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Local Business  » Keeping records of your Ebay business: Part 2

Keeping records of your Ebay business: Part 2

In part one of this ebay article series we introduced you to the

importance of keeping a proper paperwork trail of everything

pertaining to your ebay home business profits. We discussed how

keeping detailed records of every area of your ebay home

business was not only beneficial for tax purposes but at the

same time it is the only way to seriously track and tweak your

ebay home business for long term success.

Also in part one, we then closed the end of the ebay home

business article by explaining the definitions of gross profit

and gross profit margin. These two categories of incoming

profits are important to help you understand what you are

earning and which direction you want those earnings to go in.

Before you get bored again, let me remind you that I know you

would rather be talking about selling and spending all of the

millions you will make with your ebay home business! But trust

me, these dry topics on paperwork, records, and taxes are

exactly what you need to become an expert at in order to create

long term stability with your ebay home business.

Ok, back to business. In today's article we are going to help

you understand your tax responsibilities. If you were like me at

the beginning of my ebay home business, then you probably can

find any reason possible NOT to go through the trouble of

keeping formal bookkeeping records of your ebay business.

Unfortunately for us small business people, the IRS tax law

overrules whatever reason we have to justify not keeping the

books up do date for our ebay home business. The law states that

you must keep very detailed records of your ebay income, your

ebay expenses, your assets, and even your liabilities.

By keeping these ebay home business records accurately recorded,

you will be enabled to properly report on your tax return every

bit of income that comes in from that ebay home business. You

will also then be able to claim any and all write-offs that are

connected to your business.

What are "Write-offs"? They are deductions that you can subtract

when having the tax paperwork completed for your ebay home

business. Let me give you an example:

Let's say that you sell Antique products as your main source of

income for your ebay home business. Each day you get in your car

and drive around town and visit flee markets, swap meets, and

yard sales to find hot deals on Antiques. You will then turn

around and resell these same Antiques on Ebay for big time

profits. Your tax responsibility here is to keep track of the

exact mileage you used up in your vehicle. This information can

be used as a tax write-off. And of course don't forget to save

your gas receipts for extra tax benefits!

Next I'm going to bring up an ugly word that give many ebay home

business owners the chills. The "audit". If you are unfamiliar

with the term audit or have never experienced getting audited

then allow me to explain it to you.

As much as you may not like their reach of power, the IRS has

the legal right to view all of your ebay home business records

if they should ask. This is not an assumption, it is the truth.

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Should this happen, then you will be what is called "audited".

And if you are one of those unlucky ones that are audited then

you had better be prepared with detailed, complete, and truthful

business records. You do not want to have missed important tax

claims or filed inaccurate reports in the past because if an

audit should happen then those negative actions could jeopardize

your ebay home business.

Last but not least, we are going to leave you with understanding

what financial type records that you will need to show to a bank

if you are applying for a loan to help expand and grow your ebay

home business. The first one is called a balance sheet. The

second is called an income statement.

Income Statement: An income statement consists of a list of your

assets, liabilities and what you have invested into your

business. And by the way, any amount of funding that you

"invested" into your ebay home business is called equity.

Income Statement: This statement is simply a list showing all of

the income and all of the expenses of your ebay home business

within a specified period of time. This "specified period of

time" is usually quarterly or yearly, depending on how often you

attend to your taxes.

About the author:

Jason James website 'The Auction Resource Network' reveals his

inside secrets and sources that help him pocket over $10,000 a

month on eBay.

Claim your FREE 'Top 10 eBay Selling Secrets' eBook: www.auctionresourcen

etwork.com