posted: Nov. 18, 2012 @ 7:49p
There's a lot of posts on FWF that allude to various buy/resell consumer goods. Perhaps there's a good deal on Hot Deals and you can buy them 30%+ below market value and resell on eBay and profit even after fees. Perhaps you have some unique way to interpret information such as knowing a certain event will lead to a shortage of a certain product that you can profit from.
I'm not looking to discuss specific items to buy for resell, or even how we determine these things. If we share the information, then any profit we make will be arbitraged away by others.
Instead, what we can and should discuss is how to run this "business" in the most efficient way possible. For example, perhaps you can dedicate a certain room in your home to storage of your inventory. Then perhaps you may be able to deduct that space off your earnings.
Perhaps you deduct your smart phone against your business because you use email to respond to eBay buyers.
Perhaps you also eBay sell some personal possessions that you no longer use, and declare the cost basis of those items at the full retail price you initially paid several years back. Then you have a "loss" on those items that you use against the "gains" of your profit items.
Then again, perhaps you don't pay taxes at all because Paypal only sends a 1099 if you do over $20k AND over 200 transactions in one calender year.
On the non-tax front, is there any other value you can gain from this kind of activity? I have a few possibilities:
1) You can hedge your personal expenses on things you personally use. For example, suppose you're able to buy "X" in bulk at a great discount due to a deal. You can resell X at a profit. However you also personally use X. You're able to subsidize your personal use of X by buying it more cheaply in bulk, as a bonus to your profit seeking activity with X.
2) You can store X for survival scenario purposes. Suppose an extended natural disaster occurred. By having a storage of X, it may be something you can use as barter material in the disaster. Typically, if a "survivalist"/"prepper" were to store materials for barter purposes, they run a cost of depreciation and storage. However, if you churn X as part of a business activity, then you get the possible benefit from a disaster scenario at near zero cost.
3) You may be able to leverage your high eBay rating to sell personal items at a higher price. In theory, if you're selling your old crap on eBay, like a laptop computer, if you have a low rating, then people are less likely to bid it up. However if you have a high rating, even though it's from your side business, you're looked upon more favorably when selling personal items.
4) You may be able to create the eBay Account with an EIN of an LLC, build up a high rating, and then sell the shell LLC that is both aged by a few years and has "street cred" of the eBay ranking.
5) You may be able to gain access to certain conferences, private forums, etc. by being an "industry professional". I can't think of any specifics that are worthwhile but suppose you buy and resell consumer electronics, you may be able to register for the Consumer Electronics Trade show that is not open to the public. Then again, you can probably lie and get in too, and from what I hear it's very unworthwhile to go. Perhaps though, there may be some worthwhile trade show in some field, and you might get free schwag, that you can then resell as well.
6) Possibly building business credit and churning business checking account opening rewards. Although you don't "need" an actual business to do it, you could sole prop it, or make something up, it might add some street cred to the bank issuing credit/checking accounts.
7) UPS and FedEx offers discounted shipping rates to higher volume shippers. Thus, if you're selling stuff (your old crap in addition to the specific items you are buying with the express purpose to resell) personally, or shipping gifts to relatives, you're able to take advantage of the lower rate for yourself.
8) You can show higher house hold income for purposes of applying for personal credit cards and getting higher credit lines, which you may eventually be able to BT and make a profit off that when interest rates rise.
I'm curious to hear what other benefits one might get as a byproduct of their buying and reselling business.