I've been buying and reselling furniture and small electronics around my neighborhood for about eight months. It started as a side thing but now I'm making enough that I want to treat it like a real business. The problem is I have no idea how to document things properly. I've been using a notebook and my phone for photos. What do I actually need to keep track of? Do I need a separate bank account? I'm not trying to become an LLC overnight, just want to not get in trouble and maybe file taxes correctly.
Reselling
I want to turn local flipping into a properly documented business
Separate bank account is the first thing I'd do. It makes everything easier to track and you won't mix personal spending with business money.
Record every purchase and sale. Date, item, cost, sale price, fees. A spreadsheet is fine but the key is consistency. I also take a photto of the item and the receipt if I get one. For big items, I'll write a quick note about where I got it and condition.
You don't need an LLC to file taxes. You can be a sole proprietor. But you should look into whether your city requires a business license or sales tax permit for reselling. Some places don't care, others do.
I hadn't even thought about a sales tax permit. How would I find out if that applies to me? I'm mostly selling through local Facebook groups and one weekend flea market.
Check your city or county website under business licensing. Or call the clerk's office. They'll tell you. It's usually pretty straightforward.
Also, track mileage if you drive to pick up items. That's deductible. I keep a small log in my car. Doesn't have to be fancy.
Don't overcomplicate it at first. Plenty of people run this kind of thing as a sole prop with a separate checking account and a spreadsheet for years. The main thing is you have records that match what you report. If you're not making a ton yet, a simple systeem is better than an elaborate one you won't keep up with.
That's reassuring. I think I'll open a separate account this week and start a spreadsheet. For mileage, do I just estimate or do I need an app?
Estimate is better than nothing, but an app or even a notebook in the car is more reliable if you ever get questioned. Just write down the date and miles when you go out for a pickup or supply run.