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Reselling BusinessReselling LLC: Buy Inventory Tax-Free?
Marketplaces send a Form 1099-K past $20,000 and 200 sales, but the IRS says you report your income with or without the form. Where an LLC fits, the certificate that lets you buy inventory without sales tax, and the key Bizee screens, start to finish.
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Why an LLC for this business
A clean line
A loss on personal items isn't taxed. Profit on flips is. Keep them apart
The marketplace
eBay: a registered business opens a business account. No switching back
The resale certificate
Inventory for resale without sales tax. Misuse brings penalties
How to start it, in order
- Write down what you paid for every item: profit is what you sold it for, less what it cost.
- Know the line. A loss on your own personal items can't be deducted and isn't taxed; profit on a sale is taxable.
- Form the LLC and give the business its own account.
- Register with your state for sales tax, then use a resale certificate for inventory you will resell. Misuse brings penalties.
- On eBay, a registered business opens a business account. A personal account can be switched to business, not back.
- eBay collects and remits sales tax for you in 46 states plus DC and Puerto Rico.
- A Form 1099-K comes past $20,000 and 200 transactions. Report your income whether or not it arrives.
Every fact in this guide was checked against a primary source before the video was made.
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