| Few people realize that starting a side-business on | | | | Says Kennedy, Take a look atpersonal expenses and |
| eBay is actually a great way to save money on your | | | | how they could become business expenses. Things |
| taxes. The trick is to make sure youre putting all the | | | | like employing your kids, having a home office, |
| additional expenses you incur against your additional | | | | maybe your car youre using to run errandslook at all |
| income. Running an eBiz allows you to take numerous | | | | the things youre spending money on now that could |
| deductions that can add up to a lot of savings. | | | | become business deductions. |
| Deduct Your Home Office | | | | How to Protect Yourself |
| By definition, if youre an eBay seller, you have a | | | | You need to be able to prove your deductions are |
| home office. You have to have a space thats used | | | | legitimate business expenses, so its crucial you keep |
| exclusively for business, whether its in your spare | | | | good paper work on everything. Track where your |
| room or your basement. But having this allows you to | | | | moneys coming from and what your costs are, and |
| take a percentage of your mortgage interest, your | | | | have documentation to back it up. Should the |
| utility bills, your homeowners insurance, and your | | | | government ever have questions, youll be glad you |
| homeowners dues as deductions against your | | | | did. |
| business. And if you use your home to store | | | | Good record keeping will go a long way towards |
| inventory, even if it doesnt have its own room, you | | | | satisfying the IRS. But you can lessen your chances |
| can include that space in your deductions as well. | | | | of getting audited in the first place by forming a |
| Deduct Your Childrens Pay | | | | corporation or an S-Corp. If you default to a sole |
| Rather than giving your kids allowances, pay them to | | | | proprietorship, you have a one in twelve chance of |
| help out with your business. Youre moving income | | | | being audited. Incorporating also gives you certain tax |
| out of your tax bracket, and you can pay them up | | | | advantages. |
| to $4,900 a year before theyll have to pay taxes on | | | | When done properly, selling on eBay allows you to |
| it. Tax strategist Diane Kennedy, of says there are | | | | save money on the back end with taxes. As |
| three rules to employing your child: | | | | Kennedy says, So many people dont realize that just |
| 1. Have some kind of written job description. | | | | by having this little side business, they can actually |
| 2. Make sure theyre keeping track of the time they | | | | immediately start paying lesser taxes. In fact, we say |
| actually work. | | | | eBay tonight and pay less taxes tomorrow. |
| 3. Pay them a reasonable wage. | | | | |