Selling trading cards online. How to report expenses and income/profit

[DigitalNomad29]

I'm married filing jointly. I have a full time job as a IT professional and my wife doesn't work. I started selling trading cards online this year as a way to make a little extra money.  I have not created a legal entity for it yet. These are not cards that I have been holding on to. I find cheap cards and resale them. I have records for the purchases and the sales. Revenue would be something like 10k in sales, 2k in platform fees and 5.4k from purchasing inventory and 1k in shipping costs. Come tax time, how do I report everything? By the end of the year I could still have thousands of dollars in inventory how does that factor into things? Thank you.

[marctu]

Well congratulations on your side gig and discovering a way to make a profit.  So, first a definition of inventory:  Inventory refers to a company's goods and products that are ready to sell, along with the raw materials that are used to produce them.

So, your net profit will be your sales $10K, less your platform fees, $2K, shipping costs, $1K (This can also be part of the inventory calculation.  So before diving into inventory, your net profit is approximately $7K. 

Let’s assume that your year end inventory is $3K.  During the year, your purchased inventory cost is $5.4K above.   That would mean that your cost of goods sold is $2.4K.   So, your net profit now is $4.6K. 

You can use this example to see what your potential net profit is.  Keep in mind that I am assuming you also are going to have expenses for communications, internet and potentially computer and such as well.  

Thank you for your question @DigitalNomad29   and best of luck in this new venture. 

Be well and safe!

Marc T.

Turbo Tax Expert

27 Years of Experience Helping Clients