Money, taxes and making it official
If you buy parts to resell for profit, the IRS almost certainly sees you as a business, so treat it like one from the first sale: separate account, every receipt kept, money set aside for taxes. This is general education, not tax or legal advice; check with a CPA or attorney for your situation.
Your real profit
Then divide by every hour you spent: driving, pulling, cleaning, photos, listing, packing and the post office. That's your true hourly rate. Track it per trip and per part type, and pull more of what pays best.
Getting set up (Virginia examples; other states differ)
| Step | Cost | Notes |
|---|---|---|
| Sole proprietorship | $0 | You're one automatically. Simple, but you're personally liable (SBA). |
| LLC (optional, when risk grows) | $100 to form, $50/year in Virginia | Shields personal assets; doesn't lower taxes by itself (Va. Code § 13.1-1005, § 13.1-1062). |
| Trade name (DBA) | $10 | Required in Virginia if you sell under a name other than your own (Va. Code § 59.1-69). |
| EIN | Free | Only from IRS.gov; avoid paid lookalike sites (IRS). |
| Business checking account | Usually free or low cost | All payouts in, all business costs out. |
| Local business license | License fee capped at $30–50 by locality size; a gross-receipts (BPOL) tax may also apply | Ask your county Commissioner of the Revenue (Caroline County for Ruther Glen) (Va. Code § 58.1-3703). |
| Insurance | Varies | Ask about business use of your vehicle and inventory stored at home or in a unit (SBA). |
Taxes in plain English
- All income is taxable, whether or not you get a 1099-K (IRS).
- 1099-K: eBay and others file one federally when you top $20,000 and more than 200 transactions in a year, the threshold restored for 2025 and 2026 (IRS). PayPal and Venmo report Virginia sellers at $600, so you may get a state-level form much sooner (PayPal).
- Schedule C and self-employment tax: report profit on Schedule C; once net earnings reach $400 you owe 15.3% self-employment tax on top of income tax (IRS).
- Quarterly estimates if you'll owe $1,000 or more: April 15, June 15, September 15, January 15 (IRS). A common habit is setting aside 25–30% of profit in a separate account.
- Inventory: what you pay the yard is deducted when the part sells, not when you buy it. Parts on the shelf at year-end are inventory (IRS Pub 334).
- Deductions: gate fees, tools, safety gear, cleaning and shipping supplies, eBay and Facebook fees, the business share of your phone, app subscriptions, storage rent, and mileage to yards, buyers and the post office. The 2026 mileage rate is 72.5¢ per mile for Jan–June and 76¢ for July–December, so log the date of every trip (IRS, Journal of Accountancy).
- Keep records at least 3 years: yard receipts, sales reports, labels, bank statements (IRS).
Sales tax. eBay collects and pays sales tax for you on its sales (eBay), and so does Facebook on checkout orders. Regular local cash or app sales are different: in Virginia, a regular seller probably needs to register with Virginia Tax and collect tax on those direct sales (Virginia Tax). Confirm with Virginia Tax or a CPA.
Cash flow. eBay money usually reaches your bank 2–5 days after a sale, longer while new-seller holds apply. Keep a buffer of about two weeks of yard purchases so a slow week never stops your trips.
General education, not legal or tax advice. Fees, carrier rates and rules change; check the linked sources before you rely on a number.