Selling Online – Is It a Hobby or a Business?

Are you doing business on the Internet? Selling on eBay? Promoting or advertising someone else’s products on your website or blog?

Online moneymaking opportunities are plentiful – from selling your old books via online auction to promoting products and services for online merchants, or becoming an online merchant yourself. But at what point does this mean you are in business yourself and, since you are making money online, what are your tax and regulatory obligations?

Here’s some guidance about ways you can make money online, along with the tax and regulatory obligations tied to each:

When Is Selling on eBay a Business?

Many of us sell items on eBay or dabble in online money-making activities, but at what point does this become a business and how does this affect your taxes?

If you’re selling on eBay, for example, you can claim this activity as a hobby and deductions against it as long as you’re not buying and selling goods with the intention of making a profit.  Read more about determining whether an activity is a business or hobby from the IRS here.

If you make a profit from an eBay sale, you are required to report it to the IRS – income is income, after all. Now, neither eBay nor PayPal reports transactions to the IRS, so it’s up to you to report your profits.

If you are serious about your eBay venture, consider setting up a business to reduce your tax liability and the threat of penalties for failing to report income (you can then claim business deductions).

What about Affiliate Marketing?

Another popular way to make money online is through affiliate marketing. This is an arrangement by which individual website owners receive a sales commission by promoting products and services of other companies. Most affiliate marketers are individuals looking to make some extra money on their blogs, for example, or website owners who want to generate revenue from their site without selling products directly.

In the eyes of the IRS, affiliate marketing is comparable to being a commissioned salesperson; as a result, the money paid to you must be reported on your taxes as income. Make sure your affiliate companies send you an IRS 1099-MISC form showing your earnings for the previous tax year by February 1; then report these earnings as income on 1040 Schedule C.

Starting an Online Store or e-Commerce Site

If you’re starting a business online, you must follow the same basic steps any business owner needs to take. This involves registering for an Employer Identification Number (EIN), registering your business with the appropriate agencies, getting a license or permit, paying sales taxes, and complying with online regulations such as privacy laws, advertising laws, and intellectual property laws.

SBA offers two guides to walk you through the process of starting a business and understanding the specific obligations of online business owners:

• 10 Steps to Starting a Business
• Starting an Online Business

Don't Swim With The Sharks

Institutional Investors "move the markets." They dump millions of dollars on a stock, driving its share price as high as the sky, then dump it like a piece of trash. That's what happens almost every day in the market. The big guys come in, influence the markets then leave. That's why I always insist on investments that are based on solid economics and fundamentals analysis, and buying a stock at a fair price, rather than just day trading or buying whatever your neighbor advised you to buy.

Invest do not speculate

As I mentioned in a previous article that most people speculate. Although most like to call themselves "Investors", they are simply not! To be a true investor, the first step to take before you put your money into anything is understand the nature of the business, company, or venture.More specifically you have to understand the economics of the business such as: expenses, development, pricing, competition, and future prospects. The second step is to look at the numbers. For example if you are looking to buy stocks of a publicly traded company,  look at its balance sheet, and income statement...etc. Study trends of earnings, expenses, and assets.

Common Sense Finance Goals

The reason I decided to start this blog, is witnessing the misery people were put into caused by the recent sub-prime mortgage meltdown that pushed the U.S economy into the worst recession since the Great Depression.What seems more obvious to me is that only average households, and hard working individuals were affected most by this crisis. Big corporations such as AIG, Citigroup and other huge institutions are doing just fine. They all got bailed out by the government and individuals where left out to the waiting lines of unemployment offices and foreclosures.

A letter to Occupy Wall Street

Although protesting is the essence of democracy, it is rarely enough to achieve results. I salute the courage of all people who took their cause to the streets of major cities all around the world, protesting greed and corruption. This was a major step towards justice and the end of corruption. Who could ever imagine that Stock Markets would turn into casino machines, corporations would be treated as human beings with unlimited power and access to influence governments and regulations, and that the big fish would simply destroys the small fish with no reprimands?

What’s Luck Got to Do With It?

"BETTER to be lucky than good, the adage goes.

And maybe that’s true — if you just want to be merely good, not much better than average. But what if you want to build or do something great? And what if you want to do so in today’s unstable and unpredictable world?"

Steve Jobs, Apple’s Visionary, Dies at 56

"Steven P. Jobs, the visionary co-founder of Apple who helped usher in the era of personal computers and then led a cultural transformation in the way music, movies and mobile communications were experienced in the digital age, died Wednesday. He was 56."