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How to Make It on Craigslist

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Re: How to Make It on Craigslist

#121

Post by roseburg »

dotBen wrote: post #100
dangrossman wrote: post #82

This sounds like a mess to keep proper tax records for. Assuming nobody's giving receipts on either side of the transaction, how do you keep proof of what price you paid and what price you sold for? Audits aren't that rare.

Not speaking for this individual in particular but in general its unlikely that businesses like this are going to report all of their earnings, are they? You can audit a cash business but with no receipts whole transactions never happened or have a paper trail. I'm not condoning tax avoidance but remember most of the people on HN either earn six figures a year, will do in a few years and/or building startups that mig…

I already paid my taxes. Self employment taxes were a decent chunk. I keep records of everything. Just entered it all in a database.

Re: How to Make It on Craigslist

#122

Post by dockd »

This is much more common than everyone here thinks. I posted a car for sale two years ago. My first two replies were people offering half my price in cash. While I didn't actually check with them, I assume they were dealers (self employed or part of a business) trying to buy something below Blue Book so they could sell it at Blue Book. It seems unlikely there are many people sitting around looking to buy any car as long as it was a "deal".

Re: How to Make It on Craigslist

#123

Post by whatusername »

thinkdevcode wrote: post #53
awj wrote: post #48

Earlier quoted context omitted.

> I dont mean to nitpick, but I get really annoyed when people do extravagant things when they can't afford it. Everyone does. Good luck getting people to settle on your definitions of "extravagant" and "afford."

Your absolutely correct that we all have different perceptions of "extravagance" I think a vacation to hawaii from portland for a family of four while still in debt is clearly extravagant, and unaffordable. But's thats just my opinion, and I dont expect you, or anyone else, to share it. Debt shouldn't be seen as ok to have but I think that is sadly how most Americans view it now.

Mortgage? Student Loan Debt? (OK -- I know you American's have crazy prices for University and thus crazy loans)

Do these pass your muster? A lot of people still view these forms of debt as acceptable.

Re: How to Make It on Craigslist

#124

Post by jcampbell1 »

dangrossman wrote: post #120
jcampbell1 wrote: post #111

Earlier quoted context omitted.

Payroll taxes are 15.3% with no deductions. 0-10% on federal sounds about right, but that is not really an accurate picture for what taxes would do to his cashflow. I agree that it is not morally OK to not report income.

Here's TurboTax's tax forecaster, which will do all the work, including the self-employment (payroll) tax: http://turbotax.intuit.com/tax-tools/calculators/taxcaster/ I put in my own numbers for a complicated personal return (business income, capital gains, itemized deductions, etc) and the forecaster agreed with my actual taxes done by a CPA, so it's not making any guesses. Put in married, $45k in business income, 4…

If the guy has $45k in business income, then he owes $6885 of payroll taxes (unless he is Amish). I don't care what tool you use, that number is the absolute floor for what he would have to pay out of pocket.

Re: How to Make It on Craigslist

#125

Post by dangrossman »

jcampbell1 wrote: post #124
dangrossman wrote: post #120

Earlier quoted context omitted.

Here's TurboTax's tax forecaster, which will do all the work, including the self-employment (payroll) tax: http://turbotax.intuit.com/tax-tools/calculators/taxcaster/ I put in my own numbers for a complicated personal return (business income, capital gains, itemized deductions, etc) and the forecaster agreed with my actual taxes done by a CPA, so it's not making any guesses. Put in married, $45k in business income, 4…

If the guy has $45k in business income, then he owes $6885 of payroll taxes (unless he is Amish). I don't care what tool you use, that number is the absolute floor for what he would have to pay out of pocket.

Sorry, but you don't know what you're talking about.

Pull out your 2011 form 1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf

* 56: Self-employment tax. Attach Schedule SE.

* 61: Add lines 55 through 60. This is your total tax.

* 62-72: Credits and payments, including the Earned Income Credit.

* 76: AMOUNT YOU OWE: Subtract line 72 (total credits) from line 61 (total tax).

That's where his $6.3k SE bill gets nearly wiped out by $5.5k in earned income credit.

Credits, unlike deductions, are subtracted dollar for dollar from total tax owed. If he files jointly with a spouse, it can actually reduce their tax bill to $0 on that income. There's no category of taxes that can't be reduced by EIC, including SE (payroll) tax.

Re: How to Make It on Craigslist

#126

Post by roseburg »

mistermann wrote: post #23
mahannay wrote: post #17

It's very impressive that he's able to earn so much money and support his family via Craigslist, but I can't help but think about how useful (or not useful, really) his job is for the overall economy. Basically, he's another middleman - buying goods for a low price and selling them higher. Without him in the picture, buyers could have purchased their items for less and saved money. I just don't see how this job adds…

Not to mention, when i give something away on cl, I'd like it to go to someone that needs it, not a wheeler dealer parasite living off the goodwill of others. Imho

Respectfully, I would encourage you to find someone personally to give your item away to. Craigslist is not a charity, it's a marketplace for people to buy/sell goods. Giving away an item on Craigslist is like throwing bread to ducks at a duck pond. If you indiscriminately throw bread up in the air at a duck pond, would you blame a squirrel for coming by and snatching a bagel every once in a while?

Re: How to Make It on Craigslist

#127

Post by roseburg »

swang wrote: post #54
iterationx wrote: post #10

Shouldn't post stuff like this, it invites competition.

Most people aren't motivated enough to compete. They might start but they rarely go through with it.

Exactly, I'm not worried about raising up more competition. A very successful business owner friend of mine said the same thing to me when I first ran it by him.

Re: How to Make It on Craigslist

#128

Post by roseburg »

thinkdevcode wrote: post #14

> I started the year with almost nothing and ended with a used van, a new utility trailer, less debt, fully paid bills and money left to take the family to Hawaii. > less debt > family to hawaii Something does not compute here.

More context. Paid cash for the van and the utility trailer. Paid off a good chunk of debt on top of those big purchases and didn't use credit at all this past year.

Hawaii: We used to live here, and have spent the past few years saving for this trip. We came to see friends that we haven't seen in 4 years. They are meeting two of our children for the first time. Airfare: $400/ticket round trip purchased months ago at the lowest price of the year. Van: Our friends are letting us use their van for free for all 16 days. We are staying at three friends houses while we are here, also free. Our expenses while here are food and gas. Everything else we are doing here is free, surfing, swimming, snorkeling, hiking, going to the lava etc. The entire trip is costing us less than $2,500 for our family of 6 to fly to Hawaii and spend 16 days with our friends. I've saved money money on just about everything. I'm not sure it's possible for this trip to have cost any less than it has. We valued this trip over paying off a chunk of our debt for many reasons. Having money and being debt free is important to us, but recognizing that being debt free is a few more years out, we saved and paid cash for the trip. The rest, sunshine, body boarding and time with friends is worth a lot more to us than the money.

Re: How to Make It on Craigslist

#129

Post by jccc »

jleader wrote: post #117
jccc wrote: post #102

Earlier quoted context omitted.

Does it matter at all that buyers and sellers ought to have that choice, to determine whether this really is a value to them? If liquidity and risk transfer is such a value, wouldn't you want this service-for-sale to be clearly visible to all? This is my theory: If a person doing this were clearly distinguishable on Craigslist from regular individual sellers (and buyers) a great number would be swayed away from doing…

Note that eBay provides this sort of distinction, in the form of feedback history (someone who's got feedback from 100s or 1000s of transactions is probably making money at it), and people generally prefer to deal with the dealers and middle-men (in part because dealers have more to lose if they rip someone off and get bad feedback). [edited to clarify wording slighty]

Feedback histories show that eBay dealers are active users with the greatest number of transactions, and that those with the longest histories are successful because they continue to conduct themselves well. But it doesn't say much of anything about whether individual buyers or sellers anywhere (but especially Craigslist) would prefer to transact with dealers rather than other pedestrian users when given those choices.

But most of all: Amazon and eBay are themselves middlemen. They take a cut. Every time you buy or sell, a cut goes to support the platform you used to find and buy or sell. Active dealers with more transactions give more support to those sites. If you like using them you're probably okay with those dealers.

Craigslist doesn't take a cut (outside of certain job postings in certain big cities). It's a community platform for individuals. Dealers profit only themselves, contribute nothing to support the site, and offer little if any dubious "value" with their interference. This is not exotic knowledge for users of Craigslist.

Re: How to Make It on Craigslist

#130

Post by jcampbell1 »

dangrossman wrote: post #125
jcampbell1 wrote: post #124

Earlier quoted context omitted.

If the guy has $45k in business income, then he owes $6885 of payroll taxes (unless he is Amish). I don't care what tool you use, that number is the absolute floor for what he would have to pay out of pocket.

Sorry, but you don't know what you're talking about. Pull out your 2011 form 1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf * 56: Self-employment tax. Attach Schedule SE. * 61: Add lines 55 through 60. This is your total tax. * 62-72: Credits and payments, including the Earned Income Credit. * 76: AMOUNT YOU OWE: Subtract line 72 (total credits) from line 61 (total tax). That's where his $6.3k SE bill gets nearly wip…

But he gets those credits whether or not he reports his profit. On a cashflow basis, it will cost him 20%. You are right though, his tax bill at the end of the year would be about 8% of $45k.
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