This is something of an unspoken topic perhaps and one that you might feel unable to publicly comment on but here goes. [@Admin
delete if not appropriate]
Like many, as my interest in Lego expanded I began to sell Lego to reinvest in buying more sets. I started on ebay and later setup modest stores on Bricklink and Brickowl. Whilst I'm not making a significant amount on these sales I am becoming more and more concerned about declaring tax and wondered what other hobby sellers are doing? Are you declaring or not?
At first I thought, its just a hobby and lots of people are doing it so it must be ok.
There seems to be lots of folklore around the topic i.e. Its a hobby so doesn't count, I don't make enough to hit a threshold that would interest the tax man, I reinvest everything back into Lego so its OK etc. However, research indicates "any" income from the sale of a product (aside from used and unwanted goods) must be declared. So if your buying Lego with the specific purpose of reselling some or all of it then you need to think about this.
Of course, we can assume that the tax man just isn't interested in us but is this true? I have heard that Paypal report users earning above a certain threshold to the tax man, though this threshold seems high (if true). Any thoughts?
If I understand correctly if you do declare you need to register as a sole trader in order to declare through a tax return.
Being a 40% tax payer would make any profits from selling seem not worth while for me, but my wife, who doesn't work could sell without fear of paying tax.
So seems there are multiple options.
1. Stop worrying about it and do nothing.
2. Register myself as a sole trader
3. Register my wife as a sole trader and have her make the sales in her name
Now, for anyone with in the know, I have some questions about setting up as a business that I would appreciate comments on.
1. What happens about past sales if I register as a business?
2. What impact or benefit is there in converting paypal to a business account?
3. Is there an easy way to change the owner of my ebay, bricklink and brickowl accounts?
4. If setup as a business do you need to transact everything through a business account? Or can it be a joint account?
5. How is inventory accounted for when doing tax returns
6. Can I purchase items for the business through personal accounts?
7. Is the sales counted for tax purposes at the storefront or who receives the money. In other words if my stores invoices were paid into my wife's paypal account who is liable for the tax, me or my wife?
8. How do you cost parts for inventory in Bricklink?
Probably very obvious questions to some of you I hope.