How do I file taxes as a reseller?
What forms you need
If you're a sole proprietor (most part-time resellers), you file Schedule C with your Form 1040 to report profit or loss. You also file Schedule SE to calculate self-employment tax (15.3% on net earnings, covering Social Security and Medicare).
You can deduct ordinary and necessary business expenses, including inventory cost, shipping, packaging, marketplace fees, home office, and a portion of internet and phone. Inventory is typically deducted when sold (cost of goods sold), not when purchased.
- Schedule C: profit or loss from business
- Schedule SE: self-employment tax
- Form 1040: personal return
- 1099-K from marketplaces if you meet thresholds
Quarterly taxes and recordkeeping
If you expect to owe $1,000 or more in taxes for the year, the IRS requires quarterly estimated payments (due April 15, June 15, Sept 15, Jan 15). Underpaying can result in penalties.
Keep receipts, invoices, and a mileage log. Use accounting software or a spreadsheet to track income and expenses. Many resellers hire a CPA familiar with e-commerce to avoid mistakes.
Common mistakes
- Not setting aside money for taxes throughout the year, leading to a surprise bill in April.
- Deducting inventory as an expense when purchased instead of when sold (unless using cash accounting for small business).
- Ignoring state sales tax filing obligations even if the marketplace collected the tax.