Running Costs of an eBay Business
eBay Shop
Once you are selling a large number of items through eBay, you may wish to invest in an eBay Shop Page. This provides a list of all your auctions, acting as a type of shop window for visitors; letting them see only your products.
You pay a monthly fee for the shop, and any items you auction are added to the shop listing at no extra cost (a small charge is paid to add buy-it-now auctions). A basic shop setup is under £10 per month, although you can pay more to have your shop promoted on the main pages of eBay.
Promoting hundreds of individual auctions effectively is almost impossible, but having a dedicated shop page allows you to promote all of your eBay sales from other websites or offline marketing. You can provide a link (or address) that goes directly to your shop, bringing potential bidders to all of your auctions.
A shop makes your business look more professional, and you can customise it to group relevant items; as well as adding a company logo and other layout changes. Thousands of businesses use eBay shops, from worldwide computer companies to individual sole traders. If you sell a large number of items, then it is a relatively cheap way of creating a presence and an image in an environment that is usually faceless.
Setup and Running Costs
Setup Costs
The main costs most businesses will face when setting up an eBay business (or part of a business) are the PC and ‘office’ furniture (e.g. A PC workstation and comfortable chair).
You do not really need a top of the range PC, but you should probably choose something slightly above the most basic models. You are likely to pay between £600 and £1400 depending on whether you buy a printer and scanner (and what specification/quality they are). Remember that you can also use the PC for accounting, producing invoices and other documents; but you will need to buy the software to do this (e.g. Microsoft Office) separately.
If your business already has a PC that is available for use, you can save money on the cost of a new one.
The other setup cost you will face is buying the first lot of products that you wish to sell. The cost of this depends on what items you are selling, how many you are buying, and where you are buying them from. If you sell large products this cost is likely to be much higher than if you sell smaller cheaper products.
Running Costs
A running cost that you will have to pay is for your internet connection. This will allow you to setup your auctions, manage and provide any pictures of products and contact winning bidders. Any internet connection will work, but a broadband connection (I.e.: At least 150k) is highly preferable; especially if you are using pictures with your auctions.
The other main costs of running an eBay business are the seller fees on each item. For most items you pay a small fee for the listing (The fee varies depending on the price of the item), and a final value fee, which is a set percentage of the final bidding price (The percentage is lower for higher priced items).
Other potential running costs include any highlight or featured listing costs, as well as the cost of an eBay shop and any marketing you carry out.
Taxation
If you are a sole trader, your sales will count as income. This means that you need to include them in your accounting and tax calculations. If you are a limited company, then once you reach the vat threshold point you will need to charge vat on your auctions.
An increasing number of eBay sellers are being investigated by HM Revenue and Customs (HMRC) to see if they are classed as a trader, and therefore need to pay tax.
If you are classed as a trader you will need to register with the tax authorities and declare your income from eBay sales; even if you operate your sales from your bedroom in your spare time!
Example:
If you sell an old coat, or one you decide you don’t want on eBay; then that is a personal sale.
If you spot 3 cheap coats and buy them to resell on eBay; that could be considered acting as a trader, but is in a grey area.
If you buy 10 cheap coats to resell on eBay, then the odds are you would be classed as a trader.
If you are selling on eBay and are not registered as a trader or business for tax purposes, then you need to find out whether you need to do so. If you fail to register and pay the correct amount of tax you could be liable for estimated back-taxes and fines.
Article index:
3. Payment and Feedback on eBay
4. How Can an eBay Business Help You?
5. Ebay shop
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