The eCommerce Mom has a very detailed article, that can be a huge help to anyone just starting out.
10 Things You Need to Do to Start a Successful Reselling Business
If you’re a reselling newbie that wants to turn your hobby into an official reselling business, this is a post you will want to read. You’re going to garage sales and thrift stores. There are so many great deals there. You resell them and realize that this hobby could make at least a part-time income.
The part that gets technical is how to turn this into an actual business that makes a profit. And then how do you keep track of your records and all that.
You think, “I’ve never run a business before. I can’t do that. I’m not smart enough or educated enough.”
YES YOU ARE! It’s not that hard.
Here are 10 Things You Need to Do to Start a Successful Reselling Business:
1- Open business accounts for PayPal and banking.
From the beginning, set everything up right to save yourself from a huge headache in the future. Any income you make from ebay or other selling platforms is taxable income.
Paypal will send you a 1099-MISC form when you make $20,000. Many people think that they do not have to pay taxes unless they get a 1099-MISC and this is simply not true. Tax evasion is a federal crime. Please do not get yourself into trouble because of misinformation.
I’m not going to give you specific tax advice because I’m not an accountant. All of the advice I am giving here is just common sense stuff. You need to have your own accountant, a real CPA, not just a tax preparer.
Open a business checking account at your local credit union. I always recommend a credit union because they usually have free checking and they have much better customer service than a big bank. You can just open a DBA (doing business as) account. They can help you with this. It’s not hard.
Set up a business PayPal account. You can convert your personal account to a business account if you want to. Ebay suggests this so that you are covered under their seller protection policy. Ebay did use PayPal as their primary way to deliver your earnings, but that will change eventually with their new management payment system. Other platforms use direct deposit.
Convert your personal ebay account to a business account if you plan on selling there. Have everything set as a business from the start. Ebay should be a part of your reselling strategy, at least in the beginning.
2- Establish accounting and bookkeeping systems.
Keeping up with what is coming in and going out is super important. If you put this off, it will be almost impossible to catch up.
So what do you need to keep track of? On a basic level, two things- income and expenses.
Income = what comes in [gross sales (sale price of an item plus any shipping income)]
Expenses= what goes out [shipping expenses, sales fees, paypal fees, supplies, mileage, cost of goods, etc]
There are lots of ways that you can track this. For ebay and Etsy, I use GoDaddy Bookkeeping. I use a spreadsheet for any income that is not from ebay & Etsy.
GoDaddy Bookkeeping pulls all of my sales and fees from ebay and Etsy. It also separates my sales by state. Since I only have to pay sales tax for a few transactions (most of my sales are out of state), this makes it super easy not to have to sort through every transaction each month. Ebay and Etsy collect them. I just have to pass along that money to my local parish (county) and state.
It will also generate a report to give to your CPA at the end of the year. If you file taxes as a Schedule C (sole-proprietorship), it gives you the figures to put on each line of your tax form.
GoDaddy does charge a fee, but to me, it is so worth it. It does a lot of work for the price you pay. My time is better spent elsewhere.
*Update: Because I am now using ebay’s management payment system and because ebay is not my only income stream, I recently started using Wave. It’s free. GoDaddy and Quickbooks are still also great software to use. I have used both of them.
3-Make a list of places to source.
Where can you buy things to resell in your area? Make a list of the types of stores. Add the actual name of the store to your list. Evaluate that list to see what items are available there.
Good clothing (not something from Target) is hard to come by here. I cannot find a lot of it because there aren’t that many stores that sell nicer clothing. The same goes for college textbooks. We do have two colleges here but current textbooks are almost impossible to find.
I would not base my business model around books or clothing unless I were buying them somewhere else, like in wholesale lots. That pretty much crushes the possibility of a booming Poshmark business :). I’m ok with that. I can sell textbooks and clothing when I find them.
Do not dismiss any opportunity to get inventory. It can appear in the most unexpected places.
Here are some places you might try:
Your own home
Friends and family
Flea Markets and Antique Malls
Retail store clearance
Goodwill outlet stores
Local sell apps and Facebook groups
Church rummage sales
Wholesale liquidation companies
Read the rest here
The eCommerce Mom even has a Youtube channel, jump on over and say hi. The eCommerce Mom