*Disclosure: I am not a tax professional. I am only sharing information I have found online. Please consult a CPA for official rules and regulations.
There are tax changes coming for resellers in 2022, and if you’re confused about where to start, this post is going to give you all the details.
One of the biggest myths floating around in the reselling community has been that you don’t owe federal income taxes unless you make $20,000 and 200 sales in a year. This is the threshold for which you would get a 1099-K form, not the threshold for when you would get have to pay taxes. The original threshold was $600.
As of 2022, the tax laws are changing. The new threshold for the 1099-K is $600. This applies to every online selling platform.
Ebay has recently published information on their website about it, but it will affect all platforms.
Commonly asked questions about taxes for resellers:
What is a 1099-K?
A 1099-K form is a documents that taxpayers receive when they have $600 or more in gross sales from a third part selling site like ebay.
When do the changes for the 1099-K threshold take place?
The new tax laws are effective January 1, 2022.
Does this 1099-K change only apply to ebay?
No, this change does not apply to only ebay. You will receive a 1099-K form from Mercari, Poshmark or anywhere else you sell online.
How do I prepare for the 2022 tax season?
The best way to prepare to create a system to track your expenses and your sales.
Here’s my advice about bookkeeping and taxes for resellers.
1) operate like a legit business and stay decently organized
2) find a CPA that is familiar with ecommerce
3) keep track of what you’re buying, selling, and expenses like office supplies and mileage
4) watch this video about how to deduct inventory
**The guy in the video is Mark Tew. He does my taxes, and he can do yours too. He will also soon come out with a bookkeeping course. Mark and I do not have an affiliate relationship of any kind. I just genuinely like him, and he’s easy to work with.
Here are my favorite bookkeeping options for resellers:
This is a great spreadsheet, and super easy to use. The pro version tracks more and has an impressive dashboard.
2) My Reseller Genie (truly the Quickbooks of Reselling- tracks everything down the the brand/ style, etc- great for clothing or wholesale sellers)
Use code THEECOMMERCEMOM15 for 15% off your first month (code is case sensitive)
I have used both of these tools, and they all have their pros and cons, but both are solid choices. It all comes down to what you prefer (spreadsheet vs software) and how much of the details you want to track.
I also personally know the creators of both of them, and you’ll receive excellent customer service if you need extra support.
No matter which tool you use to track your sales and expensive, it’s important that you do. The best one is the one you will actually use.
Keeping up with sales daily, for me anyway, is the best method. I have waited around until the end of the year to put everything in order, and it’s awful. I spend weeks trying to figure everything out.
Figure out which tool best suits your personality, and get started today. You’ll never regret getting ahead of bookkeeping tasks.