An odd question. Anyone here self employed? Mor of a financial, tax question.

This will probably bore most of you, but I’m thinking about getting a small business license.

I buy all of my clothes exclusively online. I’m very much in the closet so I never shop out in the real world for my femme clothes. Over the years, I‘ve created a very large collection. So much to the point that my femme wardrobe is SIGNIFICANTLY larger than my guy wardrobe. Yes, its been a VERY expensive endeavor... I‘ve been able to find the majority of stuff I want to buy online, but it’s really difficult to find clothes in my size and style that I’m looking for. I‘Ve found some independent small retail websites that occasionally have things I want, but it gets VERY expensive quickly. I get the majority of my wardrobe from eBay as some sellers make the clothing themselves and are willing to make some customizations to fit my larger frame, but it’s almost always at a cost... and again, it’s s very time consuming to locate these few sellers that are willing to do this amongst the millions of sellers out there. Plus, as eBay has gotten bigger and bigger over the years, the truly good deals I could find several years ago from sellers are almost nonexistent. The fees have gotten higher and higher so the price points have gone up too. For example, I used to be able to find multiple auctions for Pleaser high heels in a size 12/13 and the ending price would end up being around 15-20 dollars. Since the listing fees are so much higher now, there are almost no auctions for pleaser heels anymore unless they’re re used and/or damaged and VERY difficult to find my size as there are SO many other dressers looking for them on there as well! Now most are fixed price listings that are the same price that I would find on any other website. Essentially, the heels I could buy for 15-20 bucks then are now 50-60 dollars now if I’m lucky.

I’ve also found some independent sellers online that offer some clothing that I DESPERATELY want, but they are wholesalers and I have to have a business license to buy from them. I already have a full time job, that I’m obviously going to keep, but its strictly 40 hours a week and I do have some extra time here and there where I could run a small business part time. I‘ve done some extensive selling in eBay quite successfully as well so I’m actually familiar with the entire process... although its always been done “off the record”. I also like the idea of some extra income helping offset my dressing/shopping costs. Also, theres so many more options to get customizable wholesalers out there as well.

But truthfully, I’m mainly doing it because i would have access to a lot more clothing that I love. I understand I’d have to pay for the license in my state and I’d have to keep records of orders sales... I also know I’d have to buy in bulk but I could easily fill my wardrobe and then sell the remaining items online.

So, in summary, would it be worth it? I’m not sure of the tax filing implications, fees, costs, etc... and any miscellaneous pros/cons that I’m not aware of?

U don't need a business license. Getting a state resale permit is all u need to buy things "wholesale". The only difference is u don't pay sales tax with a resale permit. If u don't mind paying sales tax, most every wholesaler will sell to u if u buy their minimum order, or more. The biggest break u get from a manufacturer is buying in volume.

If u resell the items u bought without paying sales tax, u r supposed to charge your buyers sales tax and pay that to the state/county, etc. Which will require u keeping records.

U should be declaring the income from your "business" with the state and IRS now. But, you're probably too small for them to come after u. Once u get involved in buying things without paying sales tax, u risk various govt agencies finding out about your "business". And, they'll want their fair share!:straightface:

No. There are two possible reasons you can?t find what you?re looking for: 1) there isn?t a viable vigorous market and therefor retailers find that it?s not worth the cost of carrying or 2) there isn?t a viable vigorous market and therefore manufacturers aren?t making it.

Have you thought about WHERE you will sell your product? If you just sell through eBay or Etsy, their fees will eat into your profits too. You could do your own website, but you?ll have to do the maintenance yourself, in addition to paying for the site itself as well as hosting. Do you happen to own a high end server already?

And are you ready to sell 3-4 garments for every one you keep in order to just break even?

Are you even looked into wether or not the manufacturers you?re interested in are even willing to sell to you? Having a license is often just the START of the process. A lot of places don’t want to sell to unproven sellers because they don’t want unsold product to flood the market and devalue their wares when a retailer fails.

Oh and general shipping rates through ups or fed ex basically guarantee you won?t turn any profit. To get reasonable rates through them you WILL need a business license, and you?ll basically have to prove to them that you?re a million dollar company who will be doing enough shipping to make it with their while to work a better rate for you.

Are you ready to lose money for 3-4 years before you ever make any money, IF you ever make money?

Basically if you have tons of money to throw away, sure you could do this, but it?s going to be more expensive than just buying your clothes retail.

I would suggest that you contact your local authorities (State & Federal) or an accountant, rather than check with people on line. Different areas may have different rules.

Seems like a lot to go through for someone that is "very much in the closet". I understand what it's like when you are in the closet and you just have to buy stuff, more and more stuff all the time. I also found that desire subsided a lot when I came out. Now don't get me wrong I am still a clothes horse but I don't obsess over clothes anymore as I only buy things I will actually wear out in public.

Check with a financial advisor and you'll likely get essentially the same advice given by Micki Finn. You can avoid many of the costs she's outlined by developing a good relationship with a clothing consignment store in your or a nearby area.

For tax purposes there are different rules with regard to this venture being labeled a business or a hobby. It is best to know the differences and the implications.

As I write this, there are 38 states that eBay, Amazon and all other mainstream e-commerce sites collect and remit sales tax for. (This is a recently new development, I'll spare the background and minutia here. But in most states, they get their sales tax now with no intervention on the seller or buyer's part.) So, that you normally wouldn't have to worry about. The remaining sales tax collecting states will pass laws to make this official everywhere in the USA. You may need to report the income on your income tax, however. If you process more than 20k through PayPal (no make profit, just process), they have to tattle on you by law and will send the IRS a form with what you processed.

However, you can get a sales tax ID anyway, and once you have that you can apply for a reseller certificate to buy things wholesale to resell without paying tax.

eBay fees are one factor, but the cost of shipping is the biggest one. Shipping from all services has gone up WAY WAY faster than inflation, especially the USPS. (Again I'll spare the minutia as to why.) Since most people shop online but don't sell online, they are unaware of how much shipping has gone up in the last 10 years. And then there are irate buyers who flip out when their package is a day late or change their mind and want to return things, or outright rip you off by claiming what they bought never arrived (even when there is proof it did, you will ALWAYS lose.)

I sell on eBay, and have for 22 years. I'll be honest with you, it isn't worth it for most people. The halcyon days of the late 1990s are over. If you make enough money at your job, it is best to spend that extra time enjoying life.

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Originally Posted by char GG

I would suggest that you contact your local authorities (State & Federal) or an accountant, rather than check with people on line. Different areas may have different rules.

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As a retiree of a federal tax agency amen to Char's advice!

As has been said before your local bussiness license and tax poeple would be your best source of information.
How ever I will give you some general info to maybe help you decide if you want to go that route. Most wholesalers want a bussiness license, a resale permit aka tax license, and an actual street address ( some ask for pictures of the building). I cant give you exact cost as I don't know where you live, here in Las Vegas those permits and licenses cost around $300 the first year. Each year there is around $100 renewal fees plus any taxes you have to pay, continue for that. Also anything resold you are responsible for collecting sales tax on, which you then need to pay to the correct state, county, or city depending on who collects them. Also the IRS is going to want their cut of any income you make, here you are best to consult an accountant. Then there is the cost of selling be it on Amazon ebay or your own site. Own site would probably require some sort of fees to be put higher on the searches.
Most of the costs can be found on line by going to your state or county bussiness licensing page. Many also have a check list for starting a bussiness so you can see all what you need and check it off as you go. I am not telling you this to discourage you but for informational purposes only. Just remember to cross your Ts and dot your I's as the government doesn't take not takeing your money lightly.

One thought stuck me. What happens if you can't re-sell items, and that will happen. You'll end up with a stock room full of stuff gathering dust. So you either try to sell at hugely discounted rates and take the financial loss or dump them.

Take this to the Dragon's Den as a business idea and you'll get slated.

What it really comes down to is how cheaply you can buy products and then how high you can sell them, simple terms, how much profit? Don't forget Ebay takes some time, you need to publish the adds, then package the items for sale then ship them so don't forget shipping materials too. Do you live close to a UPS drop off? How much time do you want to spend on this to get a "better deal" on personal clothing. I suspect it isn't worth it unless you want to go full time Ebay. Also,I have sold a couple items on Ebay and after fees and the time spend I could have cut my losses and just donated the items.

I ran my own business for a few years, so as far as the legalities of it, it is not the big of a deal, but you will need to do proper book keeping too, more time spent for no benefit. You will need to keep track of all your purchases and other expenses, then keep track of the money collected for the items you sell. Then at the end of the year you need to include your expenses and income for the state and federal income tax.

I want to start my own business also, and done a lot of home work into it. Its a lot a work just to make a few bucks. If you want to start a business, and make a profit. You have to put the company first. That means selling 100% of every thing you buy for the company. You just can't skim a pair of shoes, a nice dress off the order every week because you like it. That dress and shoes is lost income on buying more product, or maybe even making the bills for that month.

Like I mentioned, profit or markup on your items needs to be large to make any business work. You can not buy 100 pairs of shoes for $30 a pair and sell them for $40 and survive. Worse yet when you include listing fees and other materials. If you sell a pair of shoes for $40 , you better not have much more than $10 into them, plus your other expenses. Especially if you plan on keeping a pair for yourself.

Like someone mentioned, if you buy 100 pairs of shoes what happens if you don't sell them all, or it takes months to do so. Now you have an inventory problem too!

You can do it, just have an open mind and be aware of the possible problems.