Legal Question in Tax Law in California

taxes

i am starting a new business in 2008. i will be selling on the internet items that i purchase from garage sales, stores, wholesale, etc.... i have my ein number that i received last week and I will be getting my business license tomorrow. I am ready to go but have a question about how to keep my recorsds straight. I have a page of merchandise purchased. It includes date, item price, number of items and a receipt if possible will be added. on a seperate sheet is my items sold list. it says date, item, price and qty. Does this info need to be on the same sheet? Will I be paying taxes on the price i sold at or the profit? I will be selling on ebay primarily but will also set up a website this year. On ebay there are fees associated with the transactions so how do i do that also? I also have seperate sheets for business expenses, mileage, etc.

thanks!


Asked on 12/30/07, 8:52 pm

1 Answer from Attorneys
Jeb Burton The Burton Law Firm

Re: taxes

You should be able to see clearly between the inventory and the sold price, while it does not need to be in the same spreadsheet, it is often helpful. You pay taxes on the price sold, but get a deduction based on the purchase price it cost you to acquire the inventory. Essentially keep track of the fees, and how they relate to the products sold, and you get a deduction for that as well. Everything else you mentioned is a deduction for ordinary business expenses. You should speak to a CPA to assist you in this type of endeavour.

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Answered on 1/03/08, 9:02 pm


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