1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

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

    Jul 21, 2010
    Likes Received:
    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

    May 25, 2011
    Likes Received:
    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.
    • Thanks Thanks x 1
  3. volund

    volund Supreme Member

    Jan 24, 2010
    Likes Received:
    Trying to make a buck or two
    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.
    • Thanks Thanks x 3