Christmas deals are everywhere on eBay, you just have to know where to find them!  eBay recently sent a newsletter to sellers with tips on how to boost their holiday sales; I thought I’d share a few of them from the consumer point of view and see how they can save you money.

Microsoft Live Cashback

“We’ve teamed up with Microsoft to give buyers up to 30% cash back on items they find on eBay through a Microsoft Live search.”

* Note eBay coupons do not work with Express Checkout. Live Cashback does not work with third party checkout and only applies to Fixed Price and Buy It Now items when paid with PayPal. 

Do some shopping on Microsoft Live Search and checkout items that come up from eBay.

eBay’s Holiday Coupons

“eBay will be hitting millions of buyers with coupons-wherever they’re searching.”

eBay doesn’t say where they’ll offer the coupons but it sounds as though they’ll pop up all over the web so keep your eyes open.

Free Shipping

  * Buyers are on the lookout for free shipping. It can make them pick your listing over others.
  * Free shipping gives you an automatic boost in search results and a free subtitle.
  * Plus we’ll double PowerSeller discounts for items sold with free shipping through December 31, 2008.

Items with free shipping will show up higher in your search results so comb the top page for shipping offers.  Also, look for PowerSellers, they have incentives to offer free shipping so are more likely to do so.

Best Offer

  * Tell buyer’s to make their Best Offer.
  * Set up your listing to auto-accept offers above the price you want and auto decline low-ball offers.
  * Make a counter-offer to get the price you want and move more inventory.

Look for chances to save some money by making your Best Offer but don’t get emotionally sold and agree to counter offers that are higher than you want to spend.

Store Sellers Highlight Great Deals
  * Use Email Marketing to send targeted offers and holiday updates to your customers.
  * Use Markdown Manager to offer discounts and reinforce the great deal with “strikethrough” pricing.

If you’re interested in a product in an eBay store, consider signing up for the store newsletter, the seller might offer holiday discounts.

eBay Deals

eBay created the deals hub to help shoppers more easily find offers such as free shipping, best offer, and items starting at $1.

So signup for an eBay account if you don’t have one already and find some deals this holiday!

They say it’s pretty easy for college students to manage money. When you’re in school, you’re usually so broke that there’s no money to manage!  The thing about college is that everyone pretty much expects you to have no cash, to scrape by on a part time job and student loans.

Suddenly, after graduation society instantly wants you to become financially responsible:

• No more sleeping through class, now you have to get up and go to work. 
• No more borrowing thousands of dollars a year, now you have to start paying back your student loans.
• No more student tax credits, now you’re earning real money and the government wants their cut.

These realities can be a rude awakening, some mornings you’ll think about adding another major and going back to school for a few more years, just to get away from all that responsibility.

Making Your Money Work for You
Of course, the good news is that now the money’s rolling in.  You spent all those years learning a profession and now you’re hard work pays off each month when you get a paycheck.  If you have to get up and go to work every day, why not make the money you earn go as far as it can?

This financial cheat sheet series can help you with that.  We’ll cover some things you may not have picked up in school or maybe tips you already know but could use a refresher.  The good news is that a lot of personal finance just boils down to understanding the key concepts and using common sense.  Below are the topics we’ll take a look at, stay tuned for the financial coverage:

• Investing Tips
• Health Insurance Tips
• Student Loan Tips
• Spending & Budgeting Tips
• Credit Card Tips

Cash shortages are common during a recession.  What similarities do you notice in the cycle below:

• Consumers Spend Less Money
• Businesses Earn Less Money
• Businesses Stop Hiring/Start Firing
• Laid off Consumers Spend Less Money
• ….

When the economy stops expanding there is less money to go around. Everyone tries to get more out of less.  We pay less for products and services and then try to extend their useful life.  So how can you tap into this trend to make extra money during a recession?

Help People Extend Product Life
One way people will be looking to cut costs is to buy fewer things, which means making what they currently have last longer. Chances are you know more about a particular product or service than the majority of people in your town, or even the whole country.  You can make money helping people extend it’s useful life, saving them money.

If you can offer information, consulting, or repair services people looking to save money will find you.  Don’t think people will pay you for that kind of information?  Check out the following example.

There’s a person that offers a whole series of booklets (EZ Battery Tip) on how to renew old Nickel Cadmium (NiCd) batteries on cordless power tools for brands like Craftsman, Ryobi, Porter Cable, and Bosch. These batteries are not cheap to buy new so people are happy to find a way to reuse their old ones. This person has sold thousands of these booklets on eBay, with 99.8% customer satisfaction; check out some of the feedback from buyers:

• The instructions really work; saved a fortune on Bosch drill batteries
• GREAT info! well worth the bid
• great investment great ebayer
• good info worth the money thanks
• It really works!  I saved alot of $
• SUPER, worth the price

If you have experience that can save people money, they’ll reward you for it. What area are you an expert in?  You wouldn’t have to sell your expertise online; you could setup a local operation repairing items in your town instead.

Teach People to Save Money
Maybe you don’t know how to fix things but are great at cutting costs. Start a website or hold local seminars, teaching people how they can save money.  Maybe you have techniques for saving on gas prices, insurance, automobiles, housing, energy, taxes, clothing, or grocery bills.  You might think some of these things are common sense but to someone who’s not familiar with having to live with a fixed budget, they may be valuable lessons.

Take a look at Fiona Lippey, the Simple Savings lady in Australia who’s built a huge resource for people looking to save money.  Some people use it for free but others pay money to access the entire library of money saving content.  Again, to a frugal person like me this might seem like a waste of money but for some people it’s just what they were looking for.  If money is tight and the membership can save them more than it costs then they’re happy to sign up.

Look a little closer to home, remember America’s Cheapest Family?  They wrote a whole book about how to save money; I bet sales will surely increase as more people look to save money during a recession.

While a habit of being thrifty may be scoffed at by some in times of prosperity, when the economy turns and people lose their jobs, suddenly the skill of being able to make dollars stretch farther becomes very valuable.

Sell for Lower Prices
When people have less money to spend, they’ll look for alternatives to retail prices and turn to places like eBay, Craigslist, or garage sales for bargains.

If you have a knack for finding good deals you can turn around and re-sell the things yourself to make some extra money.  Obviously the benefit of selling them online vs. garage sales is that you can reach a much wider audience of potential customers on the Web.  Of course, if you’re not comfortable with selling on eBay there are options such as garage sales or flea markets.

The risk of this option may be the highest of the three since you’re taking possession of products and aren’t guaranteed to get your money back.  The way to mitigate that risk is to only buy things for re-sale if they’re a really good deal and you have a high level of confidence (based on numbers not a gut feeling) that you can re-sell them.

Of course, if money is tight you might not have extra cash to buy things with.  In this case you could always start off by selling your own stuff to raise some initial funds.

Summary
Just remember, the economy tends to move in cycles and recessions don’t last forever. Even if these things sound like more work than they’re worth, keep in mind you don’t have to do them indefinitely. 

The goal here is to make extra money during a recession to help keep your finances in order while the majority of the country is struggling through a bad economy.  Things will eventually get better and then you can decide whether to keep it up and continue making extra cash or to take a load off and enjoy the long-awaited economic upswing.

Think about the different ways you have to make more money in a bad economy:

• Help People Extend Product Life
• Teach People to Save Money
• Sell for Lower Prices

Make sure you also read how you can make money from a down real estate market and profit from the falling US dollar and be sure to stop back tomorrow to check out the best gas credit cards to save you money at the pump.

One of the changes is that sellers with good detailed seller ratings (DSRs) will get an advantage in Best Match search results. Below are my current ratings:

• Item as described – 4.7
• Communication – 4.9
• Shipping time – 4.6
• Shipping & handling charges – 4.6

I’d like to get all my scores above 4.6 so that I can take advantage of the new search results. I do know why my shipping time ratings are at 4.6.  I say items will ship within 3 business days of purchase, I could cut that down to 1 or 2 days and bump up that score.

I’m not really sure why my shipping & handling charges rating isn’t higher, my rates usually seem to be some of the lowest.  I charge whatever the USPS or UPS fee is plus $1–2 to cover shipping materials, labels, ink, gas.  I’m puzzled as well why the Item as Described isn’t higher, 99% of the things I sell are brand new and they have a picture and model number in the listing.  Can’t get much more specific than that.

ebay Advertising
As an eBay seller I get their periodic newsletter and the most recent one announced that the spring eBay catalog is going out the first week in March to more than 2 million eBay buyers. Even though many people are complaining about the fees eBay charges, I think this newsletter is an example of the value they provide for their fees.  How else could a small business owner reach 2 million people with a catalog?  They’ll advetise a variety of items across several different categories.

• Sports
• Motors
• Home
• Fashion
• Techology
• Art, Antiques, Collectibles

ebay Partnership
I got another check this month from my eBay partner, it wasn’t as big as last months but I’m not going to complain about a $450 check : )  He’s been busy expanding his business, finding more product sources. He’s listed and selling the first pallet of items and has already had another pallet delivered. It will be interesting to see what kind of ROI he gets from the stuff at Liquidation.com.

Do you ever feel like the growth in some area of your life has hit a plateau and you don’t know what to do about it?  One of my friends was recently in that situation and took action that reminded me we sometimes have to move out of our comfort zone and try something new to make progess.

This is the friend that I introduced to selling on eBay who not too long ago became my eBay partner.  His wife is staying at home with their new kid and he started an eBay business to supplement their income.  He had been seeing steady growth but not enough to earn the money he had planned on.  He realized he needed to try something new in order to break through the income barrier he was facing.  After researching many different options, he decided to spend alot of money buying pallets of goods from Liquidation.com to resell on eBay.

It wasn’t an easy choice, he was spending almost all of his earnings to date on the deal and had never done anything like it before.  Despite the doubt and all the reasons not to do it, he bought the products, took a day off from work to have the pallets delivered, and dove into listing the inventory.  Using his new approach he’s able to list more items, faster, and make higher profit margins.

I was pretty impressed with my friend’s willingness to try something new and take a risk.  I’m really glad its working out for him and offered to be an investor when he needs a few thousand dollars to buy more products.  To me, it was a great example of how we have to be willing to change to grow.

Personal Finance Review

Some weeks are better than others in terms of personal finance content online and this week was just chock full of good stuff so this is a longer review than normal.  Enjoy the articles:

Lazy Man & Money has an article I really liked called Your Financial Football Team, that reminded me of my Personal Finance for Sports Fans series and Is Your Investment Portfolio a One Man Team?

Suns Financial Diary reminds us that we’re not the only ones feeling the pain of the financial markets, things aren’t pretty with Chinese ADRs either.

The Digerati Life has a great article on beating the average investor’s returns with the Simplest Investment Portfolio and Generation X Finance reminds us of the importance of The importance of disability insurance.

No Credit Needed is pretty well read when it comes to debt reduction and offers his Favorite Books About Debt Reduction And Credit.

Free Money Finance warns that little expenses can add up, the Mighty Bargain Hunter covers banks obligations on foreclosed property, and Five Cent Nickel lists 12 commonly missed tax deductions.

Blueprint for Financial Prosperity gives us 8 Reasons To Do All Your Shopping Online, make sure you also read how to save money on shipping when shopping online.

Many people are asking the question whether they should refinance after all these interest rate cuts, Get Rich Slowly takes a look in Are Mortgage Rates Tied to the Federal Funds Rate?

The Simple Dollar takes a look at online personal finance analysis tools like Mint and Wesabe and My Money Blog talks about a new online payment system called MoneyExchange that’s offering a $25 bonus to signup.

If you’re not tired of reading about money yet, here are some more good posts from the M-network: 

-75 Frugal Hacks for Your Home @ Being Frugal

-Prosper – the Ebay of Person to Person Lending @ Cash Money Life

-Making Money in Real Estate with Fixer-Uppers @ Gather Little By Little

-The Big Rocks of Life @ Moolanomy

-Money Mistake Monday – The Learn Before You Invest Syndrome. @ My Two Dollars

-American sub-prime crisis: should the rest of us care? @ Plonkee Money

-The Real Cost of Homeownership @ Single Guy Money

-How to buy partial shares of Berkshire Hathaway with ShareBuilder @ The Dough Roller

-The “Can We Afford The Payments” Mentality @ Paid Twice

If you’re running a profitable business on eBay hopefully you’ve been making estimated tax payments throughout the year to avoid any kind of fees and interest.  I just sent in my estimated payment for fourth quarter of last year and it sure wasn’t any fun writing that check to the United States Treasury. If your home office qualifies, it may be one way you can shrink the size of the check you write the IRS.

eBay Home Office Deduction
As an eBay seller, you probably do most of the selling work from home. If your home office is your principal place of business, and you use it regularly and exclusively for business you can probably deduct part of your housing expenses on your tax return.

Principal Place of Business
To pass the ‘place of business’ test, your home office must be the principal place you conduct your business, or a place where you regularly meet with clients or customers, or it must be a separate structure not attached to your home.  Although I recently teamed up with an eBay partner, prior to that I did the majority of my eBay work in our home office.  My wife will tell you that I spend more time in there than I do with her : )

Regular & Exclusive Use
Regular and exclusive use means that you spend at least 10-12 hours per week conducting business in your home office, and that you don’t use this space for other purposes. For example, you can’t just clear off your dining room table and call your dining room a home office.  The IRS is a big fan of documentation so I’d recommend keeping track of the hours you work each week as proof of the regular and exclusive use.

If you track your time electronically it’s a good idea to make periodic backups of that information in case the IRS ever comes looking for it. I use the export function in Freshbooks to download all the time I track there and burn it onto a CD for safe keeping.

Which Rooms Qualify?
Although I have a separate office, your home office does not have to constitute an entire room. You can identify part of a room as your home office, but you should have some type of partition and you should not mix personal items with your business items. In addition, if you are storing inventory in your home, then the portion of a room that is used for storage qualifies for the home office deduction.

Which Expenses Qualify?
Expenses that can be deducted as part of your home office include:

• mortgage interest
• real estate taxes
• utilities
• insurance
• repairs
• security
• depreciation

How Much Can You Deduct?
Keep in mind that only the business use percentage of these expenses can be deducted. The business use percentage is calculated by dividing the square footage of the office space by the square footage of the home, or by dividing the number of rooms you use for business by the number of rooms in your home.

Direct expenses, such as repairs made solely to the room used for your home office, or telephone lines installed just for business use, can be deducted in full. Indirect expenses, such as mortgage interest and real estate taxes should be allocated between the home office deduction and your itemized deductions to get the greatest tax benefit.  Of course everyone’s situation is different so you can ask your tax advisor for guidance there.

Will You Get Audited?
The home office deduction is often considered by many to be a red flag. It’s more and more common these days so it doesn’t stand out as much as it used to, but you should still use caution when calculating this deduction. Keep good documentation that proves your office is your principal place of business and that you use it regularly and exclusively for business.

One thing to remember is that your business must earn a profit to take the home office deduction. If your home office expenses are larger than your business profits, you must carry the excess expenses forward to future years.

Depreciation Recapture
Be aware, if you deduct the depreciation expense of your home office you’ll have to pay tax on that depreciation when you sell your home someday.  The amount of the depreciation deduction is taxed at a flat rate of 25% and reported on Schedule D. Basically what this means is that by using the depreciation deduction for a your home office now, you’re deferring the taxes to some point in the future. 

Where Can I Get More Information?
The whole home office deduction can be a bit overwhelming for those of us who aren’t tax experts. You report your home office expenses on IRS Form 8829 and can turn to IRS Publication 587, Business Use of Your Home, for some more information. 

If you’re interested in the home office deduction but are unsure of how to proceed, I’d recommend checking out a resource by a friend of mine, eBiz Tax Tips. Kristine is an expert in the field of entrepreneurial taxes and spent over a year capturing her knowledge in this guide. While this post talks about the home office deduction for eBay sellers the deduction can also apply to people that run other types of businesses from their home. The eBiz Tax Tips book covers not just eBay businesses but tax strategy for online businesses in general. Good luck with those taxes!

My response was, if you are selling on eBay and have a net earnings of more than $400 in a year, you may be subject to the self employment tax of 15.3%. Needless to say he wasn’t exactly happy to hear that his profits in his new business could take another hit, this time over 15%!  He wanted to know what that 15% was for and why he had to pay it.

Self Employment Tax Explained
I explained that the self employment tax rate is made up of two parts: 12.4% for Social Security and 2.9% for Medicare, for a total of 15.3%. To answer why he might be subject to self employment tax, I answered that generally if you have income earned in any of the following ways Uncle Sam expects self employment tax:

* as an independent contractor
* as a sole proprietor of a business
* as a member of a partnership
* from any business you run yourself

Part Time Employment
“But I only sell in my spare time, it’s not my full time job or anything”, my friend protested. I was sorry to tell him that a business does not have to be full time to be subject to self employment tax, income earned from a part-time business in addition to a full time job may also be subject to self employment taxes.

He does work in a full-time job as a software developer and is paid a salary by his employer but the profit from his eBay sales is considered self employment income and is subject to the self employment tax if he has net
earnings of at least $400.

Paying Self Employment Tax
Obviously none of this was making my friend very happy but he knows you can’t fight taxes.  “So how do I pay what I owe”, he asked. I explained that Schedule C of Form 1040 is used to report his business income and expenses and to calculate his net profit or loss. Schedule SE is then used to calculate his self employment tax and to report the amount owed. The numbers from both Schedule C and Schedule SE are then transferred to his Form 1040.

Reducing Your Taxes
As he moaned and groaned about paying another 15.3% of taxes I suggested that next year he record & document all his business expenses carefully to help offset his self employment income. The lower his self employment income the smaller the amount that’s subject to the self employment tax. Keeping good records of what he spends can really pay off!

When he asked me whether he needed to be reporting the income that he earned on eBay I turned to a resource by a friend of mine that’s all about managing your taxes on eBay sales, eBay Tax Tips Book. I ran him through the list of nine factors that the IRS looks at to determine if you are trying to make a profit, or if you’re just enjoying a hobby:

1. Whether you run the activity in a business like manner
2. How much time and effort you put into making a profit
3. Whether you depend on the activity for your livelihood
4. Whether your losses were due to conditions beyond your control
5. Whether you changed your operating methods to improve profitability
6. Whether you or your advisors have the knowledge needed to carry on a successful business
7. Whether you successfully made a profit in similar activities in the past
8. Whether the activity makes a profit in some years, and how much
9. Whether you can expect to make a profit in the future from the activity

He answered yes to enough of the questions that we determined he needed to establish a business entity to manage his eBay income and expenses. So yes, he should be reporting his income, in addition to tracking his expenses so he can offset some of the earnings and bring down the total tax bill. 

Of course, in order to deduct those expenses he’ll need to be able to prove he’s running a business.  We went over some things he can do to show that he’s indeed operating a business and not just a hobby:

· Get an employer identification number (EIN)
· Apply for a business name
· Have a separate checking account to be used for business transactions
· Hire an accountant to keep his books
· Create a business plan
· Keep track of the time he spends each week doing business activities
· Consult other business owners or advisors to help make his business profitable

I know he wasn’t happy with my answers since it meant some of the profit our partnership generated for him would have to be paid to Uncle Sam but it’s better that he starts tracking it now rather than wait until tax season and have to play catch up.

eBay Feedback
If you’ve done any of your Christmas shopping on eBay then you’ve already built up a feedback profile that will make others comfortable doing business with you.  If you haven’t purchased anything there before now is a good time to get some great deals on things you can put away as future Christmas or birthday gifts.  Sellers have flooded the site with auctions to meet the holiday rush and typically the more people selling a product, the lower the price goes, with exceptions such as the Nintendo Wii.

Free Shipping Supplies
You and your family will likely open gifts in the week ahead and with gifts almost always come boxes.  Save the boxes and packaging material as you open presents and you’ll have free shipping supplies!

Big Discounts
As we get closer to the day of Christmas retailers continue to offer sales and once the holiday is over they will offer big discounts on many products.  Take advantage of these low prices as they try and move out inventory.  If you can buy it for a big discount chances are you can re-sell it at some point in the future for a handsome return on investment.

Unwanted Gifts
Another inevitable side effect of the season of gift giving are people who end up with presents they don’t really want.  In some cases there is no gift receipt so they’re stuck with what they got.  In other situations the thought of standing in long return lines prevents people from taking back or exchanging unwanted gifts.

So what does this have to do with you?  Offer to sell your friends, families, neighbors, or co-workers unwanted presents for them on eBay and take a commission.  They get rid of something they don’t want and you make some extra money, win/win.

Of course the best thing about the holiday season is the time you get to spend relaxing with your family but that doesn’t mean you can’t think ahead for some pre-emptive eBay action.  Enjoy!

I mentioned earlier how I had found a partner to help me sell on eBay.  I had a bunch of inventory I wanted to sell but didn’t have time and he wanted to increase his sales volume on eBay. We got things rolling about two weeks ago and it’s been great. He’s doing all the work and I’m still making money : ) 

Inventory Transfer
Every morning I’d load my car up with merchandise before I left for work.  We’d meet in the parking lot of my work building over his lunch hour and transfer it all over to his car.  I have to laugh when I imagine what’s going through my co-workers heads as they see us out there every day moving stuff from trunk to trunk.  They must think we’re moving “hot” items, maybe that’s why they haven’t asked what I’m up to.

Tracking with Google Docs
Managing the financial details of the partnership has been pretty easy with a spreadsheet in Google Docs. As he creates listings and uploads them to eBay he adds the item information into the spreadsheet.  When a sale is made he puts the sale price, eBay charges, shipping amount, original product cost, and final profit for each of us in the spreadsheet.  Google Docs makes it easy to share since there is common file we can both edit anytime from anywhere, pretty neat.

Payment
My role in the partnership is mainly the money man.  I took the risk to spend the money and buy the products.  My partner’s role is to actually sell and ship the items. We split the profit of each sale 50/50.  We’ve established a minimum payment he receives per item so in the unlikely event something sells for little or no profit, he’s still paid for his time to list and sell it.  Since all the sales go through his PayPal account, he will cut me a check at the end of the month for my accumulated profits. We’re not using PayPal to avoid getting hit with another payment charge.

Win/Win Partnership
The main reason our venture is working so well is that it functions just like a partnership should, both parties are benefiting from it. We talked just yesterday and I checked to make sure he felt he was making enough for the time he put in.  He’s happy, I’m happy, and my wife is happy that the storage shelves full of products in our house are steadily being emptied.