Selling on Whatnot is so much fun and profitable!
The year has gone by so quick and tax season is around the corner. Before you know it, you will find yourself scratching your head thinking… how do I report my income and expenses? Did I keep the Goodwill receipts? If so, where?
I personally know the thrill of a good find at the Goodwill bins or at a local yard sale. Then feeling another adrenaline rush when I sell it for 500% more than what I paid for it. The rush and excitement fades until the sober reality hits me come tax time and I need to pay taxes on my profit.
Are you ready to report all your income and expenses this coming January 2023? Do you even know where to begin?
First step is to have a separate business checking account. Contact your bank and ask them if you can open an additional bank account. Be sure that your bank provides a monthly pdf bank statement with copies of checks and deposits. This banking feature can be a time saver for the times you do not write down or keep copies of receipts. Ask your bank for full calendar month statements (ie. December 2022 12/1/2022-12/31/2022).
In order to open a business bank account you will need the following information:
- Federal Employer Identification Number (EIN) – Apply for EIN
- Personal and Business information
- Sole proprietor: You will need to present your Social Security card. If your business has a DBA (doing business as) or assumed names, you will need to provide a certificate that shows the other name or names.
- LLC or S Corporation: You may need to present the EIN and business registration. If you are the sole owner, your name should be listed as such or all owners will need to be present to open the account.
- Initial deposit
Next, you will want to record all transactions. Keep a list of all your purchases from thrift stores, yard sales or estate sales. If you are paying cash, write down the date, items and price paid. Even if you do not obtain a receipt, logging/writing down the details of the purchase is crucial. As you continue to grow your reselling business, you may notice that small business bookkeeping can be fairly overwhelming. Diligent record keeping is a habit all resellers need to establish early.
While some reselling marketplaces such as Ebay may offer inventory reports and sales reports, others provide virtually no tools to resellers for the record-keeping you require to run your business effectively.
As a high volume multi-platform seller, you will need to find a solution for you that helps to keep everything in order in the most efficient and inexpensive way possible. Speak with an accountant or licensed tax professional that has experience advising multi-platform resellers. If you want to learn more about bookkeeping basics and tax saving strategies be sure to join me and @momsandcrumbs on Friday December 16, 2022. Scan QR code below:
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