only occasionally for the fun of it, or should I consider making a part-time or full-time living doing this? Sometimes the decision is made for you, as when so many people are asking you to sell their stuff on eBay that before you know it you’ve made $50,000 or more in profits, and you almost have to treat it as a business.
Here are 20 signs that your eBay selling activities are getting a wee bit beyond the “hobby” stage.
No. 20: You’ve run out of things in your attic and basement to sell on eBay, but you’re continuing to sell stuff from … somewhere.
No. 19: After putting your garbage out by the curb on pickup day, you drive around the neighborhood to see if anybody is throwing away anything interesting.
No. 18: You’ve taken out classified ads in the local newspapers and have placed one-page “flyers” in all of your neighbors’ mailboxes offering to help other people clean out their attics and basements on eBay — for a fee, of course.
No. 17: You begin haunting local funeral parlors, such as Paul Newman in “The Verdict”, offering your eBay selling services to bereaved relatives who just can’t bear the thought of cleaning out Mom’s house.
No. 16: You’re personally acquainted with every estate, divorce and bankruptcy attorney in your community.
No. 15: A hedge fund wants to invest in what you’re doing, and website brokers such as feinternational.com and websitebrokers.com want to find buyers for your User ID.
No. 14: You consider building out the shed in your backyard or adding a third story to your center-hall colonial so you’ll have more room to store your inventory.
No. 13: You keep your Chihuahua chained to your eBay inventory at night so you can deduct him as a “guard dog”.
No. 12: The first things you read in your local online newspaper every morning are the liquidation and creditors’ notices in the “legal” section of the classified ads page.
No. 11: You carry rolls of one hundred dollar bills to garage sales, arriving just as the homeowners are putting out their stuff and offer to buy everything they have, sight unseen.
No. 10: You own the complete works of Rick Riley, Marsha Collier and Jim “Uncle Griff” Griffith, and you are a charter member of the “Thrifting with the Boys” Facebook group. (If you don’t know who these folks are, you probably aren’t quite “there” yet.)
No. 9: You’re on a first name basis with every employee of your town dump, the head of the local trucker’s union and every freight liquidator, customs broker and factory outlet within a 50-mile radius.
No. 8: You arrive at 6 a.m. for your local library’s annual book sale with 36 empty liquor boxes and three illegal immigrant “day laborers” to help you pack up your truck.
No. 7: You have so many student interns helping you create eBay auction pages the local community college has named a faculty chair after you.
No. 6: You know exactly where you can find motor vehicles that were “formerly owned by drug dealers”.
No. 5: You know which brands of perfume, housewares and other consumer goods are being discontinued by their manufacturers within the next six months — and which distributors are likely to have overstocks of these items.
No. 4: The talk show hosts on the eBay for Business podcast have your home phone number on speed-dial.
No. 3: The local kids can’t play basketball in the street anymore because they’re too busy dodging UPS trucks going to and from your home office.
No. 2: You’re setting up a charitable foundation to teach convicts in your state prison system how to use TurboLister, SellingManager Pro and Blackthorne Pro.
And last but not least …
No. 1: You make at least one penny in profit each year from your eBay selling activities.
When you start selling things on eBay, you have to take yourself seriously as a business. EBay will expect you to operate in a professional, businesslike manner, and to treat your buyers with respect. If even two buyers post “negative feedback” on the eBay site saying they didn’t have a good experience with you, you may well be kicked off the site.
Here are a couple of tips for getting started:
— Have your accountant obtain a federal tax identification number (EIN) for your eBay business;
— Register for state sales, use and other business taxes — your accountant can also do this for you, probably for free;
— If you plan to have lots of shipments each week, set up a “private mailbox” arrangement at your local UPS Store and use that instead of your home as your business address;
— Consider forming a corporation or limited liability company for your business — a local attorney can do this for you for a fee in the $500 to $1,000 range; and
— Set up an eBay Store so you can start “branding” your presence on eBay.
Cliff Ennico ([email protected]) is a syndicated columnist, author and former host of the PBS television series “Money Hunt.” This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.