Expert: Suzie Eads - 8/8/2008

Question
I was asked by an individual who I know, if I could list items on my ebay account for them. They plan to sell around 15-17 thousand dollars worth of merchandise. He will be giving me a cut of the money. He is a trusted individual and I am not worried about being scammed, but my question is, if the 15 thousand dollars worth of items sell under my ebay account, and the money enters into my paypal account (I will be sending him his cut of from my paypal to his) is their a chance I would be screwed because of taxes. Would I be taxed that entire 15k even though I'm only getting a small percentage.

Answer
Andrew;

I am sorry it took me so long to get back to you. I did not have my setting on vacation when I was!

You didn't mention how much you sell now.  I would be interested in knowing what your current level of experience is, that would tell me if your instinct about this stuff he wants you to sell is right.

Here's some things to think about when selling items for other people.

1. Who pays the PayPal & eBay fees?
2. Who is going to do the mailing? If the consignor does the mailing (I do not recommend this)will they mail it out with the speed and care you would?
3. What is your commission going to be? Typical eBay commission now is 25% to 50%. If it's in the lower range, the consignor pays the eBay fees.  If it's in the higher range you could split them.
4.Where are the items going to be stored? If they are stored at your home it will be easy to answer questions and ship them out.
5. If the item doesn't sell the first time, what does the consignor want to do? Re-list? Give it back to him?

When it comes to the taxes you will pay them on what you earn.  So if the items sell for $20,000. and your commission is 30% you will pay taxes on $6000.00.  There are also a tax form you will need to fill out for your consignor so he can file his taxes.

Selling for other people can be fun and rewarding. I know quite a few people who have made a career out of selling other peoples stuff. It has always made me very nervous when I have sold things for people.  I am worried the items will not sell for what they should, or what the consignor feels they should sell for, then I am left feeling bad for them.