The internet auction site eBay has become a global phenomenon in recent years. Today, an estimated 135 million users around the world currently use the service to buy and sell things as diverse as mobile homes, jewellery, and celebrity clothes.
Its popularity has also seen the site become an obvious business opportunity for entrepreneurs. With millions of potential customers just a couple of clicks away from your products, setting up an eBay store is a cheap, easy and massively appealing way to do business online. However, as with starting up any business, there are challenges involved as well particularly when it comes to tax, accounting and the legal side of things.
Predominantly, the people that trade via eBay tend not to be aware of some of the basic – but critical administrative requirements of running a business. This is particularly the case with those eBay sellers who begin by selling odds and ends and slowly become a business. Other people that sell online regularly to subsidise their income moonlighters likewise have to be careful.
For example, at what point should the business be registered as an official company? When should the Inland Revenue be contacted? What permits are necessary? Small business owners / eBay moonlighters are also opening themselves up to risk and need to be aware of when they should be paying tax on their sales. According to Sunil Parekh, PJT Accountants, the following provides a checklist for people starting an eBay business or using it frequently to sell goods.