You will be responsible for the goods you take in from consignors. Therefore, you need to carry theft, damage, and adequate fire insurance. Make sure your car insurance covers contents that could be stolen or damaged in an accident. In many states, insurance can be very difficult to find for businesses in the home. First, check with your homeowners insurance company, because many of them offer low-cost riders for such businesses.
Find an independent broker to buy your insurance from. Brokers represent lots of insurance companies, and they can research and find you the best deal. Tell your insurance agent that you are running a business and you need commercial coverage. This is a little more expensive than your standard home and auto insurance. But, if you have a loss and the insurance company finds out you are using your home or car for business (and didn’t tell them), they can deny the claim if you do not have a business policy.
One problem you will have is that the value of the goods you have in your possession will vary from time to time. Unless you have a bonded warehouse with security, you probably cannot buy a policy with variable limits. You will need to estimate the value of your goods you have at any one time and buy that much insurance coverage. You can obviously start out small and raise the limit later. I would suggest $10,000 coverage to start with, because it the minimum coverage you can purchase. A policy such as this should cost less than $500 a year. Remember too, the very fact you have an insurance policy you can show to consignors will help you get more business.
There is a new service available for eBay sellers called buySAFE, which can bond all the auctions against frauds and is underwritten by the Liberty Mutual Insurance Company. Print out your buySAFE page and carry it with you to show that you are a bonded seller. You can apply at http://www.buysafe.com. buySAFE is also working with Liberty Mutual to develop an insurance policy for eBay Trading Assistants.
You will want to carry a copy of your business insurance policy and/or your bond with you and show it to people as part of your presentation.
Another important reason for having insurance is that you will occasionally run into consignors who are reluctant to let you hold the merchandise you are going to sell. Showing them your insurance policy and/or bonding certificate will often solve this problem for you.
You will be doing a lot of writing, creating auction ads, sending e-mails, etc., so you should have a good dictionary, style manual handy, and thesaurus.
If you will be selling antiques and collectibles, you will want some reference books and price guides.
My most valuable reference tool is a series of three-ring notebooks I keep next to my computer. It is frustrating and time-consuming to be working on a document or an e-mail and have to flip back and forth to a web page or other file for information. I find it much easier to open a notebook next to my computer where I have printed out copies of web pages, pages from catalogs, the eBay help files, and information that I prefer to suggests too often.
The Official eBay Bible by Jim Griffin is a good general eBay reference and how-to guide.
Keep good files. Keep a hard copy of each transaction and back up your computer records on disk or with an online backup service. Also, keep good financial records for tax purposes.
As a small business owner, you will have to pay taxes on your income. There are thousands of people selling on eBay on a cash basis that never claim the income. I don’t recommend this unless you are placing only a few auctions a month.
If you are ever audited, the IRS will have a look at your bank and credit card records. If they see a lot of charges by eBay and/or a lot of miscellaneous deposits, you will have some explaining to do.
I am not licensed to give tax assistance, but I just want to explain as a small business owner you have dozens of tax breaks and deductions available to you. These became even better under the 2003 Tax Reform Act, which improved tax breaks for small businesses.
You can estimate in the home, automobile expenses, costs for computers, software, Internet service, telephone, utilities, transportation, meals, entertainment, and so on.
Instead of paying your kids an “allowance,” you can hire them as “casual laborers” and deduct what you now pay them as an allowance.