Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I’m still confused if the IRS rules apply to me. Can you tell me more?– Norman L.
A: Last week’s column on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.
Several folks argued that just because their little eBay hobby generated a little cash, that didn’t make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I’ve always been amused by folks who try to impress me with talk about their “little side business” but when the subject turns to taxes they suddenly refer to it as “my little hobby.”
All kidding aside, the conclusion that I came to after reading each email was always the same: while you may think selling on eBay is just a fun pastime and the money you’re making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you. It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you’re going to come to the dance you have to pay the fiddler.
The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay.
In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.
In reality, if you are a casual seller who only sells a few items on eBay every now and then it’s doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.
As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business.
These factors include: - Do you carry on the hobby in a business-like manner? - Do you spend considerable time working on the hobby? - Do you depend on income from your hobby for your livelihood?
If the answer to any or all of these question is yes, you’re running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.
What’s eBay’s take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not does not issue 1099 tax forms to sellers, nor does it report seller’s sales figures to the IRS.
Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.
Furthermore, under it’s current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction.
On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.
You might also be able to deduct things like the purchase of a computer for business use, office space (even if it’s a home office), office supplies, and more.
Talk to your accountant if there’s any doubt as to whether you should or should not be paying taxes on your eBay earnings.
Here’s to your success!
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Friday, April 13, 2007
Tuesday, April 10, 2007
Writing The Book On Great Customer Service
Q: One of the big chain bookstores recently opened up near my small book store. Already I can see my business starting to decline. Is there anything I can do to compete with the bigger store or should I just accept the inevitable?– Peter Q.
A: A wise man once said, “The inevitable is never a sure thing.”
Don’t be so quick to close the book on your business, Peter. You probably can’t compete with the superstore on volume of inventory or on price, but there are other things you can do to help keep the customers coming in your door. One of the best ways to ensure customer loyalty is to offer superior customer service.
It’s funny that you’re a bookseller. Let me tell you about my last visit to one of the big chain bookstores just a few weeks ago.
I took my teenage daughter in to find the classic book, The Once and Future King, for a school project that has to be done over the summer. It was a Sunday afternoon and the store was crawling with customers. We spent fifteen minutes scouring this great warehouse of a bookstore, but couldn’t find the book anywhere. We also couldn’t find anyone who worked there to ask for help.
Finally, I went up to the front counter and asked the apathetic looking teenager who was manning the register if they had the book in stock. She looked at me as if I’d asked her to do advanced calculus in her head and said, “I dunno.”
I asked if she might check her computer for me. She looked at me again, this time as if I’d just asked her to rotate the tires on my car without a jack. After a minute of tapping the keys with her long fingernails (which were painted black, by the way) she said, “Yeah, we have it.”
“Great,” I said. “Where can I find it?”
She glanced at the screen again and said, “It says that it’s in the classics section.”
“Great,” I said again. I use the word “great” a lot when I’m trying to restrain myself from strangling incompetent sales people. “Where might the classics section be?”
She didn’t bother to look at me or the computer this time. She just shrugged and said, “Beats me, man. I’ve only worked here a week. ”
I wanted to ask if there was anyone who had worked there long enough to know where the ^%$# classics section was, but by that time there were a dozen or so people lining up behind me to pay for books they had somehow managed to find on their own.
I went home and ordered the book online. So much for supporting my local bookseller.
It’s a shame your store isn’t located near me, Peter. I’ll bet if I walked in and asked for a copy of The Once and Future King you would be able to tell me almost to the square inch where the book is on the shelf in your store. I’ll also bet that if you didn’t have a copy in stock you would go out of your way to order it for me.
That is what superior customer service is all about: going the extra mile to satisfy your customer. That is what will keep customers coming back to your store time and time again.
Superior customer service leads to greater customer satisfaction, which leads to repeat business, which leads to the holy grail of the retail business: customer loyalty.
Here are a few tips on how to deliver superior customer service and build customer loyalty:
1. Anyone on your staff who deals directly with the customers should be well groomed and dressed appropriately for the job. Customers over 25 years old will not get a warm and fuzzy feeling if the guy processing their credit card is wearing an Ozzy Osborne tee-shirt and matching nose ring.
2. Sales people should be knowledgeable about the product they are selling. I can’t tell you how many times I have asked a sales person a simple question and only got a blank stare in return. A lack of product knowledge does nothing to instill confidence in the customer.
3. Your staff should know where every product is without having to ask a manager or consult a computer. At the very least they should be able to point out the ^%$# classics section without blinking an eye.
4. Make it a point to know your customer’s name. Nothing makes a customer feel special like the sound of his or her own name. You can’t remember everyone’s name, of course, but you should strive to remember the names of those customers who come in regularly. I f requent one particular restaurant and the owner not only knows my name, but the names of my wife and kids. And every time I set foot in his restaurant he calls me by name and shakes my hand and personally leads me to a table. I don’t feel like a customer. I feel like a friend.
5. Offer personal services that the big boys do not. Anything you can do to make your customer’s life easier will be appreciated and remembered. If a customer comes in and asks for a book you do not have, offer to order the book and deliver it to their home so they don’t have to make another trip to pick it up. All this is going to cost you is a few minutes of your time and you will not only save a sale, but also make a lasting impression on that customer. The next time they need a book they will head your way.
There are other things you can do to combat the bookstore Goliath, Peter, but offering superior customer service is a great place to start.
Here’s to your success!
Tim Knox
Be sure to see all our latest wholesale arrivals @ http://savesucash.com/
A: A wise man once said, “The inevitable is never a sure thing.”
Don’t be so quick to close the book on your business, Peter. You probably can’t compete with the superstore on volume of inventory or on price, but there are other things you can do to help keep the customers coming in your door. One of the best ways to ensure customer loyalty is to offer superior customer service.
It’s funny that you’re a bookseller. Let me tell you about my last visit to one of the big chain bookstores just a few weeks ago.
I took my teenage daughter in to find the classic book, The Once and Future King, for a school project that has to be done over the summer. It was a Sunday afternoon and the store was crawling with customers. We spent fifteen minutes scouring this great warehouse of a bookstore, but couldn’t find the book anywhere. We also couldn’t find anyone who worked there to ask for help.
Finally, I went up to the front counter and asked the apathetic looking teenager who was manning the register if they had the book in stock. She looked at me as if I’d asked her to do advanced calculus in her head and said, “I dunno.”
I asked if she might check her computer for me. She looked at me again, this time as if I’d just asked her to rotate the tires on my car without a jack. After a minute of tapping the keys with her long fingernails (which were painted black, by the way) she said, “Yeah, we have it.”
“Great,” I said. “Where can I find it?”
She glanced at the screen again and said, “It says that it’s in the classics section.”
“Great,” I said again. I use the word “great” a lot when I’m trying to restrain myself from strangling incompetent sales people. “Where might the classics section be?”
She didn’t bother to look at me or the computer this time. She just shrugged and said, “Beats me, man. I’ve only worked here a week. ”
I wanted to ask if there was anyone who had worked there long enough to know where the ^%$# classics section was, but by that time there were a dozen or so people lining up behind me to pay for books they had somehow managed to find on their own.
I went home and ordered the book online. So much for supporting my local bookseller.
It’s a shame your store isn’t located near me, Peter. I’ll bet if I walked in and asked for a copy of The Once and Future King you would be able to tell me almost to the square inch where the book is on the shelf in your store. I’ll also bet that if you didn’t have a copy in stock you would go out of your way to order it for me.
That is what superior customer service is all about: going the extra mile to satisfy your customer. That is what will keep customers coming back to your store time and time again.
Superior customer service leads to greater customer satisfaction, which leads to repeat business, which leads to the holy grail of the retail business: customer loyalty.
Here are a few tips on how to deliver superior customer service and build customer loyalty:
1. Anyone on your staff who deals directly with the customers should be well groomed and dressed appropriately for the job. Customers over 25 years old will not get a warm and fuzzy feeling if the guy processing their credit card is wearing an Ozzy Osborne tee-shirt and matching nose ring.
2. Sales people should be knowledgeable about the product they are selling. I can’t tell you how many times I have asked a sales person a simple question and only got a blank stare in return. A lack of product knowledge does nothing to instill confidence in the customer.
3. Your staff should know where every product is without having to ask a manager or consult a computer. At the very least they should be able to point out the ^%$# classics section without blinking an eye.
4. Make it a point to know your customer’s name. Nothing makes a customer feel special like the sound of his or her own name. You can’t remember everyone’s name, of course, but you should strive to remember the names of those customers who come in regularly. I f requent one particular restaurant and the owner not only knows my name, but the names of my wife and kids. And every time I set foot in his restaurant he calls me by name and shakes my hand and personally leads me to a table. I don’t feel like a customer. I feel like a friend.
5. Offer personal services that the big boys do not. Anything you can do to make your customer’s life easier will be appreciated and remembered. If a customer comes in and asks for a book you do not have, offer to order the book and deliver it to their home so they don’t have to make another trip to pick it up. All this is going to cost you is a few minutes of your time and you will not only save a sale, but also make a lasting impression on that customer. The next time they need a book they will head your way.
There are other things you can do to combat the bookstore Goliath, Peter, but offering superior customer service is a great place to start.
Here’s to your success!
Tim Knox
Be sure to see all our latest wholesale arrivals @ http://savesucash.com/
Thursday, April 5, 2007
When It Comes To Staring Your Own Business Never Say It Can’t Be Done
I ran across an interesting article in Wired magazine this week that told the tale of Kolo Soro, an elementary school teacher in the tiny village of Tomono in the northern Ivory Coast of Africa.This is an area so remote and void of technology that for generations communication between villages has been done by tying notes to rocks and having passing trucks toss them out the window at pre-described locations.
Kolo Soro changed all that when he purchased a cellphone during a visit to a larger city and found that if he held the phone seven feet off the floor in a corner of his bedroom he could get a decent signal.
Being an enterprising young man he hung the phone on the wall, hooked up an earbud, and started charging his fellow villagers 80 cents per minute to make calls. He earned $200 the first month.
Being a smart entrepreneur Kolo plowed those profits back into his business. He bought a PlayStation 2 game console and connected it to a 13-inch color TV and charged 10 to 20 cents to play games. He made $20 in the first three days.
Now I’ve worked with some pretty sharp entrepreneurs over the years, but in my mind Kolo Soro leaves them all in the dirt. He lives in a tiny African village where the average income is probably no more than a few dollars a month, yet he has founded a thriving enterprise that continues to grow.
Kolo’s next purchase will be a computer, which he plans to connect to the Internet using the cellphone signal.
You have to wonder how Kolo’s tactics would go over here in the good old US of A. He’d probably be fined for operating an unlicensed telco and arrested for contributing to the delinquency of minors. Or some superstore would move in next door, slash prices, and drive poor Kolo out of business.
I guess there are some advantages to starting a business in a region of the world not as advanced and competitive as our own.
What entrepreneurial lessons might you learn from Kolo Soro? The first lesson is as old as the rocks Tomono villagers used to communicate with: think outside the box. I’m pretty sure people used to say that even before there were boxes, that’s how creativity works. In fact, give the box to the kids and let them think with it. You never know what those little buggers might come up with that can make you a fortune.
Next, know your market well. Kolo knew his fellow villagers well. He knew what was lacking in their lives. He identified a critical need and when he filled it, people literally beat a path to his door.
Find out what the customer wants and give it to them. Boy that was an MBA moment, huh. Kolo knew communication with the outside world was a crapshoot and the moment he discovered that cellphone signal he knew he could make money from it. There is no more basic tenet of business than to find out what people will pay you for and sell it to them. Make waves, then sell boats.
Reinvest your profits back in the business. It speaks highly of Kolo’s entrepreneurial acumen that he saved up all the money from his first venture and plowed it right back into the business.
I’m sure it would have been very easy to take that $420 and spend it on food, clothing, and shelter, but Kolo’s vision was much bigger than that.
I’ve seen entrepreneurs kill their businesses by spending the profits on themselves. Kolo brilliantly avoided that mistake and so should you.
Diversify to build revenue. I’m sure Kolo realized that to grow his business he would need to diversify his offering. After all, there’s only so much you can make from a single cellphone hanging on the wall.
With the addition of the gaming business he unplugged a second revenue stream that complimented his initial offering instead of competing with it. It was win/win for Kolo and his fellow villagers who were hungry for some kind of recreation other than kick the rock.
The final lesson is this: never say, “It can’t be done.” If you think that you don’t have the brains or the money or the time or the resources to start your own business, think of Kolo’s thriving enterprise in that tiny African village and remember this: those who don’t know things can’t be done are usually the ones who end up doing them.
Tim Knox
Be sure to see all our latest wholesale arrivals @ http://savesucash.com/
Kolo Soro changed all that when he purchased a cellphone during a visit to a larger city and found that if he held the phone seven feet off the floor in a corner of his bedroom he could get a decent signal.
Being an enterprising young man he hung the phone on the wall, hooked up an earbud, and started charging his fellow villagers 80 cents per minute to make calls. He earned $200 the first month.
Being a smart entrepreneur Kolo plowed those profits back into his business. He bought a PlayStation 2 game console and connected it to a 13-inch color TV and charged 10 to 20 cents to play games. He made $20 in the first three days.
Now I’ve worked with some pretty sharp entrepreneurs over the years, but in my mind Kolo Soro leaves them all in the dirt. He lives in a tiny African village where the average income is probably no more than a few dollars a month, yet he has founded a thriving enterprise that continues to grow.
Kolo’s next purchase will be a computer, which he plans to connect to the Internet using the cellphone signal.
You have to wonder how Kolo’s tactics would go over here in the good old US of A. He’d probably be fined for operating an unlicensed telco and arrested for contributing to the delinquency of minors. Or some superstore would move in next door, slash prices, and drive poor Kolo out of business.
I guess there are some advantages to starting a business in a region of the world not as advanced and competitive as our own.
What entrepreneurial lessons might you learn from Kolo Soro? The first lesson is as old as the rocks Tomono villagers used to communicate with: think outside the box. I’m pretty sure people used to say that even before there were boxes, that’s how creativity works. In fact, give the box to the kids and let them think with it. You never know what those little buggers might come up with that can make you a fortune.
Next, know your market well. Kolo knew his fellow villagers well. He knew what was lacking in their lives. He identified a critical need and when he filled it, people literally beat a path to his door.
Find out what the customer wants and give it to them. Boy that was an MBA moment, huh. Kolo knew communication with the outside world was a crapshoot and the moment he discovered that cellphone signal he knew he could make money from it. There is no more basic tenet of business than to find out what people will pay you for and sell it to them. Make waves, then sell boats.
Reinvest your profits back in the business. It speaks highly of Kolo’s entrepreneurial acumen that he saved up all the money from his first venture and plowed it right back into the business.
I’m sure it would have been very easy to take that $420 and spend it on food, clothing, and shelter, but Kolo’s vision was much bigger than that.
I’ve seen entrepreneurs kill their businesses by spending the profits on themselves. Kolo brilliantly avoided that mistake and so should you.
Diversify to build revenue. I’m sure Kolo realized that to grow his business he would need to diversify his offering. After all, there’s only so much you can make from a single cellphone hanging on the wall.
With the addition of the gaming business he unplugged a second revenue stream that complimented his initial offering instead of competing with it. It was win/win for Kolo and his fellow villagers who were hungry for some kind of recreation other than kick the rock.
The final lesson is this: never say, “It can’t be done.” If you think that you don’t have the brains or the money or the time or the resources to start your own business, think of Kolo’s thriving enterprise in that tiny African village and remember this: those who don’t know things can’t be done are usually the ones who end up doing them.
Tim Knox
Be sure to see all our latest wholesale arrivals @ http://savesucash.com/
Monday, April 2, 2007
This Is Why Blogs Are Important To You
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