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Tax Planning/Newbie with questions!



I quit my job to file for disability. I was denied, obviously.
They told me that "Yes, you have restrictions, but you are still able to perform basic job functions."
I can not go back to my previous work because I absolutely struggle to do it. So I am looking for creative ways to make money.

Which leads me to you! You may not be able to help me, but maybe you could direct me to someone (or a website) that can!

Here is what I want to do:

I learned from a coworker of my mother's a way she makes extra cash during the month. Buy cheap goods in bulk, and sell them for more at flea markets, yard sales, and on ebay! (Also drop shipping)

So I have done some extensive research and reading, and have decided I do NOT want to drop shipping. I would like to just purchase the products on my own and sell them of my own accord. I have discovered dozens of websites that offer products for this purpose.

HOWEVER.. in order to purchase these products you must have an EIN.

So I obtained my very own EIN, as a sole proprietorship/individual thing.

My questions for you........

How will I file my taxes?
What forms do I use?
How do I know the amount of money I should save for taxes?
Will I even HAVE to file taxes?
Should I keep a separate bank account for this venture?
How much money will I have to earn in order to have to file taxes?
Is this considered entrepreneur, small business, etc?
Will my tax-related things be different if I sell on ebay vs. flea markets?

Umm.. and probably more questions that I can't think of right now. :(

I really hope you can help, I know this is long. If you can't, please direct me to some websites perhaps?? I don't really know what I'm looking for.. :)


Kayla - I will address your questions one at a time, but keep in mind that the tax code is VERY complicated and there are a wide variety of variables.

1. How will you file your taxes?  You will file a Schedule C attached to your personal 1040 tax return.
2. What forms do you use?  If you make a profit of over $400 from your business, in addition to Schedule C, you will also have Schedule SE for self-employment taxes.
3. How do you know the amount of money you should save for taxes?  At a minimum, you will owe 15.3% (roughly) of your net income from the business for self-employment taxes.  The amount of income taxes you will owe varies depending on a number of factors, including your filing status, your age, your total taxable income and a number of other variables.
4. Will you even have to file taxes?  More than likely, the answer is yes.
5. Should you keep a separate bank account? The answer is that it is a good practice to do so, although not required for a sole proprietorship.
6. How much money will you have to earn to have to file taxes?  Again, that depends on a number of factors.  You may not have any earnings at all, but that doesn't mean you shouldn't file.
7. Is this considered entrepreneur, small business?  Yes.
8. Will your tax-related things be different if you sell on eBay?  Maybe.  It sounds like you will have an inventory-based business which has another entire layer of complexity.

I suggest before you go into business that you consult with a local accountant so they can get you set up.  And you might want to take some business courses at a local community college.  It sounds like you need some assistance and you should not go into business unless and until you have a grasp on what is required or you will find that you have many surprises you didn't ever expect.

I hope this helps.

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As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.


I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

National Association of Tax Professionals


Enrolled Agent, Admitted to Practice Before the IRS, Accredited Tax Preparer, Fellow of National Tax Practice Institute, Certified QuickBooks ProAdvisor (1999-2011), Sleeter Group Certified QuickBooks Consultant, Life & Disability Insurance Agent License (California, Texas, Maine), Real Estate Agent License (California); Many years of continuing education in all these fields.

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