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Paying taxes as a middle man to a wholesaler/dropshipper

Discussion in 'Business & Tax Advice' started by everythingred, Apr 18, 2012.

  1. everythingred

    everythingred Jr. VIP Jr. VIP Premium Member

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    Let's say I want to buy a TV from a wholesaler for $9k (this is just an example to better represent this). If I charge customers $10k, I will pay the wholesaler/dropshipper $9k and pocket $1000. The problem is, come tax time, my personal earnings will say that I made $10k, and instead of being taxed on the $1k I made, I'll be taxed for a higher amount. How do collect information in order to prove that I only made $1k in profit? Do I have to register myself as an LLC or corporation?
     
  2. Roparadise

    Roparadise BANNED BANNED

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    If you have a receipt showing you bought it for $9,000 and you sold it for $10,000,then its all you need to prove you only made $1,000.
     
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  3. volund

    volund Senior Member

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    If you are working as a sole-proprietorship then you need to fill out a schedule C when you do your taxes. You can write off the $9k plus any other expenses such as shipping, phones, auto, advertising, etc.

    You are not required to form an LLC or Corp. That is what the schedule C is for. Now it is a good idea to get yourself a dba and a separate bank account but as far as the feds are concerned it is not a requirement.
     
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