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Craigslist & Sales Taxes

Craigslist & Sales Taxes
« on: April 16, 2013, 11:55:58 AM »
I have been going to garage sales for a long time, however I've never tried to sell my items (other than personal items) on craiglist.  I've sold a few items on Ebay, but thought Craigslist might be a good way to go to start sellings I could pick up at garage sales. This might a total newbie question, when posting the ad on craiglist, do you say you are business?  Also, do you take sales tax out of the total amount you collect and if so, do you give the buyer any kind of receipt?   I want to make sure I represent myself correctly and also pay the appropriate taxes.  would love to hear about your experience!

Offline Cobia

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Re: Craigslist & Sales Taxes
« Reply #1 on: April 16, 2013, 12:53:43 PM »
I have been going to garage sales for a long time, however I've never tried to sell my items (other than personal items) on craiglist.  I've sold a few items on Ebay, but thought Craigslist might be a good way to go to start sellings I could pick up at garage sales. This might a total newbie question, when posting the ad on craiglist, do you say you are business?  Also, do you take sales tax out of the total amount you collect and if so, do you give the buyer any kind of receipt?   I want to make sure I represent myself correctly and also pay the appropriate taxes.  would love to hear about your experience!

Decide now if this is a business or hobby and if you want to be completely legit or dance in the grey areas. I am going to assume by the question you intend to run a legitimate business enterprise based on re-selling. You could cause yourself some heartache if you try to dance in and out of being a legitimate business and a hobbyist.

You will need to file income on your Schedule C as a sole proprietor or file articles of incorporation; partnership, S-corp, C-corp, LLC.
Depending on State law, you will need to apply for a sales tax certificate or a re-sale certificate.
Again, depending on local laws, you will need to apply for a local city, county, township business license.

Once you have all this in place and start selling, then yes, you will need to collect & remit sales tax to the State, & local government. You should write the customer a reciept and keep a copy for your records. You will pay the Federal government a portion of your profit in income taxes, the State government a portion of your profits, and possibly the local government a portion of your profits. You will also pay the State and possibly local governments a fee each year for the privilege of doing business in thier jurisdiction.

As far as posting on Craigslist, you can post as a owner or dealer, it's up to you how you want to represent yourself. When you start posting a lot of items, people will take notice, and if your ads indicate you are a business, then people may flag you if you don't post as a dealer.

Or you can go underground, claim no real income, not collect sales tax or pay income tax, but don't show off that money cause your neighbors will get jealous and rat you out!  :)

It's all a matter of scale. Nobody is going to notice if you make $500 a month "under the table", but you start making $5,000 or $10,000 a month "under the table" Uh-Oh!! You better watch out! You can't put that money in a bank account (suspicious activity report; & almost anything triggers a suspicious activity report nowadays, trust me, i've seen the form). You start spending that money your neighbors and/or family gonna notice and they will spill the beans #jealousmofos!  :'(  By the way, spending/buying items from retailers with large sums of cash activates suspicious activity reports too!

Good Luck!


Offline alloro

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Re: Craigslist & Sales Taxes
« Reply #2 on: April 16, 2013, 03:30:26 PM »
This might a total newbie question, when posting the ad on craiglist, do you say you are business?  Also, do you take sales tax out of the total amount you collect and if so, do you give the buyer any kind of receipt?

If you are a business posting an ad, then you'd best make it clear that you will be charging sales tax on top of sale price.

Re: Craigslist & Sales Taxes
« Reply #3 on: April 16, 2013, 09:59:05 PM »
Thanks for the replies.  I am actually already set up as a sole prop, but haven't made the decision to whether I wanted to do this.  I sell a little on amazon and ebay already.   I definitely wouldn't charge sales tax on top of a price on craigslist, but I wasn't sure if other dealers wrote receipts out for their customers if I could simply collect the money and then pay the sales taxes out of my cut.  My worry about representing myself as a dealer, is then less people would want to buy from me (vs. an owner) and possibly having to accept returns, etc. I was curious to see what other people's experience was.

Offline Travis

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Re: Craigslist & Sales Taxes
« Reply #4 on: April 18, 2013, 10:56:41 PM »
Thanks for the replies.  I am actually already set up as a sole prop, but haven't made the decision to whether I wanted to do this.  I sell a little on amazon and ebay already.   I definitely wouldn't charge sales tax on top of a price on craigslist, but I wasn't sure if other dealers wrote receipts out for their customers if I could simply collect the money and then pay the sales taxes out of my cut.  My worry about representing myself as a dealer, is then less people would want to buy from me (vs. an owner) and possibly having to accept returns, etc. I was curious to see what other people's experience was.

I wouldn't claim to be a business on Craigslist. It could only limit your sales.

Offline Cobia

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Re: Craigslist & Sales Taxes
« Reply #5 on: April 19, 2013, 09:40:35 AM »
I wouldn't claim to be a business on Craigslist. It could only limit your sales.

Not true! My sales are continuing on an upward trendline and I advertise on Craigslist as a business! Marketing & customer service make the difference.

Offline rulesforrebels

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Re: Craigslist & Sales Taxes
« Reply #6 on: April 23, 2013, 03:48:27 PM »
most people dont want to pay sales tax which is why they are on craigslist in the first place. i would avoid charging it as you will lose customers

Re: Craigslist & Sales Taxes
« Reply #7 on: April 29, 2013, 10:18:16 PM »
As resalemom said, if you have a sales tax license, you can still collect what your ad states and pay the sales tax yourself.

Sell a $100 item in a state with 6% sales tax, collect $100 figuring you will then owe $6 to the state.
Or move to Delaware  ::)


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