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You Know You Have an eBay Business When...

If you're not sure whether your eBay "obsession" is now a full-fledged business, take this quick 20-point test to find out.
January 23, 2006
URL: http://www.entrepreneur.com/article/83146

"I've been selling stuff on eBay on and off for a few years now. When do I know if I have a 'real' business going?"

You'd be amazed how often this question arises in the eBay community. A lot of people--roughly 750,000 at last count--are making either a full- or part-time living selling stuff on eBay. Many of these folks started out selling things on eBay as a fun "hobby," and they're shocked--shocked!--when they learn that someone (like the IRS) sees them as more than that.

To help you out, here are 20 signs, David Letterman-style, that your eBay selling activities are getting a wee bit beyond the "hobby" stage:

20. You've run out of things in your attic and basement to sell on eBay, but you're continuing to sell stuff from . . . somewhere.

19. After putting your garbage out by the curb on pickup day, you drive around the neighborhood to see if anybody is throwing away anything interesting.

18. You've taken out classified ads in the local newspapers offering to help other people clean out their attics and basements on eBay--for a fee, of course.

17. You begin haunting local funeral parlors, like Paul Newman in The Verdict, offering your eBay selling services to bereaved relatives who just can't bear the thought of cleaning out Mom's house.

16. You're personally acquainted with every estate, divorce and bankruptcy attorney in your community.

15. A hedge fund wants to invest in what you're doing.

14. You consider building out the shed in your backyard, or adding a third story to your center-hall colonial, so you'll have more room to store your inventory.

13. You keep your Chihuahua chained to your eBay inventory at night so you can deduct him as a "guard dog." (Note: You can deduct the expenses of maintaining a guard dog--such as food--but not the dog itself, which has to be depreciated over his or her "useful life.")

12. The first things you read in the newspaper every morning are the liquidation and creditors' notices in the classified section.

11. You carry rolls of hundred dollar bills to garage sales, arriving just as the homeowners are putting out their stuff, and offer to buy everything they have, sight unseen.

10. You own the complete works of Janelle Elms, Marsha Collier, Joseph Sinclair and Jim "Uncle Griff" Griffith [leading authors of eBay guidebooks].

9. You're on a first-name basis with every employee of your town dump, the head of the local trucker's union, and every freight liquidator, customs broker and factory outlet within a 50-mile radius.

8. You arrive at 6 a.m. for your local library's annual book sale with 36 empty liquor boxes and three day laborers to help you pack up your truck.

7. You have so many student interns helping you create eBay auction pages the local community college has named a faculty chair after you.

6. You know exactly where you can find motor vehicles that were "formerly owned by drug dealers".

5. You know which brands of perfume, housewares and other consumer goods are being discontinued by their manufacturers within the next six months--and which distributors are likely to have overstocks of these items.

4. The talk show hosts on eBay Radio have your home phone number on speed-dial.

3. The local kids can't play basketball in the street anymore because they're too busy dodging UPS trucks going to and from your home office.

2. Your kids show up in your home office at dinnertime wearing straw hats and start singing "Do You Know the Way to Go eBay?" (to the tune of Burt Bacharach's "Do You Know the Way to San José?") as a way of telling you they haven't been fed in days.

And last but not least . . .

1. You make at least one penny in profit each year from your eBay selling activities. If you make money selling on eBay, the IRS really doesn't care if you're a "business" or a "hobby"--they want you to report your income (i.e. profits) from whatever it is you're doing on your tax return and pay taxes on it.

Since you're going to have to pay taxes on your eBay selling eventually, why not take the steps necessary to treat it as a "real" business? That way, you can deduct lots of stuff that people with hobbies simply can't do, and you'll have an incentive to look for even more creative ways to make a ton of money on eBay.

Cliff Ennico is a syndicated columnist, author and host of the PBS television series MoneyHunt. His latest book is Small Business Survival Guide (Adams Media). This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. Copyright 2005 Clifford R. Ennico. Distributed by Creators Syndicate Inc.