Even if you're just a casual reseller, eBay takes up to 9 percent of your total sales price, and PayPal takes another 3 to 4 percent. But if you're savvy, you can avoid these fees by selling in person and taking credit cards that use Square's mobile card reader and app.
Square is a credit card reader that attaches to your phone or tablet's headphone jack and works in conjunction with a free app for iOS and Android devices. To obtain a free Square card reader, you just sign up on Square's website. Square charges 2.75 percent per credit or debit card swipe (Visa, MasterCard, Discover, or American Express), so you can sell items offline while still accepting card payments. Use Square's card reader and app to sell items through Craigslist, at a garage sale or flea market, or to your next-door neighbor.
Smart resellers keep track of their inventory. This task is a little different from expense tracking, since you can't deduct the cost of unsold inventory at the end of the year.
A note-taking app such as Evernote is practical for inventory tracking. Evernote is especially helpful because it can sync notes, lists, and photos across multiple platforms, enabling you to access your notes from any device.
One way to keep track of inventory with Evernote is to snap photos of the front and back of all receipts connected with your inventory purchases. Doing so will help you keep track of how much you paid for each item (including tax, which should factor into your calculation of your final profit), when you purchased the item, and whether you can return the item if it doesn't sell.
Purchasing discounted items from stores with good return policies (such as Nordstrom Rack, Saks Off Fifth, and Neiman Marcus Last Call) is a great way to stock up on no-risk inventory--if the items don't sell, you can return them and get your money back. But you need to keep track of the return-by date for each item, or you may find yourself stuck with unsellable inventory.
If you flip new items for profit, or resell older, used items for profit, you're legally obligated to report this profit to the IRS. One benefit of this is that you can deduct costs associated with your reselling business--such as the cost of parking and gas if you go to a store to pick up an item, or the cost of storing inventory (if you have to rent a storage locker, for instance).
To keep track of expenses and other tax-related issues associated with your reselling efforts, download an accounting app such as FreshBooks. FreshBooks lets you create invoices, keep track of clients (the app is free if you have fewer than three clients), track time, track expenses, manage projects, and create estimates. As a reseller, you'll most likely be using the time-tracking and expense-tracking features; but if you're reselling offline, you can also use the invoices option to create invoices for particular clients.
You can use the time-tracking feature to create timesheets to help you keep an eye on how much time you're investing in your reselling efforts. The expense-tracking feature lets you log expenses; and if you attach a photo of each receipt, you can keep track of the money you spend on reselling-related costs.