An eBay Seller's Guide to Financial Planning: Easy Steps to Financial Success in Your Reselling Business 9781713320340, 1713320347

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An eBay Seller’s Guide to Financial Planning Easy steps to financial success in your reselling business Joey Ruffalo, MBA-FP Although the author and publisher have made every effort to ensure that the information in this book was correct at press time, the author and publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause. This book contains information on how to make sound financial planning choices. The opinions and strategies expressed within are those of the author and not intended to replace those of professional tax and legal advice. www.JRFinancialCoaching.com Copyright 2019-2022 Joseph M. Ruffalo. All rights reserved. No portion of this book may be reproduced in any form without permission from the author, except as permitted by U.S. copyright law. For permissions, contact: [email protected] Copyright © 2019-2022 Joseph M Ruffalo All rights reserved. ISBN: ISBN-13: 9781713320340

DEDICATION To my wife, Bettina. Thank you for your love and support

Foreword Every day, more people discover the possibilities of entrepreneurship and the freedom that self-employment can provide. Starting your own business can be the ticket to financial freedom and there’s nothing quite as exhilarating as building a successful business. But the details of starting and managing a self-owned business can be complicated for the new owner to navigate, especially when it comes to the financial details. Whether it’s how to structure your business or how to maximize it for success, Joey Ruffalo’s extensive experience with starting and running his own businesses gives him the necessary know-how to help you get it right the first time. As a regular guest of our eBay for Business podcast, he has helped sellers understand the steps of business-building from the ground up. Every new business venture can benefit from the guidance of a business coach like Joey. Consider this an investment in the future success of your new selfemployment journey! Jim “Griff” Griffith Editor in Chief The eBay for Business Podcast

CONTENTS 1 2

Introduction So you want to become a full-time online reseller

i

Cash Flow and Inventory Management

18

3

3

Risk Management in your transition to online seller

31

4

Uncle Sam: Friend or Foe

43

5

Investing in You and Your Business

51

6

Retirement and Life after Selling

66

7

Estate Planning and Leaving a Legacy: What it’s all about

76

8

Special Topics and Q&A

87

Appendix

94 110 111

9 10. 11.

Works Cited About the author

ACKNOWLEDGMENTS First and foremost, I would like to thank my wife Bettina for pushing me to follow my dreams and standing beside me throughout the process, for having my back and putting up with my insufferableness. I love you. To my family—Mom Judy, Dad Joe, Jim and my second Mom Teresa, and Joe,—thank you for your love, support, and encouraging words while I chase my dreams. To Liana, Nick, Guiliana, Lia, and Dominic, thanks for giving me a break, allowing me to have fun during this process, and reminding me what it is like to be a kid. To my instructors at UCLA and Cal Lutheran—Mark, Lee, Cindy, Harry, and Kelly—thank you for your support, feedback, and constructive criticism and for fostering my desire to help others with a newfound love of numbers. To my eBay family: Sherry, Alan, and the meetup crew, Brian and Griff, thanks for listening and giving me a chance.

And lastly, to Dave Ramsey and the team at Ramsey Solutions for being there during our darkest times and inspiring me to go forth and spread a message of hope to others. Thank you to everyone else for believing in me and sparking something I didn’t even know I had. I have walked through a mess to deliver a message.

Introduction There were more than 6 million registered sellers on the eBay platform in the United States as of 2018. Eighty percent (80%) of those sellers stated that selling on eBay enabled them to start an ecommerce business full-time (Tarman, 2018). Seventy-one (71% ) of total businesses fail in the first 10 years. However, for ecommerce businesses, 65% fail in the first 18 months and 90% fail in the first five years. That means that of the 4.8 million sellers who consider themselves full-time, 3.1 million will fail in the first 18 months and 4.3 million won’t survive five years (Whitmore, 2013). There are a variety of factors in why a business fails: lack of revenue, scarcity of product, changing marketplace, and disinterest by both the buyer and seller. Having a plan in place to guide you through the ups and downs of running an e-commerce business will help you to survive and flourish. Understanding your business and how it operates in the vast landscape of the ever-changing world of e-commerce is vitally important. According to a survey done by eBay, full-time sellers are responsible for creating over 690,000 jobs (Tarman, 2018). It’s not just yourself you have to worry about, but others as well. This book is the first step in helping you to protect against pitfalls like: lack of insurance and too much debt and taxes, while preparing you for the bright spots like retirement and reaching your reselling potential!

I. So you want to become a full-time online seller Well, here we are starting our journey together. You have sold that first item, received payment, and shipped it to its destination. You have an increased sense of pride and an enthusiastic willingness to do it all over again. Congratulations! You have taken the first steps to transition from a hobby seller to a business owner. When I first started selling on eBay back in 2000, known now as the Wild Wild West days, eBay was marketing itself as a worldwide garage sale. When we think of garage sales and yard sales in our community, we think of items very few people would want, and if they did… well, they can have it for $1 or less. It evolved from a place to buy items I couldn’t get anywhere else to selling items I had that people couldn’t get anywhere else. From buying collectible movie items and CDs to selling sports cards and movies, I was well-versed in the eBay process. Over time, I fell away from eBay and from selling online. I would sell here and there but not consistently. This led to ineffectiveness when I would sell, which in turn led to a lack of success. More recently, my wife and I have made the move to sell full-time, which I classify as more than 25 hours a week. This includes time to list, ship, and source. This time we went into it with a plan. We needed to be intentional with our time and our efforts. Having run a successful small business for over 15 years prior to going full-time on eBay, I was well aware of what needed to be done in order to be a business. Once you do these things, you feel different; there is a different pace to your walk, a different posture to your stance. -How to transition from hobby to business Let’s begin by examining some of the steps you can take and the tools you will need to transition to a business. The first step I took was to file a

Fictitious Business Name document with the county clerk-recorder. What this does is allow you to operate under a name other than your own. Of course, you can use your name if you wish. But if you want to use something that speaks to what you sell, say Widget Collectibles, then you would need to file. A second part of filing is to publish your document in a local paper for roughly four weeks. Each county has its own rules and regulations that could be different so be alert and ask questions. After this timeframe, if there are no objections to your name, you are good to go. The cost here varies depending on the publication; however, from my experience, the total for the document filing and newspaper publishing was under $100. The second step is to apply for and obtain an EIN from the IRS. An EIN is an Employer Identification Number. It is essentially a Social Security number for your business. If you already have one from a previous venture, you can use that. The IRS limits you to 1 EIN number as a self-employed/sole proprietor. There is no cost to obtain an EIN. You can use your Social Security number but if you would like clear separation or intend to hire in the future, it is a good idea to obtain one. The third step would be to open a business bank account. I suggest a checking account, and depending on the bank and fees, a savings account as well. In order to open an account under your business name, you will need to have filed the Fictitious Business Name document. You do not have to wait the four weeks for the paper to finish publishing in order to open your account. I suggest going the same day or the next day after filing to open the account. Once open, you can then start funding the account with sales and using the funds to purchase inventory. Separating your personal funds and your business funds is important. It avoids what is known as a comingling of assets. It also makes it so much easier when it comes time for taxes. You can also link your PayPal account to this account to allow the transfer back and forth of funds. PayPal provides a 1% cashback on its debit card purchases. The next step is two-fold and involves licenses and legalities. In each town, county, community, freehold, etc., there are certain regulations regarding

home-based businesses. Some require a business license and tax license, others just a business license, and still some do not have any regulations if you make under a certain amount. The best avenue here is to check with your town clerk at city hall to verify what is specific to your town. The costs are usually minimal. For example, the City of Albany in California charges $283.00 plus $15.20 for the issuance of the first license. In the City of Orlando, Florida, you would pay the City Business Tax fee plus a $50.00 Home Occupation Processing Fee. Again, please consult with your local government to find the best way to proceed. In addition to a business license, many states require a reseller license. In California, it is called a Seller’s Permit. It serves two main purposes. The first is that if you purchase large amounts of goods for resale, you can be exempt from paying the sales tax on these items. The second part is if you sell within the state to residents of the state, then you must collect sales tax on those purchases and forward the fund to the state. We will touch on this later in Chapter 4.

So to recap, you have your: 1. Name 2. EIN 3. Business bank account 4. Business license 5. Seller’s permit One final and important tool in setting up your business is to create a council of elders. This council will include professionals from various financial and legal areas such as insurance, taxes, estate planning, and investing. Coordinating it all will be your financial planner. You run the show and your planner organizes the other areas to get them all on the same page, acting in your best interest.

Start by reaching out to a planner today. Look for a qualified financial coach or someone who is a CFP®. -What is your S.I.N.? Do you know your SIN? I do, it's 2x. Perhaps you were thinking of something else. Your SIN is your Seller Independence Number. This is the amount of money you need to make reselling in order to completely replace your 9-to-5. This not only includes a salary-to-salary tradeoff, but perks and benefits like medical insurance, tax withholding, etc. You may ‘take home’ $40,000 a year in your current job and believe that selling $40,000 a year is an even tradeoff, but you would be wrong. You will need to calculate your total value in the workplace to your employer and then use that number as your start. For example, if your salary is $40,000 but with benefits and taxes you ‘make’ $65,000, then you would need to make $65,000 reselling to completely replace your current job. Of course, we do not just want to replace our current job; we want to grow and make more money. The good news is it can be done. We are making a plan for success that will determine the speed at which we move. Types of business entities: Which is right for me? Now that we have discussed the materials needed to be recognized as a legitimate business, we have to decide what type of business structure we want to be. We have all heard about corporations and sole proprietors and even LLCs, but what is the best choice? The overwhelming majority of eBay sellers and e-commerce sellers on sites like Amazon and Etsy are sole proprietors. The next most common would be LLC, followed by only a handful of people operating as a corporation. Let’s break down some pros and cons of each, shall we? 1. Sole Proprietor: A single person or, in some states, husband and wife. The most cost-effective way to operate. Usually, the business license fees are the cheapest for this type of business. It offers minimal protection in regards to liability, which we will cover in Chapter 3. You are responsible for taxes at your own tax rate and

your business income is added to your personal income. 2. LLC: Limited Liability Company or Corporation. This business setup is a little more costly depending on your location but also provides liability protection. Earnings are taxed on a pass-through basis, meaning you are taxed at your personal rate rather than a corporate rate but you have all the same rights and protections as a corporation. 3. C-Corporation & S-Corporation: The main difference between these two types of corporations is how they are taxed. A C-corporation is subject to double taxation. This means it is taxed at both the corporate level and the personal level, but only on profits, which of course is what we are all shooting for. An S-corporation is known as a pass-through entity. This means that all income is passed from the business to the personal income tax returns of the ‘shareholders.’ So what’s the difference between an S-corporation and an LLC, since they are both passthrough on taxes? The answer lies in how many owners the company has and how may tax returns you have to file. An S-corporation must file a business tax return, which will alert the IRS that you will be passing through essentially, and you also have to file a personal tax return. An LLC with just one owner only has to file a personal tax return since all income is pass through. If you have more than one owner, then you need to file a business tax return as well as a personal. If you have more than one owner, then it comes down to cost. In the state of California, for example, an S-corporation pays a 1.5% tax on net income with a minimum payment amount of $800. An LLC in California with income under $250,000 also pays an $800 LLC tax but does not pay any LLC fee. This only occurs for income over $250,000. Amount

Tax

$250,000-$499,999

$800

$500,000-$999,999

$2500

$1,000,000$4,999,999

$6000

$5,000,000 and up $11,790 Example- S-corporation earns $250,000 a year and pays 1.5% tax for a total

tax payment of $3750. An LLC earns $250,000 a year and pays the flat $800 fee. There is a savings here of $2950. This only gets more noticeable the higher the income. Let’s imagine for a minute that your company earns $999,999 this year. An S-corporation would pay 1.5% or $15,000 while an LLC would pay the $800 LLC tax and a $2500 LLC fee for a total of $3300. I try to pay the least amount of taxes possible and in this case, if I were to incorporate, I would go with the LLC. This could still get tricky depending on whether you are in a non-community property state, in which case you have to file the LLC as a partnership. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, spouses share property 50/50 regardless of whose name is on the ownership. -Are you your own worst enemy? (Biases and how to recognize them) We have all heard the quote from Snow White and the Seven Dwarfs, “Magic Mirror on the wall, who’s the fairest one of all?” The queen is shocked to hear that the answer is Snow White and not her. We have all had that Magic Mirror moment. That time where we had to face ourselves and take a good long look. The main reason you haven’t begun to be taken seriously as a business owner and the main reason you fail is you. We are quick to point the blame at big companies, the government, the economy etc., but businesses do succeed and thrive through all of those excuses. We get into our own head and that opens us up to be susceptible to outside influences and internal biases. If we recognize that these biases exist, then we can overcome them and not let them control us. Not everyone is cut out to be a business owner and that’s okay, but just like most things in life, if you work at something, you can become competent in it. We must first look at our mindset when we decide to start a business. Online businesses are very easy to start; except for some minor paperwork mentioned above, you can start right away using the items in your house as immediate inventory (more on that in Chapter 2). But does that mean everyone who starts one will be successful right out of the gate?

There is a difference between a conscious and unconscious leap into entrepreneurship. Some people set themselves up from the beginning while others fall into it from a place of desperation. In a survey I conducted, it was determined that over 72% (42/58) of the respondents stated that they began out of necessity, job loss, disability, or money issues. While these may seem like outstanding motivating factors to begin a business, they put your mind in a fight-or-flight mode. We don't think rationally and therefore set ourselves up to make mistakes. We cling to our basic needs and this includes our biases. Coming to it from a rational place and with a plan is important. Not just a plan that says ‘make a lot of money’ but also a plan that details how you will accomplish that goal. Let’s look at it from the perspective of a baseball game. The goal is to win the game after nine innings. How do you accomplish that goal? By scoring more runs than your opponent. Nine innings might seem like a long ways away when you first start the game, so the more immediate goal is to win the game at-bat and I would even go further and say win the pitch. If you are the batter, your goal here is to not make an out. You can’t think about your third or fourth time at bat when it’s your first. Same thing in business—yes, the goal is to make a lot of money but if we only focus on that, we will scramble to win in our last atbat rather than having a comfortable lead. I belong to many ecommerce and eBay seller Facebook groups and forums. There is a lot of good information but also a fair amount of misinformation that takes places in these groups. This can fuel your fear and affirm your doubts. The number one mistake new business owners in this space make from my observations is a lack of planning. Alan Lakein, among others, is known to have said, “Failing to plan is planning to fail.” Most members of these groups want to emulate and duplicate and not originate. Psychotherapist and author Amy Morin is quoted as saying: “Successful people don't get to the front of the pack by sticking with the pack.” This goes hand in hand with Lakein’s quote. Successful people subscribe to a common practice of surrounding themselves with people they strive to be like. There is an old adage that you are a composite of the ten people you spend the most time with. This may sound

contradictory to avoiding the herd but I look at each group as a separate entity. Being in ten groups gives me access to loads of information from any and all angles. I then adopt the best practices that work for me, taking a little from each group. I find what I think they might be doing wrong and I tweak it to make it work for me. That is part of having a plan. It is also a great idea to surround yourself with what I refer to as your ‘Council of Elders’. These are like-minded individuals who do what you do and can teach and guide you. They also include those outside your direct business but indirectly assist such as CPAs, attorneys, financial advisors, and coaches. New members tend to not have an end game or long-term game plan. For example, many believe that they will be able to list X amount per day until life gets in the way and they fail to meet their goal. Then, after failing to meet their goal, they give up. Instead of listing a smaller amount per day or setting a weekly or monthly goal and reaching that, they do not list at all. Baby steps instead of giant leaps can save you time and money. Remember if one does not list, they cannot sell. This is where cost analysis comes in. A “lack of realism is not without” (Ackert & Deaves, 2009). You are not using your time effectively, thus costing yourself money. Overestimating benefits and underestimating costs and timeframes can be mistakes that end up costing the business more money in the long run and eventually cause it to fail quicker. This is referred to as optimism bias. For example, you might have overspent on products in anticipation of listing more but when the disappointment and lack of self-esteem kick in, you do not list and therefore lose money. We will discuss this more in Chapter 2. -“Failing to plan is planning to fail” One of the most important aspects of starting a new business or recognizing that you are a business is how you plan to proceed. I’m not just talking about what type of business entity you want to be or operate as, I’m talking about your business plan.

I know this can be a daunting task but it is one that must be done. When you put pen to paper on this subject you map out all the areas of your business, most importantly your goals and how you plan to obtain them. This is also where you plan the beginning, middle, and end of your business. I know what you are saying, “the end? I mean I’m just getting started.” Well yes, you go through your business lifecycle so to speak. The end right now doesn’t need to be detailed, but it may be as simple as “I want to retire at age 55.” In the appendix, you will find a basic outline of a business plan. You are encouraged to make changes and customize it to your own personal needs. I refer to a business plan as your businesses instruction manual. We all have been through the scenario where we buy a new piece of furniture or it’s Christmas Eve and we are up putting together that new bike or toy and decide “I know what I’m doing.” When we are done and the toy, bike, or nightstand looks done on the outside, we look down and see a few screws and bolts. It will be fine, we say. They always throw a couple of extra in anyway. But then we start to second guess ourselves and worry it won’t be sturdy or last as long as we hoped. This goes for your business as well. Cutting corners is not the answer, having a solid foundation is. This is why the business plan is so important. It’s the instruction manual for you to build your business upon and to refer back to. Remember this plan is just that, a plan or a guide. It is not set in stone but you should avoid changing it just to avoid doing the things in it. However, you will realize that goals change, the markets change, and people change. It would be naive to think the plan doesn’t change. But the root principles upon which you built your business, those should be etched in stone. The ‘Why’ remains static. The ‘How’, that is what can be fluid. Most importantly, when constructing a business plan, don’t stress. It’s not going to be perfect right out of the box. The goal here is to get you thinking like a business owner and to start acting like a business owner. The plan gives you a sense of ownership over the business. You are telling the business what to do rather than the other way around. -Questions from Social Media

Comment: Well John, thanks for the question. Of course it is 'doable'. The majority of people who work at this more than 25 hours a week intentionally do make enough to replace their prior employment income. Be advised that there are extra expenses that come with quitting your job and going full-time, like a loss of benefits from work and the need to replace them on your own. Given that you sound as if you want to do this since you have no other option, I would be careful. Again your heart is in the right place with wanting to take care of your family but your mind might be clouded. Take a step back and think through the process. I would suggest starting part-time. What that would entail would be to list a few items, ones around your house, so you don’t have initial expenses. Take advantage of the free listings eBay offers. You said your wife is disabled; can she not work at all or can she do some things around the house? Can you list and take photos of the items? Can she get items together to ship? If so, then she can help while you are at work. Give it a few months to see if there is a steady income flow from the parttime effort. If so, then I would revisit going full time then. Slow and steady. Remember, baby steps. Best of luck to you.

II. Cash Flow and Inventory Management You did it. On paper you are a business. You filed your fictitious name statement, opened your bank account, got your license, and decided on your structure. Step 1 is complete. Next, we need items to sell. After all, making money is the ultimate goal of a business isn't it? Before we head back to the bank to ask about a loan, let's examine some ways we can start selling and make money without going into debt. We will examine cash flows and inventory management, explore how to keep track of your stockpile, as well as how to obtain new things to sell. All right, let's go! -Expense/Inventory management overview E-commerce businesses, especially those that sell on eBay or sites like Poshmark, Etsy, and Amazon, have a relatively low startup cost when compared to traditional brick-and-mortar businesses. The great thing about a site like eBay is you can get started for virtually no cost. Just find an item you have around your house that you no longer need, take a picture or two, write a short description and list it. Bam! Just like that, you are selling something and you did not have to buy inventory. This is the recommended method to starting not just this type of business, but virtually any type of business. Start with what you know, or in this case what you own. As you begin to sell items and the money is deposited into your PayPal account or directly into your bank account, you can begin to use some of that money towards purchasing new items to sell. We will discuss budgets later in the chapter. I started by selling items around the home, building enough of a reserve that I did not have to use personal money to fund the business. I now only spend a percentage of what I earn. This is a type of reinvestment we will discuss in Chapter 5. I hear all the time from people who can’t wait to quit their job, or who have even quit their job because they feel they can make more selling online than they did at their 9-to-5. This may be true but remember, it’s a marathon, not a sprint. Imagine for a moment a snowball rolling down a hill; when it starts, it’s quite small, but as it rolls, it gets bigger and bigger. This is the mentality

you should have with selling. Starting small and growing bigger and bigger over time. If you have just started selling on eBay, you will have selling limits that are pretty low. What this means is you will only be able to list a certain amount per month, maybe as low as 10 items, and only in certain categories, until you have proven yourself. This is another great reason why you should start out with items from around the house. Why spend money on inventory you can’t list? Remember to plan! -Debt in your business? How to start and thrive without it We touched on this briefly already; you can succeed without the need for debt or large startup cost. Where people get into trouble is when they don’t plan. They buy a large amount of items, borrowing money from themselves or taking a loan, only to find out they are restricted on the amount of items they can list. The items that have to sit around and wait to be listed are dead weight and costing you money, rather than making you money. Eventually, you will be able to list them and they all might sell for what you were asking for but the longer it takes, the smaller your Return on Investment (ROI) percentage is. It also means you have your money tied up longer and can’t use the profits to buy new inventory or pay back the loan amount. Starting off with debt handcuffs you; it adds an unneeded element of risk to an already risky situation. You don’t need it. -Lions and Tigers and Budgets, Oh My! Who can forget the iconic scene in The Wizard of Oz when Dorothy, the Scarecrow, and the Tin-Man are chanting “Lions and Tigers and Bears, oh my!” in a fearful manner. By saying it over and over again, they were trying to calm their fears of what might be out there in the unknown, what might try to harm them. The same can be said about budgets. We don’t like them and, in fact, we fear them. Just saying the name can send chills down your spine. They are a necessary evil in your personal and business life. We need to know what comes in and what goes out. Every dollar must have a purpose and a place. If we fail to assign a responsibility to each dollar, then some can mysteriously

walk out the door… never to be seen again. A basic monthly budget for eBay should include the following categories: Listing fees, final value fees, store fees, shipping fees, inventory replacement, taxes, and personal take home, at a minimum. The income we will use for those categories will come from our prior months' sales. You take average sales for a month and put that at the top of the page and then fill in the line items until you reach zero. There is a sample budget in the appendix. Don’t be scared! It usually takes a few months of doing a budget to get it just right. -S.I.C.K. Is your business SICK and can you cure it? Just like personal health, there's also business health. We count calories and watch our sugar for personal health and we also need to watch certain areas in our business that could lead to an unhealthy business and, ultimately, failure. These areas are sales/cash flow, inventory management, customer service or customer management, and knowledge. These initials spell SICK and if your company is sick, you need to cure it by focusing on these four areas. Let's start by examining sales and cash flow. This is the lifeblood of your business. We get into business to make money. We also know that most new businesses are not successful, or they take a long time to become successful. The fact is that 71% of all businesses fail in the first 10 years with 90% of ecommerce businesses failing in the first five years.[1] You have the power to survive that. While there is no magic formula; we just need to allocate how are funds from sales will be split and spent. For example, you could go with the 25/25/25/25 method: 25% for taxes, 25% for replacing inventory, 25% for a slush fund, and 25% to cover returns and fees. Let’s look at my suggestion to take 25% off the top for taxes. Twenty-five percent may seem a little high to set aside but it is always smart to save a little from each sale rather than try to come up with a large amount down the road. Twenty-five percent is a decent tax bracket to save for and you may well not end up needing that much, but it’s better to be safe than sorry. We

will discuss taxes a little later on in Chapter 4. Next is the 25 percent for a slush fund. This is for emergencies. If your computer should break down, you need a new printer etc. Saving for it as you go means you won’t need a whole lot of additional funds when that time comes to make a purchase. Then you set aside twenty-five percent to pay your eBay fees, which are roughly 10-12% if you factor in store subscription fee costs, and to cover any returns that might occur in the 30-day period after your sale. eBay currently deducts the listing fees/final value fees while processing your payments in their Managed Payments program. Poshmark also deducts their fees off the top of each sale. Any leftover funds can be absorbed by either the slush fund or inventory categories, however, do keep a healthy reserve. This is your business emergency fund. Finally, the last 25 percent is set aside to replace inventory. As you sell items, you will need to replace them. Where will you get the money to do so? You get it from prior sales. We will cover inventory management in more detail next. 25% Taxes state and federal

25% Slush Fund, replace equipment, eBay open

25% 25% eBay Replace fees inventory including returns

-Inventory Management If you buy it, you should sell it Inventory management does not just mean “what am I buying to sell?” but also “where is the stuff I bought? how much product do I have? and what is my capacity?” Keeping a simple inventory spreadsheet can help with the first two areas—where and how much. I have provided you with a sample spreadsheet in the appendix. The last thing you need after you sell something

is to not be able to find it and have to refund the buyer only to find it later, under a pile of stuff. Making the process easy for you will cut down on your stress, make selling fun, and saving you money. Another feature eBay provides to sellers in their listing flow is the Custom ID field. I use the field for everything from where I bought the item, how much I paid, where I am storing it, and the date listed. This allows me to quickly access information when the item sells, if I get an offer. If I have relisted the item, I can see the original list date so I can see if the item is stale and needs to be tweaked. I strongly encourage you to take advantage of this field. It will save a lot of time when excepting or sending offers as well as when it comes time to ship. Poshmark provides a similar field in their listing flow where you can provide a custom SKU for your item. eBay Example: Custom LOCALTHRIFTSTORE 3 ID 12/1/19 BIN A3 When listing your items, try to think of each listing as shelf space in a virtual store that you rent each month. That ‘rent’ can be anywhere from .03 cents on up, depending on which store level you might have. If you have a Premium store with 1,000 free listings, it will currently cost you $60.00 per month. That equals .06 cents a listing if you use all 1,000 listing on unique items. If you only use 500 listing, you are paying .12 cents a listing. The more times you relist that item, the more you are spending on shelf rent. Take that number into consideration when determining price and whether you need to run a sale or promotion. Capacity is also a big issue among sellers in a survey I conducted as well as what I have seen through observational research. Capacity has two meanings. The first is asking “How much product can I handle? How much can I store? and How much can I list before I burn out and start adding to my ‘deadpile’, ‘profitpile’ or items I’ll get to eventually this decade pile?” Capacity also means formal listing capacity. eBay limits new sellers to roughly 10 items a month. If you went out and bought a truckload of items,

you will have to wait a long time until you are able to list them all. Knowing your capacity will keep you from making a potentially costly mistake. You may also have a need to hire someone in the future to help you with your business. Knowing capacity allows you to know when the right them to hire as well as track productivity. Finally, let's talk about what could be the most important area of business health—customer service. You may have the first two areas all locked down, you are making sales and managing your inventory flawlessly but failing to provide, recognize the need for and execute anything short of stellar customer service won't help your business grow. It reminds me of the saying “firing on all cylinders.” All three need to be firing in order for things to run smoothly. Let's break down customer service. One area that falls under this category that is a big concern to sellers is returns and refunds. “How do I handle them? Do I have to take them? Do I need to refund without a return?” The questions go on and on. In order to be successful, you need to establish some Golden Rules to your business. These are absolutes. For example, one of my Golden Rules is to “Ship items in the way in which I would like to receive them.” I am a consumer as well. There is not a bigger letdown than receiving your item in less than stellar condition because the packaging was not paid attention to, or hastily done. The first time many of your customers are physically handling your item is when they open the box —wow them! The first three areas (sales, inventory, and customer management) overlap and have a cyclical relationship. For example, you sell an item, you replace that item in your inventory, the customer wants to return the item and be refunded. That's great; you should do that. But are you thinking, “I spent the money on the new item already?” Remember we discussed keeping a percentage aside to cover returns. You should be building returns into your prices as well. What I mean is if you have an item returned, you should immediately relist it equal to or slightly higher than before while being mindful of new listings and their price

point. Planning again is important. You will have returns. You will have to issue refunds. Planning on it allows you to prepare for it and deal with it without disrupting your day-to-day operations. Another aspect of customer service deals with handling and packaging/shipping of the items. Take care and pride in how you ship and how your items are presented, customers appreciate it. If you make it part of your normal business routine it will become second nature. Remember my Golden Rule here and you will be fine. When messaging with customers, be professional, be courteous, and be prompt. Try to respond quickly and provide a personal touch by adding your name to the end of your email so they know they are dealing with a real person. It goes a long way. Great customer service leads to customers for life. Repeat customers are essential. Last but not least is knowledge. In order to be successful, you must also be knowledgeable—about your product, about the sales method, and about your customers: “What do they want? How do they want it shipped? When do they want it?” One way of being knowledgeable and to learn is by surrounding yourself with fellow sellers and mentors in the field. Listen to what they say, take it and use it effectively in your own business. What I have personally done is surround myself with key people I can learn from and I take a little from person A and a little from person B and combine these thoughts with my own to create a successful working environment that is mine. It is important to not emulate but originate. You don’t want to be a clone of the person you follow but your own individual self. Knowledge also expands to whatever your profession is. Learning about trends in the industry, learning about new ways to deliver your product and learning about new ways to be effective. Also learning new niches and products to sell so you don't stay stagnant and outdated. Always make sure you're continuously taking the pulse of your business. You want it to be beating regularly and not flat-lined; otherwise, your business will be S.I.C.K. and you will need to cure it.

-Questions from Social Media

Comment: Great question John. First, welcome to the club. Second, slow down and smell the roses. Yes you are locked from selling more at the moment. You are a new seller. eBay wants to see how you do before they open up the flood gates and allow you to list more. Your enthusiasm is great and you obviously followed some of the sellers on this page in how they conduct business, but remember they have been doing it longer. They are able to list a lot and have the capacity to handle a pallet or a large amount of items. I’m afraid you are stuck with the sunglasses for a while, at least until you sold a few items and have been a member for longer than a few days. eBay is very generous when it comes to increasing the seller's limit. Just be patient. Once the new month hits and you can list 10 more items, instead of all 10 sunglasses try five sunglasses and five items from around your house. This way you not only give your potential customers variety but you give eBay variety as well. They will see that you are listing in various categories, not just one, and might speed up the process and allow you to list more in specific categories. I hope this helped. Good luck.

III.

Risk Management in your Transition to Online Seller

Welcome to the discussion on risk management. Risk management does not necessarily mean insurance; however, insurance is a tool used to manage risk. Insurance is used to move the risk from you to the insurance company. Knowing that you have the right amount and the right types of insurance in place will help to reduce your worry and fear. Insurance, especially life insurance, can be used as an income replacement or a wealth-building tool. There are several types of insurance that you can utilize to bring you peace, protect you in the event of a tragedy, and allow you to leave a legacy. These include home, auto, life, health, disability, long-term care and umbrella. When starting your online business, there are a few types of insurance that would be suggested to obtain like liability. If and when you decide to leave your job and do this full time then there are other types of insurance that are a must to obtain like health insurance. Finally, there are some types of insurance that you will have regardless of the job you have like homeowners. Let's start with your business insurance. -Business Insurances The first insurance you should look at under this category is a general liability policy. I like to term this as a cost of doing business insurance. The issue at hand is what happens when you sell an older item say like a lamp, the buyer receives it, plugs it in, and it starts a fire damaging their house. Who is responsible? Are you just a third-party seller or are you like Walmart, a retailer selling various products? In this instance, I don’t want to sort that out later; I want to be sure and alleviate the risk. Having some basic liability insurance would give me peace of mind. Also some liability insurance policies will also cover credit card fraud and product loss from fraud, which in my opinion, makes the policy well worth it. I would suggest contacting your insurance agent and explaining to them what you are looking for. This way you are, as the old saying goes, better safe than sorry.

For example, there could be some liability when it comes to homemade or handmade products that you created specifically for retail/resale. In this situation, you would also provide as much detail about the item and its creation as well as any disclaimers. However, again erring on the side of caution, general liability insurance is not very costly and could run about $50 a month depending on policy limits and company. -Homeowners and Auto Homeowner’s and Automobile insurance are two types of insurance that you are paying regardless of where you work or what you do. However, when deciding to sell online and or become self-employed they need to be looked at and adjusted accordingly. Homeowner’s policies typically cover self-employed goods and products up to a $2,500 amount. As you are beginning to find out the average amount of inventory we keep in our home is more than that. At any time, a fire or disaster can wipe out the inventory rendering you out of business. It is very important to stay on top of your inventory amount and adjust your coverage as needed. This will also apply in the situation when you have workers come to your home in your employ. If there were to get hurt, say slip and fall on ice, cut themselves on scissors, or get bit by your dog, you need protection. If they were employees, you would have worker’s compensation insurance, but if they are independent contractors, you would be liable and your homeowner’s coverage would apply. Make sure you are adequately protected. I subscribe to the notion that it is better to be over-insured then under-insured. With your automobile coverage, your main concern is increased use such as driving more to shop for items, running to the post office etc. Once you start using your vehicle for business purposes, you run the risk of your personal policy not covering you anymore. For example, if you own a truck over 10,000lbs like a Ford F250 then you may need commercial coverage, even if you never used it for any type of work at all. I once owned a truck that had an open flat bed. It was determined by the DMV that I could, at any time, start a hauling business or landscaping business and they rated my truck as commercial in terms of registration. This, in turn, bumped me into the

commercial auto insurance category. Once I put a camper shell on it and filled out some paperwork at the DMV I was reclassified as personal which 1) lowered my registration fee and 2) switched me back to personal auto insurance, lowering the cost there as well. It actually took me quite some time to realize that I was marked as commercial. Check your registration renewal notices. The other qualifiers are if you have employees drive the vehicle and if you use it to pick up or drop off supplies or goods. Supplies could mean boxes and packing material while goods could mean inventory and sales via local pickup. One nightmarish scenario you could find yourself in is this: You are driving to the post office to mail your latest sales. At the intersection, you make a turn. As you do, the other drivers also decide to go. One is a regular person and the other is a UPS truck. The UPS driver would be carrying commercial insurance and the other driver would have personal insurance coverage. If you were to be found at fault, and since you were using your vehicle to conduct business, your insurance company may have a legal right to not pay out. Even if they do, it would not be up to the commercial insurance policy limits and would leave you and your business subject to lawsuits and financial ruin. A simple phone call to your insurance agent would solve a lot of potential heartache. Another type of policy that covers a number of policies is an umbrella policy. An umbrella policy gives extra liability coverage. It typically applies to your homeowners and automobile coverages. It will help protect against claims and lawsuits protecting your assets. You are required to keep your policies at a higher level in order to obtain umbrella coverage. For automobile insurance, the California state minimum is $15k/$30k/$5k. In order to obtain umbrella coverage, you need to up your coverage to either $300k/$300k/$100k or $250k/$500k/$100k. For your homeowner’s policy, you would need to increase your liability to $300k. Umbrella insurance kicks in once you have exhausted your limits on your other policies. It is relatively cheap and has a high coverage limit, usually around a million dollars of protection. For example, say you get into a car accident and the person sues you for $750k. Your automobile policy would

cover up to $300k and the umbrella would kick in and cover the remaining $450k -Employer/Employee-Funded and Transition Now that we have looked at insurance you should get and insurance you already have and need to adjust, we’ll look at insurance you may need to replace. Starting a business and going off on your own can be an exciting and scary time. Quitting your job to do so can also be exciting and scary. What you must remember is that you will need to replace several types of insurance that your employer may have provided to you. These include: health, disability, life, and long-term care. Your health insurance may have been provided from your employer. Your first option would be to see if your spouse has a plan that you can be added too. If you don't have a spouse, then you need to purchase private insurance. I would suggest you do this before quitting. Sometimes it can take several weeks or until the first of the month following the month you apply. Example: In February, you decide you want to quit your job and go full time in March. You immediately apply for private health insurance. Your first day of eligibility will most likely be April 1st. This puts you at risk for all of March unless you purchase a COBRA plan, which can be very expensive. In this scenario, it would be wise to apply for the insurance and then, once you start on the new plan in April, you can quit your job. It wouldn't be a bad thing to have two insurance plans for one month. What would be bad is to have no insurance for any length of time. The second employer-provided insurance is life insurance. This is extremely important and, just like health insurance, should be addressed prior to leaving your job. Most employers will provide some type of life insurance policy as an employee benefit. The typical plan is a term plan that equals your yearly salary. As soon as employment is terminated, the plan will also terminate. You don't own the plan; the company does. As part of your overall healthy personal financial plan, your advisor, CFP®

professional, or coach should have addressed the life insurance issue with you. The path I follow and suggest to my clients is to have a 20-year term policy with an amount equal to 10-12 times your income. This scenario will allow your beneficiaries to safely invest the lump sum and with good returns effectively replace your income Example: You earn $50,000 a year. You purchase 20-year term policy for an amount of $500,000. Your survivor invests that amount and earns 10% a year. That nets $50,000 a year in interest. You have allowed your survivors to replace your income. You may have purchased an additional policy as part of your overall plan and that is awesome. You may need to adjust your amount up to make up the difference. Also as a side note: the healthier you are, the better the chance you have at obtaining life insurance quickly. The worst scenario is you quit your job and lose your life insurance, get into an accident or diagnosed with an illness, and are denied life insurance leaving you with nothing or a very, very expensive policy for a little amount of coverage. Again, making sure you look before you leap is important. The third employer-provided insurance is disability. Disability insurance covers you in the event you become disabled and cannot do your current job. This is the type of situation that usually propels people into full-time ecommerce in the first place out of a necessity and need. Let's examine why you should have this as a full-time seller and what happens if you are employed full-time and need to use it before transitioning to selling. How will selling affect your disability insurance? Employer-funded disability insurance is usually short-term disability. This type of coverage pays a percentage of your salary for a specified time period, anywhere from 4-6 months. On average, the benefit is 40-60% of your salary. The coverage will begin after what is called an ‘elimination period’. This can be anywhere from 7 to 30 days; however, the average is usually 14 days. It is best to check with your employer. Short-term disability will cover an illness or injury that prevents you from working. The top five reasons people use short-term disability are:

1. Maternity leave 2. Injuries, excluding back 3. Joint conditions 4. Back disorder 5. Digestive disorders The big question I know you are dying to get answered is: “Can I work another job while on short-term disability?” You first need to see if your policy has what is called an ‘own occupation’ clause. This will allow you to work another job, in this case reselling, as long as the duties of the reselling job are substantially different than your primary job. Another point to be careful on is you don’t want to prejudice your claim and give the impression that you quit or resigned from your job since you are able to have gainful income from another ‘job’. It wouldn’t hurt to contact an employment lawyer for clarification. Contacting your local bar association would be a great place to start. If you were to become permanently disabled, you could receive Social Security Disability Insurance or SSDI. The average worker receives $1358 monthly in benefits. The good thing about determining the eligibility is that your spouse’s income does not count. While receiving SSDI, you are limited in the income you can make monthly. The current cap is less than $1350 a month. If you are receiving SSDI and are blind or visually impaired, you can earn up to $2260 a month before benefits are cut off. The fourth employer-provided insurance is long-term care. This is a policy that may or may not have been part of your employee benefits package. It is insurance that you should consider once you turn 60 years of age. At this point, the statistical likelihood that you will need nursing or long-term care increases significantly, warranting you to purchase the coverage. This insurance is nicknamed nursing home insurance. Why? Because it is used to cover nursing home or in-home nursing care for someone. It's a great wealth protection tool. Example: You end up needing to enter a nursing home for end-of-life

care. The average cost is roughly 50,000 a year with an average stay of four years. That comes to $200,000. Now if your spouse needs to enter one after you’re gone, they will have $200,000 less to use and will probably run out of money and be forced to move to a government-run facility. You probably felt something in the back of your throat or in your gut while reading that. The last thing you want is to leave your spouse struggling after you’re gone. Having this coverage is a great way to protect against that. -Questions from Social Media

Comment: John, first off, we are all glad that you and your family are okay. Situations like these force us to take stock of what is important and what can be replaced. Your family is okay; that is the most important and good news. Let’s get down to the bad news now. Homeowner’s insurance will not cover the lion’s share of your lost inventory unless you added a rider to your coverage. A typical policy will cover up to $2500 of self-employed homebased products and supplies. Keeping a lot of inventory in one place, or storing collectibles, is risky which is why that risk should be alleviated through the purchase of additional insurance. As you probably already did, I would immediately put your store on vacation mode to prevent any purchases. Go through your inventory and see what is sellable and what is not. Anything that is unsellable, immediately end

your listing. Once you are left with all of your sellable items, turn your store back on. This will help you avoid any unnecessary fallout from cancelled sales or failing to ship within your timeframe. Next, value your unsellable items. You may be able to use up to $2500 to replace some of these items or to buy different items to get your store back on its way towards full capacity. For the remaining value of the items, you should be able to write off the damaged items on your tax using a Schedule C. Talk to your CPA about this as soon as you can.

IV. Uncle Sam: Friend or Foe? We all have those dates etched in our mind that occur every year. We know December 25th is Christmas and the fourth Thursday in November is Thanksgiving. We know these dates and we prepare for them. We have positive connotations surrounding them. There is also another date we all know but one many of us fear and that is April 15th—tax day. The Beatles sang in their 1966 hit, Taxman, “Let me tell you how it will be, there’s one for you, nineteen for me.” Believe me, sometimes it feels that way for sure, but only if you let it and you are unprepared. Knowing what to do, how to proceed, and what advantages you have as a business owner can help you level the playing field from one for you to many for you. The goal we all are looking to achieve is tax avoidance. Tax avoidance is the legal use of tax laws to decrease what you owe to the government. This is different from tax evasion, which is illegal. Having a good, competent CPA on call is worth its weight in gold as they say. The money you might spend to have one is worth the money you will save sending to Uncle Sam. Now I am not a CPA or tax professional so what I am saying does not constitute tax advice. It comes from the experience of running several businesses across several industries and what similarities I have seen. However, please seek out a qualified CPA to handle your taxes. With that being said, let’s start with the basics of small business taxes. -Small business taxes The majority of you who are reading this book are set up with a business structure that is sole-proprietorship. Some may be LLCs and a few S or C corporations. The information provided below typically applies to soleproprietorships. Again the best thing to do is to work with a qualified tax professional. So we set up a shop, listed some items, sold some, and shipped them. We made money, but sadly your silent business partner Uncle Sam wants his cut. Since he didn’t do anything in the day-to-day operations of the business, we

don’t want to pay him. Of course we are going to do our best to pay him as little as possible. Remember, your goal is tax avoidance, which is legal; tax evasion is illegal and you will end up in jail. Another area to be mindful of is state taxes. There are some states that do not have a state income tax and if you are located in these states, your total cost of doing business can be slightly lower than someone living in a high tax state. That can have a trickle-down effect on everything from sourcing to pricing your items for sale. -Deductions What is a tax deduction? Quite easily explained, a tax deduction is when you reduce the income that can be taxed. This can occur as a result of expenses. Ultimately, it reduces taxable income. It serves the same purpose as exemptions. Tax credits, on the other hand, only reduce tax. There are two areas in which deductions can be placed on your tax form. The first is called ‘above the line’. This is important as it can help regardless of your income by lowering your taxable income, therefore potentially putting you into a different, lower tax bracket. The second is called ‘below the line’. This area is only important if the amount of your deductions exceeds that of the standard deduction. Under the new tax plan, the standard deduction for an individual is $12,000, head of household $18,000, and married couples filing jointly as well as surviving spouses is $24,000. If you are disabled or age 65 and over, you can add an additional $1300 to that amount. There are many business deductions we should be taking advantage of as resellers. These include: 1. Vehicle expenses such as mileage (54.5 cents per mile in 2018, 58 cents per mile in 2019) 2. Salaries and wages to employees 3. Contract labor wages -1099 MISC independent contractor work 4. Supplies 5. Rent on business property such as office, storefront, or storage

6. Taxes- License, fees, and real estate 7. Insurance- just about everything but health insurance 8. Certain types of travel 9. Home office 10. Interest on business debt There are many more deductions that your CPA can claim for you but it is a good idea to start using the above list to keep track. -Above the Line IRS Publication 17 lists all the qualifying above the line deductions. However, there are several that apply to our line of work and should be highlighted here. Interest in student loans, higher education expenses, health savings accounts, retirement plan savings for the self-employed, and contributions to traditional IRA -Below the line These include charitable donations, medical expenses, tax, and interest expenses. Below the line deductions are less advantageous than above the line deductions and typically not allowed unless they are in excess of certain IRS limits. For example, to count medical expenses below the line, the total expense must exceed 7.5% of your adjusted gross income (AGI). So if your AGI was $50,000, then your medical expenses must exceed $3,750 in order for you to deduct them. -Sales tax On just about everything we buy, we pay a sales tax on. Why is it then on just about everything we sell on eBay or other sites, we don’t collect it. Is that common? Is it legal? Should we be collecting sales tax on our purchases? All our purchases or only some? These are all very valid questions. As a reseller, you are expected to collect and file sales tax revenue with your state’s franchise tax board. It used to be that you only needed to file sales tax on sales within your own state. With the passing of recent legislation it has

become a bit more complicated than that. You are now required to collect and remit payment to every state in which a sale has been made. eBay has been excellent at keeping its sellers informed on which states currently collect sales tax. More and more are rolling out as the months go by. As of July 1, 2021 there are 45 states plus Puerto Rico and the District of Columbia that require the collection of sales tax. eBay will automatically collect the tax for you. What does this mean to you? Well as more and more states require you to collect sales tax it makes the cost of your item more expensive to the buyer. You will have to reassess your pricing as well as possibly your resourcing to acquire the items slightly cheaper. Otherwise, you may experience a slowdown or less profit on your items. -Questions from Social Media

Comment: Well John, that is a great question and one of the most asked, most talked-about, and the one that elicits the most debate on the various boards, chat rooms, and pages. First, let me start by saying that no matter what your

income is, you need to file a tax return. April 15 is the usual deadline to file; however, you can file an extension until October 15. That extension is just for filing the paperwork, not to pay. If you wait to pay until October, you will be late and charged penalties and interest. I know, how do you know what to pay if you haven’t filed the paperwork? Well it’s good to send something and you should have a good estimate based on last year’s returns. Now let’s look at the PayPal 1099 question. Businesses are required to file a 1099 for any payouts over $600. PayPal operates as a bank and even though you might have been paid less than $20k throughout the year, you still were paid something. You need that number to figure out your earned income and what would be considered taxable after you subtract cost of goods and deductions. Ebay and other marketplaces including Venmo and Cash App will start sending 1099k’s for any total over $600 received in a year. While you were required to reports income over $600 anyway, this type of reporting can be a little confusing if you’re a small seller, or operating at a loss. A good and diligent business owner doesn’t need PayPal or anyone else to tell them what they made last year. A good business owner knows what they made last year. They have kept track in other ways such as using Quicken or other accounting software, by doing a monthly spreadsheet in excel or whatever method you choose. Remember, the law requires filing taxes. Failure to file could get you into big trouble. Please consult a CPA or tax attorney for further questions and have their number on speed dial.

V. Investing in Yourself and Your Business What is investing? Simply put, it is putting something in to get more out later. This could be either financially or personally Let’s start with personal investing. One of the basic terms you must know when doing any kind of investing is the Return On Investment or ROI. Simply measured, it is how much you get out based on what you put in. For example, investing one dollar and getting a return of $10 is a return of investment of nine dollars. On the surface it is better than a return of five dollars; however, when you factor in any sort of risk, the five-dollar return may be a better investment. We will discuss that later. What are some types of investments you can make in yourself personally? These include education, experience, hiring, equipment, upgrades, etc. Let’s discuss education first. This does not mean going back to school unless that is something you need or you want to do. For example, to learn how to be a web designer or computer programmer, you may need to take some courses in order to be proficient. What I’m talking about here as far as being a better seller is to learn some basic business practices. You can accomplish this by learning from others around you through Facebook groups, YouTube channels, local meet-ups, and conferences. Taking all this information and putting it together and forming your foundation of knowledge. To paraphrase a great line from the movie Glengarry Glen Ross: ABL, Always Be Learning. In fact, Always Be something. Always be communicating, always be nice, always be ________. Investing in yourself has the potential to yield the highest ROI. Sometimes you end up putting little to no money in but you do end up investing time. You need to figure out exactly what your time is worth and how you will spend it. Will you spend it sourcing new products? Will you spend it on social media engaging with fellow sellers? Or will you spend it revising and reworking older listings? Some of that needs to be done regardless but when

you do it might be the question. Remember too it’s just as important to maintain a healthy work-life balance. Another way to invest in yourself is through experience. They say you need to do something for 10,000 hours before you are proficient enough in it. Remember, there are trials and errors along the way. We all heard this referred to as ‘the learning experience’ or learning curve. I’m sure we all had a parent or grownup tell us when we protested about trying something new that ‘it would be a good learning experience’. You know what it was. Learning experiences can be both positive and negative. For example, entering the wrong weight for shipping on an item that you were in a rush to list and accidentally saying it was 5 ounces and not the real weight of 5 lbs is a learning experience. It was negative to you as it had a negative impact but ultimately it was positive as it made you change the way you think about listing. It also got you to think and slow down, assuring you don’t make that mistake again. One of my favorite ways to invest in myself and my selling craft is to attend monthly meet-ups. You can easily find these on sites like meetup.com or by searching Facebook groups. My group meets once a month for a 2 ½ hour meeting. Drive time plus hanging out before and after means we spend about 8 hours a month on this event. However, it has yielded dividends. Being able to connect face to face with other sellers who are in the same situation as you, mostly working for ourselves and isolated, as well as meeting people who have done it longer or might be more successful, will help you grow substantially. You might learn new listing tips that result in faster sales. You might also learn about new products or product categories to try. All of this will increase your business profit and help you better utilize your business time. An extension of the live meet-ups is the Facebook groups. There are hundreds if not thousands of groups around the topic of eBay, Amazon, Etsy, and online selling. It is important to find the ones where you can learn and not get sidetracked by rumors, innuendo and constant bickering that suck up all your time. All these types of investment pose little to no risk; however, the same cannot

be said for the next part—investing in the market. -Investing in the Market, A Primer As you should already be noticing, you have more money at the end of the month than when you started. Congratulations, you made a profit. Now what do we want to do with all that extra cash? As you remember, you are putting 25% aside for Uncle Sam and then using the rest to pay down any debts and to reinvest in new products to sell. After you have done all of that, you might still have a little left over. That is money we can invest. We will get into the meat and potatoes of investing in the next chapter when we discuss retirement. For now, we will use this space as a primer, a beginner’s guide to investment products, and what to look for when you ultimately decided to invest. -Risk Tolerance What is risk tolerance? Simply put, it is your measure of how much risk you are willing to take to earn money in the market. The higher your tolerance, the less you mind absorbing massive lows (so long as they come with massive highs). A lower risk tolerance means that you just want something that is not going to lose a lot but you know it won’t make a lot and you are okay with that since it won’t lose a lot. Finding your risk tolerance level is also a key component in determining how you ultimately invest. Questions can range from “How comfortable are you investing in the market in general?” to more detailed questions like “If the market fell by 10% in the current year, how likely are you to sell your current positions?” How you answer these questions will help your advisor construct a portfolio that meets your asset allocation and diversification needs. I am sure you have heard the phrase “The greater the risk, the greater the reward.” Measuring this risk vs. reward level is important to developing your investment strategy. -Types of Investments Before we go any further, let’s stop for a moment and go over the types of investments you can make. This is not a complete list by any means but it does contain some of the more popular types.

Stocks: A share of stock represents a partial ownership of the company that you own. How much ownership depends on the size of the company and how much stock you own. As the company goes, so does your stock price. Mutual funds: A mutual fund is a collection of single stocks usually ranging around 100-200 companies embedded together into one fund. The fund manager determines the proportion of these stocks within the fund. Funds are available across many sectors and industries. If a few companies are having a hard time, the fund price doesn’t suffer as much as the single stock price. (Disclosure: That depends on several factors, such as the proportion in the fund. For example, your top stock in the fund is doing badly might mean the fund falls, but if several smaller components are not doing well, it might not drag it down). This type of fund is a solid tool when trying to diversify in the market. ETF: These are mutual funds that are traded like stocks. The price fluctuates throughout the day unlike mutual funds, whose price is calculated at the end of the day. There are some advantages to ETFs over mutual funds, including potentially lower expenses as well as a lower cost to invest. Some mutual funds require a minimum to get started; ETFs do not. Bonds: Bonds are another type of asset class. They are a fixed income investment by which you, the investor, loan money to the borrower at a fixed rate for a specific period of time. The entity, usually a corporation or government agency, agrees to repay you over a defined period. You have probably seen these types of investments when you go to vote in local elections. There usually tends to be a bond measure up for vote where the local government is seeking approval to issue new bonds for a specific project like a new library or road repairs. Bonds can be a good addition to your portfolio as they can add a steady income stream and help insulate against a falling market. As with any investment, it is a good idea to discuss with your advisor. CDs: Certificate of Deposit. These are investments you can make at your local bank. I am sure we have all seen the signs. They offer a set rate for a variable amount of time some as little as one month to as long as five years. The current rates are not very good and yield around 1% to 2.25% depending

on length, amount invested and bank. With the current 2017-2018 inflation rate projected to be around 2.1%, investing in a CD is actually a way to lose money since your investment would be worth less when cashed in due to the rise in inflation. Annuities: You may have heard this term before and might be confused as to what it is. Annuities are an insurance product that pays out an income. Depending on how much you invest and when you would like to start receiving payments along with whether or not you would like a guaranteed payout, known as a fixed annuity, or one that is determined by investments performance of the securities in the annuity, known as a variable annuity, an annuity can be a costly way to save for retirement. They typically have high expenses that eat away at any returns you might have made. -Types of Investment Accounts Now that we have discussed some of the types of investments you can make, we need to know where to put them. We have basically two options— retirement and non-retirement accounts. Retirement accounts such as 401k, IRA, Roth, SEP, etc. will be discussed in the next chapter. For now, we will take a look at non-retirement type accounts. Non-Retirement accounts are any type of investment account not used to invest or save for retirement. These can include money market accounts, checking and savings accounts, as well as HSA and 529/ESA accounts for college. These are accounts in which you can invest and have ready access to your money. If you are saving for a long-term goal of more than five years, it might be a good place to put that money and watch it grow. You can open an account with any of the major brokerage firms and even online type accounts, quite possibly even with your bank. Depending on your goal and income needs, you will need to research which is the best fit for you. Some accounts at the bank only have access to a select set of mutual funds, which limits you from investing in products you want. You must also look at the fees involved to buy the initial positions and what the company charges for account management. These fees could include monthly maintenance fees, transaction fees, and even statement fees.

A big difference between this type of account and a retirement account is the tax implications. When you sell the investment in a non-retirement account you will have what is referred to as a basis. A basis is the amount of money you personally invested and you will not be taxed on this amount, only the net gain. In some retirement accounts when you are using pretax money to invest, the entire amount of the account is taxable upon withdrawal. Also the long-term tax rate on gains for investments held longer than a year is currently 20%. This is important since your retirement account withdrawals would be taxed at your current tax rate as opposed to the long-term rate. -Diversify You might remember the old saying from your grandparents, “Don’t put all of your eggs into one basket.” That is diversification in a nutshell. Just think about that for a moment. If you had all of your eggs in one basket, sure you would have fewer baskets to carry but if you dropped that one, you’d run a greater risk of having a basket full of broken eggs and being out of eggs. Putting those eggs into several baskets might seem like more work, but if you were to drop one, you would still be left with several good eggs. Let’s relate this to the market. Having all of your retirement or investments in a single stock at one company is the riskiest. Your future depends on the health and prosperity of that company and given recent history no one company is safe (General Motors for example). In reselling, you can take a similar approach. Having all of your listings in one product or even one category vs having listings that are spread over multiple categories and yes, even multiple websites. It is always wise to start reselling with items and categories you know well. That is a given. You also want to explore categories that you do not know well too. What you can do is dedicate a percentage, roughly 10%, of your overall listings to items and categories you are learning. For example, if you have 100 listings, then you would use 10 listings on items and categories you are learning. The reason is you are bound to make a mistake during this process. It isn’t called the Learning Process for nothing. By minimizing your risk exposure, you can mitigate your potential losses. As you become more familiar with those items and categories you can absorb them into your

regular listing flow and use that space towards another new category or item. -Investment Goals Some areas in which people choose to save in the form of investments are child’s education, perhaps a second piece of real estate, to take care of a loved one in the form of a special needs child or elderly parent. These are types of goals in which we would invest in non-retirement accounts. The reason is we need access to these funds at some point before we turn 59 ½ years old. Let us focus on the one area that is the biggest need for parents and young adults: college education. There are several ways to pay for college, cash out of pocket, or from borrowing in the form of a student loan. The average student graduates with approximately $30,000 in debt according to a report from The Institute for College Access and Success. Similar reports from USA Today and Business Insider all put that average roughly the same. Starting off your adult life saddled with $30,000 in debt is a huge obstacle that can hamper future goals and plans like buying a house or travelling, even getting married and starting a family. This is why it is so important that college education funding be discussed and planned. In a recent survey conducted by Scholarshare Invsestment Board, which administers the California Scholarshare 529 College Savings Plan, 31% of parents said they lose sleep over how their child will pay for college. Also the same survey concluded that 49% are keeping their college savings in taxable accounts and pay taxes that are avoidable. It further found that 39% plan on using retirement savings while 52% said they would take a second job. With the proper planning and guidance, these situations are avoidable. Among the many ways to pay for college without borrowing money is to invest in a 529 plan or ESA (Educational Savings Account). There are many types of these plans but the one I would steer towards is the one where you get to manage the options yourself, with the help of your advisor. You want to avoid ones that reallocate your assets based on the age of your child. This means that they will move from risky to conservative as your child gets older potentially leaving some return behind as they make this change. You also do not want to use a prepaid 529 plan as their growth mirrors the college tuition

growth and you generally can do better in the market investing in your own funds. The 529 plans vary from state to state. There are no income restrictions or contribution limits; however, any contribution over $15,000 and you must pay the federal gift tax. It grows tax free. One other key point is that you can withdraw the money for noneducational expenses but if you do you will be penalized with a 10% penalty as well as the person receiving the funds would have to pay tax on the money. The SECURE Act of 2019 allows 529 plan owners to withdraw funds to pay student loans, apprenticeships as well as homeschool expenses. The one drawback is you are limited in your investment options as each 529 plan has its own set of investment options. The ESA plan allows you to contribute up to $2000 a year per child. It also grows tax-free, but there are some income limits that apply when opening this type of account. The ESA does have income restrictions. It is currently $110,000 for single filers and $220,00 for those married filing jointly. There is an age limit as once the beneficiary turns 18, you cannot contribute anymore and all funds must be used or transfer to another beneficiary by age 30. You can also withdraw the money early at a 10% penalty and federal tax rate. -Questions from Social Media

Comment: John, great question. Let me start by addressing one quick point. You asked if you should be investing for you or for the business. My answer is both. I know you said you invest in retirement but retirement and investing are a little different as retirement investing is for later and investing can be for now or not so long-term needs. Most people think about retirement as locking away funds and investing as trading. You know the image of the day trader or the floor of the exchange where everyone is yelling ‘buy’, ‘sell’, etc. Let us clear that up. Trading is the act of buying or selling securities or positions. Investing is when you save for specific goals or a time in your life. Yes, retirement is a time and therefore requires investing but so does saving for a house or college. In your instance, you’re saving for the business as well is investing. Business savings and investing are a little different than individual, as it is more time focused. So let’s say, saving for an expansion, a hiring boom or even to purchase new equipment. What you should do is look at your revenue minus your expenses from the last few years to predict the percent increase or decrease in both. If your expenses are climbing at 5% a year on average but your revenue is growing at 3% a year, then you need to hold back more of your revenue in the good years to cover the 2% difference as an alternative to

cutting expenses. Basically you need to know how much money it took to run the business this last year, how much is it costing this year and what will it cost next year, two years from now, etc. This will help you figure out how much cash you need now and how much you can invest so you can offset future expense growth. It would be great to be able to put some money in a non-retirement investment account earning 8-10% and have that money and growth available to cover the 5% increase from the example above. Investing can also be investing in yourself through education, training and skills to help the business grow.

VI. Retirement and Life After Selling Whether you are sitting on the beach with a drink in your hand, traversing across Europe or just spending more time with the family everyone has a different view of retirement. Hopefully your view of retirement does not include you still working because you have too but only because you want to. Retirement planning for your small business is just as important as if you were saving for retirement with a regular 9-5 job. We all do eBay, Amazon, etc. as a way to earn extra income or as a way to provide a full-time income. Either way, we need to plan for the time when we don’t want to do it anymore at all or continue at the level we were once at. Having a retirement plan in place not only includes the accounts you are saving in but your goals and dreams. Let’s start with the basics: There are several elements that make up retirement planning. These include phrases and terms such as ‘working life expectancy’ (WLE) and ‘retirement life expectancy’ (RLE). Simply put, WLE is the amount of years you expect to work and therefore save for retirement, while RLE is the amount of years you expect to be in retirement until you pass on. These are the years in which you will be using your funds. The last number is the Wage Replacement Ratio (WRR). This is the percentage of your current income you plan to live on while in retirement. These three numbers are extremely important when coupled with your goals and dreams. If you plan to work fewer years and live more years in retirement, then you need to save more while you are working in order to support that. This will have a trickle-down effect on all other aspects of your life such as delaying current pleasures like traveling or upgrading cars and houses in order to save more now. Let’s meet Jack. Jack is 35 years old, married to Jane, also age 35. The couple has two children. Their current household income is $70,000 a year. They both come from a family with good health history and realistically expect to live until around age 95. They have spent the last several years

getting out of debt and getting on a plan. They are just getting around to saving for retirement. Jack would like to retire at age 65. They expect to live on 80% of their current income. From this scenario, we see that Jack has 30 working years left to save for 30 years of retirement. He expects them to live on $56,000 a year. If we take inflation and interest out of the equation for a second and determine that $56,000 a year for 30 years means they need $1,680,000 at retirement. This also means that they need to start saving big time. Luckily we do have things like interest that can help cushion the blow and they won’t need to save $56,000 a year and live off of $14,000 in order to afford retirement. Assuming a modest rate of return of 8% a year during their working years would lead them to need to save approximately $1213 a month or $14556 a year. This would give them enough at retirement to live off of $1,650,000 if they made no interest in retirement but alas you will gain interest during retirement as well. An investment advisor can better go over the numbers that fit your situation specifically but the goal here is to start thinking about retirement. It is never too late to start and never too late to ramp it up. While selling online is great we all can’t do it forever and if a situation arises such as disability, death of a loved one, disinterest, lack of desire, etc. it is great to have something to fall back on. Let’s continue by looking at various types of retirement accounts that are available for small business owners. -Retirement Planning for Your Small Business As a small business, you have options available to you to save for retirement that a normal employed person does not. We will explore all options here and you can determine which one might be the best fit for you, your family, and your business. The most common type of accounts and ones you have probably heard about time and time again are the 401k and the IRA or Individual Retirement Account.

The 401k is a qualified retirement plan that allows employees to defer a portion of their salary on a pretax basis to a plan allowing them to reduce their current taxable income. The amount invested grows and once a distribution happens, the amount is then taxed. The plan is established through an employer as opposed to an IRA which can be established by an individual. There are currently two types of IRAs, a traditional IRA that allows for tax deductible and nondeductible contributions and the Roth IRA. The Roth only allows nondeductible taxable contributions. Besides the tax element both accounts have basically the same rules and limits regarding contribution limits, catch up provisions for those over age 50 as well as maximum annual contributions. Currently, the annual limit, on 2023, for both accounts is $6,500. If you are over age 50, you can contribute up to $1,000 extra for an annual maximum contribution of $7,500 per person. This amount is based off your earned income, meaning if your earned income is less than $6,500 a year, say $4,000, you can only contribute up to $4,000. For individuals with no earned income, like a stay-at-home spouse, you can establish was is called a Spousal IRA, allowing you and your spouse to each have an IRA and contribute up to the earned income contribution limits. A SEP (simplified employee pension) plan is an alternative to a qualified plan. Small businesses and sole proprietors can use this plan. They are easy to establish and do not require mandatory contributions year over year; however, when a contribution is made it must be made to all eligible plan participants. A SIMPLE (savings incentive match plans for employees) is a type of retirement plan for small businesses with less than 100 employees who earn more than $5,000 in a year. SIMPLEs can be established as either SIMPLE 401(k)s or SIMPLE IRAs. The difference is basically which account you used as the funding vehicles for the plan. Solo 401k Selfemployed or owner-

IRA Roth or traditional

SIMPLE Less than 100 employees

SEP Small business or sole prop

only business Easy to administer

Eligible for Roth

Traditional = pretax now, tax on growth Roth = tax on contributions now, no tax on growth

401k or IRA No mandatory contributions Contribution limit $15,500 under age 50, $19,000 over age 50

Contribution limit 25% of net earnings up to $66,000

$22,500 $6500 contribution annual limit. contribution limit , over age 50 $7500 allowed It is important to remember that once you allocate funds for retirement accounts and start investing them, they are locked up until you are at least 59½ years old. Otherwise, you have an early withdrawal penalty of 10%. This applies to all funds withdrawn. So basically, depending on the plan and whether it was pretax or after tax you will have a huge liability, upwards of your tax bracket plus 10%. There are some situations in which the penalty is waived. These include death, being over 59½, disability, if you medical expenses exceed 10% of your adjusted gross income (AGI), you roll it over and/or there is an IRS tax levy. These apply to both IRAs as well as qualified plans. For IRAs, you can avoid the penalty when using the funds for higher education expenses, up to $10,000 can be withdrawn for the purchase of your first home as well as to pay health insurance premiums if you are unemployed, once unemployment runs out. It is important to think long and hard before withdrawing any money pre-

retirement. You will be unplugging that money from the growth and losing its earning power. It will take much more of an effort to rebuild your account to the point it was before you started withdrawing. Before taking any action, please sit with a qualified advisor for assistance and guidance. -When is the Right Time to Retire? This is going to be the biggest question you will ask yourself. When is it right for me to let go and start enjoying retirement? Transition or change is one of the toughest things we do. It is really never easy and as much as we think we are prepared for it we usually never are. Luckily with online ecommerce, you have the unique opportunity to keep working the business how often you like. At your peak, you may have had 1,000 active listings but now you are ‘retired’ and want to travel more, you may decide to only have 100 going. There was even one member of one of the online groups who retired from their 9-5 and bought an RV. They packed it with some of their items they had listed on eBay and started travelling the country, mailing their sales from whatever state or town they were in. They even had the opportunity to source items in these new areas but would only buy ‘what would fit in the RV’. Then again, there are many others who decided to make eBay selling their encore career. An encore career is a second career that you establish after you retire from your first. Maybe you always loved to knit but didn’t have the time; now that you are retired you have more time to knit and to sell your creations on Etsy. Bottom line is retirement doesn’t mean you’re done living; for many people, it's just the start. -Questions from Social Media

Comment: John, I love selling on eBay. I want to sell when I am in retirement because I want to, not because I have to. It is important for us as sellers and small business owners to protect our futures. I do not want to have to rely on someone purchasing an item to be able to buy medication or food. Steadily investing a portion of your profits into a retirement account will allow you to sell because you love selling. For example, putting away $250 a month from age 35-65 earning an average of 8% a year will net you approximately $367,000. If you were to max out an IRA and put the full $6000 or $500 per month, you would have approximately $734,000. Everyone’s retirement looks a little different and there is no one-size-fits-all plan. You have to decide what it is you want to be doing and how much money you need to do it. Only then can a proper plan with a proper amount to invest be constructed and that may or may not include working/selling in your retirement years.

VII.

Estate Planning and Leaving a Legacy – What it’s All About

Benjamin Franklin said, “The only things certain in life are death and taxes.” Well we already discussed taxes. Now it’s time to discuss your legacy, what you will leave behind and how you will be remembered. Estate planning is not just for the wealthy. It does not have to be complicated and should be done by all. Estate planning is the effective and efficient transfer of assets upon your death. Effective means the assets go to the intended person, while efficient means that the transfer costs were effectively minimized using all available strategies. Why is this important? For starters, you will not be here to ensure that these steps are carried out so you want to be assured that your wishes are followed and do not leave a burden on your loved ones. There are a few numbers that are important to remember when setting up your estate plan. These are the: 1) lifetime exemption, 2) annual gift tax exclusion, and 3) estate tax rate for federal and state. As of 2019, you are allowed a lifetime exemption of $11.4 million per person or a combined $22.8 million per married couple. This means that if you leave behind less, depending on the state you live in, you may end up not owing any estate tax. One important note here that should not be overlooked is what happens to the lifetime exemption when the first spouse dies? IRS form 706 allows you to elect portability upon the death of the first spouse. This means that any unused amount from their $11.4 can be rolled over into the surviving spouses estate giving access to the full or remaining amount. The second number is the annual Gift Tax. As of 2019, this amount was $15,000 per person, per spouse. This means that each spouse can gift up to $15,000 per calendar year. For example, you have a son who is married, you can each gift $15,000 to your son and $15,000 to your daughter-in-law, effectively gifting them a total of $60,000. This is all well and good but what does it mean to me you are probably asking. Well if you live in one of 17 states, or Washington D.C., you could be subject to either a state estate tax, a inheritance tax, or in the case of Maryland residents, both. Please check with

an estate planning attorney in your state to verify the current limits, exemptions, and tax rates. What Do I Need? When we think of estate planning, we immediately think of wills and the dramatic readings in the lawyer’s office where the trophy wife gets it all over the kids, like in several Hollywood movies. Sometimes art imitates life and this can happen. Why does it happen? Well lack of communication and lack of planning for starters. Lack of planning doesn’t necessarily mean you didn’t have a will at all but it may mean that you haven’t looked at our updated it in years. Let’s start with the basic documents you will need: 1. Will 2. Power of Attorney 3. Health Care Proxy/Directive/Health Care Power of Attorney/DNR 4. Letters of Instruction 5. Any all statements related to accounts as well as username and passwords

-The Will A will is the cornerstone of any estate plan. It is a legal document that gives you the opportunity to control the distribution of your assets and property at your death and allows you to avoid your state's intestacy laws. Each state has their own intestacy law. So if you die without a will, the state makes one for you and your assets and property are distributed how the state sees fit. Wills have a ton of advantages and are not hard to construct or fill out. There are many places online where you can fill one out such as LegalZoom.com. Each will is state-specific so if you move you will need to update your will to your current state. You will also want to update your will after every life event, such as marriage, birth of a child, divorce, or a move out of state.

Failure to do so could leave out important directions for care and distribution. -Power of Attorney The next important document is the Power of Attorney. This is a legal document that authorizes a person to act on another’s behalf. It allows them to act in place of you. There can be broad or limited powers of attorney granted. For example, you may not want to deal with a certain aspect like a real estate transaction so you appoint a power of attorney to handle that. This also comes into play if you are incapacitated in any way and you need someone you trust to care for your needs and estate while you are still alive. For example, you are in a nursing home and need to withdraw money or pay bills, the power of attorney can legally act in your steed and pay the bills for you. Having one in place does not automatically grant the power to the person named. You can have what is called a Springing Power of Attorney. This basically means that the power of attorney is dormant until an event springs it to action. -Health Care Similar to a Power of Attorney is the Health Care Proxy, or Health Care Power of Attorney. This is a power of attorney for medical reasons. You can appoint different people as your medical and non-medical attorney in fact. Unlike a living will, which states your wishes regarding end of life care, a health care power of attorney puts those decisions into the hands of the person you appoint. This is usually designed to cover treatment and procedures, it does not generally cover end-of-life sustaining treatment. Again, this type of power of attorney usually begins when there is a certain condition met and ends when you are recovered. End-of-life decisions are covered by a living will or advanced medical directive. There also could be what is called a DNR or Do Not Resuscitate Order. -Letter of Instruction Another essential document to include in your estate plan is called a Letter of Instruction. While this is not a legal document, it gives you the opportunity to expressly spell out your last wishes, hope and desires for everyone you are leaving behind. It also spells out your funeral wishes as well as what to do

with your household or tangible possessions. -Account-Related Statements & Paperwork There are several other documents you should have in your possession. These include beneficiary forms, user name and passwords to online accounts especially bank, investment, insurance and trusts. Make an appointment with a qualified estate planning attorney to ensure that you have all of these documents properly filled out. Lastly, it is important to everyone who will be affected by your death and impacted by your estate to be made aware. Lack of communication can cause those dramatic movie scenes in the lawyer’s office. Having everyone know what they will receive and why is important. It gives them an opportunity to ask you why rather than wonder why after your gone. It also gives them on opportunity to change themselves and possibly earn their way back in. Ultimately, it is your decision on what to leave and to whom. You may even decide to leave it all to charity while your oldest child is hoping for the money to buy a house. Having that conversation on a regular basis is crucial. -Strategies to Utilize The most common structure used in estate planning is a trust. There are various forms of trust including living trusts, irrevocable life insurance trusts, power of appointment trusts, charitable trusts, bypass or credit shelter trusts, as well as qualified terminable interest property trusts or QTIP. Not all of these will apply to you so we will cover those that do. A trust is an estate planning tool that provides for the management of assets as well as the flexibility to carry out the operation of the trust. It is a structure in which legal title to assets of a party, who is the grantor, is vested to another party, the trustee, who then manages the assets for the benefit of others called the beneficiaries. The appointed trustee must act in your best interest at times. They are considered a fiduciary. Trusts provide for management of assets or property. They provide creditor protection. They can allow assets to be split. They can help avoid probate and most importantly they can be used to minimize taxes.

The two most common forms of trusts are revocable or irrevocable. Revocable allows for the grantor, or person who creates the trust, to retain the right to revoke the trust at any time prior to their death. With an irrevocable trust, the grantor cannot take back any assets or property placed in the trust. Finding the right strategy and tool to use for your situation is important. Meeting with a qualified estate planning attorney as well as your CFP® or financial planner is key. Remember the council of elders? Having them all on the same page makes your life and death much easier for you and all those around you. -What to do with Inventory? If you should pass away before finalizing your business assets such as inventory, you will need to address those in your estate plan as well. Many of you would have decided to liquidate or sell your business long before your death but what happens if you should pass away suddenly? Do you want your business to go on? Can it survive without you? There are a few options to consider. If you are the sole breadwinner or main income of your family, then it might be in the best interest of your family to continue the business or look to sell. If you simply pass on and inventory remains, you can consider having the items donated to a charity of your choice. In any event, your estate plan is a fluid one and can change at any point or from any life event. Be mindful of all areas of your life, including how it will affect your business if you do not have the proper plan, or any plan for that matter in place. It’s not too early or too late to start.

-Question from Social Media

Comment: John, great question. Typically how much something is worth is how much someone is willing to pay for it. Our first barometer would be to compare it against other e-commerce or eBay businesses that have sold recently. We can also calculate your actual business in one of two ways. The first being if you sold off all of your inventory and equipment how much would that bring you? This is called Book Value.

The second would be to calculate your net profit for the year in your business after you were paid and multiply that by 4 or 5. This is called your Capitalization Rate Method. The reason we subtract your income from the net profits is in case the potential owner wants to buy it and not work in the business themselves and needs to hire someone to replace you. So looking at those two numbers, you can estimate the value of your business in a pinch if you or your family needs to sell it off after your death.

VIII. Special Topics and Q&A Congratulations! You made it through the financial planning process and you are well on your way to having a successful business and life. So let’s now focus on other aspects that will affect your business and help you grow and succeed. These topics include hiring help as well as expanding your business. -Hiring Help For most of us, we have gone it alone. Selling online can be lonely. There is only so much time in the day for you to get your work done, spend time with your family, educate yourself, source new products, list new items, and prepare sold items for shipping. As you get busier and busier, you may start to look into hiring some help. I know you have questions like, “Where do I look for someone? How much do I pay them? How much can I trust them with things like my password and access to my home?” These are all valid points to think about. Let’s start with finding someone. This is a type of job where sometimes you just need an extra hand and having someone else do what most of us call 'the dirty work' like listing. It allows us to focus on finding new products while not letting our store get stale or our death pile grow larger. The first place I would look is in your own home. Do you have a spouse who is looking to help out a few hours a week? What about children? This can be a great bonding experience and the cost is minimal. If that does not work, start looking at what I call 'Your cone of influence'. Picture a cone with the smallest part being you. As you move down the cone, the space between the two sides grows further and further apart. If you imagine that space filled with people, then these are the people you have access to in some way shape or form. The closer they are to the cone, the more influence and more direct contact you have with them. People in the cone include your child's piano teacher's nephew, and the neighbor’s grandchild, etc. Letting the people you have direct influence over know you are hiring or looking for something specific allows the word to get out and qualified candidates to be identified. Other avenues are the local high school and colleges as well as online sites

like Craigslist. The next step would be to spend some money on hiring outside help, outside of your cone of influence. This would include utilizing apps such as Sellhound, as well as VA’s or Virtual Assistants. You can find them on sites like Fivver and Upwork. Sellhound for example is an app where you send in some photos of your item and fill in a few prompts and their team will build the listing for you, send it back to you when ready and you just need to make it live. This can cut down on some prep work during the listing process. They do charge a fee per item and you need to incorporate that cost into your item bottom line, making sure you can still return enough profit to make the investment profitable to you. -Expansion The natural order of business is to make a profit and sometimes in order to make a profit, you need to grow. Now expansion in a traditional sense is when a company identifies a location that can be served better or a product line that is undervalued or maybe even, referring back to hiring, you bring on more people. In our line of work, selling online, an expansion might mean expanding into a brick and mortar location or quite simply, selling on multiple platforms. Perhaps you have been selling on eBay forever but have decided to explore Amazon, Etsy, Poshmark, or a host of other listing platforms. That is an expansion. You need to put the same amount of effort into those areas as you do your initial business. Once you decide to hire someone to help with your eBay store, you can then focus on getting the other platforms up and running. You do not want to neglect one for the other. It will show in the quality of your listings and therefore affect your bottom line when sales trickle down. Keeping the main one going is key before you expand. It’s important to know, you do not have to expand. It is not required and completely up to you. Like any venture you take, expansion should be done slowly. You do not want to sign your entire inventory up to sell on Amazon and pay fees only to be not ready for increased sales and shipping expectations. Trying a few items to get the feel is quite all right. Another option to explore apps that specialize in cross-listing. These apps

include ListPerfectly and Vendoo. These apps can connect to your current inventory and import them into a host of other platforms. This means in a short time, you can have your entire store listed on several different platforms, expanding your reach. If you have a lot of items to list and the lack of storage space is impeding on your expansion there is another service called eBliss. eBliss is the storage and fulfillment option for eBay and Poshmark sellers. Similar to Amazon’s FBA program, you ship your items to eBliss and once they sell eBliss packs and mails them to your customers. Once again, just as in the case with the listing apps, each service has a cost and you need to take that into account. It can get quite costly to have someone build your listing, pay to have it cross-listed and then pay to have it stored and shipped for you. Start off small; there is a time and place for all of these solutions. -Individual vs Business eBay account or To Store or Not to Store Speaking of expansion, your first step on eBay would be expanding your listings. This can be done in several ways. They include calling eBay and requesting your selling limits be increased so you can sell a lot of items. Another way focuses on the eBay store. The eBay store is a great tool for the person looking to up their active listings and have more control over the listings, including tools such as vacation mode. It allows you to start thinking about branding for marketing purposes. You will get a custom URL that you can use on email signature lines or business cards. Your store name can then be used as your Facebook page, Twitter handle, or Instagram name. -Store Levels When you first start selling on eBay for example, you are given a small amount of listings to prove you are worthy of selling on the platform. After about 30 days, you can call to request more. Don’t get frustrated by this. I know you have the best intentions to get started and sell. I know you want to make a lot of money and you feel eBay or whoever is getting in your way. But it is for good reason. It gives you a chance to feel out the platform, learn the ropes and fail, yes fail, without much invested, (time to list a lot as

oppose to dollar amount of the items). You can figure out which shipping methods and techniques work best for you etc. This way when you are ready to step up to the big league you have a game plan in place rather than trying to figure things out on the fly. I mentioned branding in such a way that your social media accounts and your store match. This is important for continuity and marketing. You want people to be able to find you anywhere they look. This will help drive traffic to your listings and ultimately boost your sales. -Social Media There are many social media networks available today, and each one has its own advantages. Facebook is great for building a community around your business, while Instagram is good for sharing visual content. Twitter is great for reaching a wide audience quickly, Pinterest is perfect for sharing creative content, and TikTok and YouTube are perfect for creating videos. Using social media in your business can help you reach more customers, connect with your target audience, and promote your products or services. It can also help you build brand awareness and create a strong online presence. Social media is a powerful tool that should be used to its full potential in order to get the most out of it. So, which social media network should you use for your business? It depends on your business goals and what you want to achieve. But, in general, Facebook, Instagram, Twitter, Pinterest, TikTok, and YouTube are all great options. So choose the ones that work best for you and get started! -Afterword Remember the story about the tortoise and the hare? Do you remember that the hare won? Neither do I. The moral of the story was slow and steady wins the race. slow and steady wins this race too. Stop to think about what you're doing, how you're doing it, and most importantly why you're doing it. Think long term, not just in sales but in life and everything that comes with it. My hope in writing this book for you is that you begin to think about retirement, think about all the things being a successful business owner allows you to have, and make decisions that better you and your family for generations to

come. Good luck!

IX. Appendix All forms are available for download at www.jrfinancialcoaching.com/resellerresources Sample Business Plan

Used courtesy of Hubspot.com

Sample Budget

Sample Independent Contractor Agreement

This Agreement is made between ____________________ ("Client") with a principal place of business at __________________ and _______________ ("Contractor"), with a principal place of business at ____________________________. 1. Services to Be Performed Contractor agrees to perform the following services: _____________ OR Contractor agrees to perform the services described in Exhibit A, which is attached to this Agreement. 2. Payment In consideration for the services to be performed by Contractor, Client agrees to pay Contractor at the following rates: ____________________________. Contractor shall be paid within a reasonable time after Contractor submits an invoice to Client. The invoice should include the following: an invoice number, the dates covered by the invoice, and a summary of the work performed. 3. Expenses Contractor shall be responsible for all expenses incurred while performing services under this Agreement. This includes automobile, truck, and other travel expenses; vehicle maintenance and repair costs; vehicle and other license fees and permits; insurance premiums; road, fuel, and other taxes; fines; radio, pager, or cell phone expenses; meals; and all salary, expenses, and other compensation paid to employees or contract personnel the Contractor hires to complete the work under this Agreement. OR Client shall reimburse Contractor for the following expenses that are attributable directly to work performed under this Agreement:

_________________. Contractor shall submit an itemized statement of Contractor's expenses. Client shall pay Contractor within 30 days after receipt of each statement. 4. Vehicles and Equipment Contractor will furnish all vehicles, equipment, tools, and materials used to provide the services required by this Agreement. Client will not require Contractor to rent or purchase any equipment, product, or service as a condition of entering into this Agreement. 5. Independent Contractor Status Contractor is an independent contractor, and neither Contractor nor Contractor's employees or contract personnel are, or shall be deemed, Client's employees. In its capacity as an independent contractor, Contractor agrees and represents, and Client agrees, as follows [Check all that apply] [ ] Contractor has the right to perform services for others during the term of this Agreement. [ ] Contractor has the sole right to control and direct the means, manner, and method by which the services required by this Agreement will be performed. Contractor shall select the routes taken, starting and quitting times, days of work, and order the work is performed. [ ] Contractor has the right to hire assistants as subcontractors or to use employees to provide the services required by this Agreement. [ ] Neither Contractor nor Contractor's employees or contract personnel shall be required to wear any uniforms provided by Client. [ ] The services required by this Agreement shall be performed by Contractor, Contractor's employees, or contract personnel, and Client shall not hire, supervise, or pay any assistants to help Contractor. [ ] Neither Contractor nor Contractor's employees or contract personnel shall receive any training from Client in the professional skills necessary to

perform the services required by this Agreement. [ ] Neither Contractor nor Contractor's employees or contract personnel shall be required by Client to devote full time to the performance of the services required by this Agreement. 6. Business Licenses, Permits, and Certificates Contractor represents and warrants that Contractor and Contractor's employees and contract personnel will comply with all federal, state, and local laws requiring drivers and other licenses, business permits, and certificates required to carry out the services to be performed under this Agreement. 7. State and Federal Taxes Client will not: • withhold FICA (Social Security and Medicare taxes) from Contractor's payments or make FICA payments on Contractor's behalf • make state or federal unemployment compensation contributions on Contractor's behalf, or • withhold state or federal income tax from Contractor's payments. Contractor shall pay all taxes incurred while performing services under this Agreement—including all applicable income taxes and, if Contractor is not a corporation, self-employment (Social Security) taxes. Upon demand, Contractor shall provide Client with proof that such payments have been made. 8. Fringe Benefits Contractor understands that neither Contractor nor Contractor's employees or contract personnel are eligible to participate in any employee pension, health, vacation pay, sick pay, or other fringe benefit plan of Client.

9. Unemployment Compensation Client shall make no state or federal unemployment compensation payments on behalf of Contractor or Contractor's employees or contract personnel. Contractor will not be entitled to these benefits in connection with work performed under this Agreement. 10. Workers' Compensation Client shall not obtain workers' compensation insurance on behalf of Contractor or Contractor's employees. If Contractor hires employees to perform any work under this Agreement, Contractor will cover them with workers' compensation insurance to the extent required by law and provide Client with a certificate of workers' compensation insurance before the employees begin the work. 11. Insurance Client shall not provide insurance coverage of any kind for Contractor or Contractor's employees or contract personnel. Contractor shall obtain the following insurance coverage and maintain it during the entire term of this Agreement: [Check all that apply.] [ ] Automobile liability insurance for each vehicle used in the performance of this Agreement -- including owned, non-owned (for example, owned by Contractor's employees), leased, or hired vehicles -- in the minimum amount of $_____ combined single limit per occurrence for bodily injury and property damage. [ ] Comprehensive or commercial general liability insurance coverage in the minimum amount of $______ combined single limit, including coverage for bodily injury, personal injury, broad form property damage, contractual liability, and cross-liability. Before commencing any work, Contractor shall provide Client with proof of this insurance and with proof that Client has been made an additional insured under the policies.

12. Indemnification Contractor shall indemnify and hold Client harmless from any loss or liability arising from performing services under this Agreement. 13. Term of Agreement This agreement will become effective when signed by both parties and will terminate on the earlier of: • the date Contractor completes the services required by this Agreement • ____________ [date], or • the date a party terminates the Agreement as provided below. 14. Terminating the Agreement With reasonable cause, either Client or Contractor may terminate this Agreement, effective immediately upon giving written notice. Reasonable cause includes: • a material violation of this Agreement, or • any act exposing the other party to liability to others for personal injury or property damage. OR Either party may terminate this Agreement at any time by giving ____ days' written notice to the other party of the intent to terminate. 15. Exclusive Agreement This is the entire Agreement between Contractor and Client. 16. Modifying the Agreement This Agreement may be modified only by a writing signed by both parties. 17. Resolving Disputes If a dispute arises under this Agreement, any party may take the matter to California state court, jurisdiction of the county of Alameda.

OR If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually agreed-upon mediator in Alameda County, CA. Any costs and fees other than attorney fees associated with the mediation shall be shared equally by the parties. If it proves impossible to arrive at a mutually satisfactory solution through mediation, the parties agree to submit the dispute to a mutually agreed-upon arbitrator in Alameda County, CA. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction to do so. Costs of arbitration, including attorney fees, will be allocated by the arbitrator. 18. Confidentiality Contractor acknowledges that it will be necessary for Client to disclose certain confidential and proprietary information to Contractor in order for Contractor to perform duties under this Agreement. Contractor acknowledges that disclosure to a third party or misuse of this proprietary or confidential information would irreparably harm Client. Accordingly, Contractor will not disclose or use, either during or after the term of this Agreement, any proprietary or confidential information of Client without Client's prior written permission except to the extent necessary to perform services on Client's behalf. Proprietary or confidential information includes: • the written, printed, graphic, or electronically recorded materials furnished by Client for Contractor to use • any written or tangible information stamped “confidential,” “proprietary,” or with a similar legend, or any information that Client makes reasonable efforts to maintain the secrecy of • business or marketing plans or strategies, customer lists, operating procedures, trade secrets, design formulas, know-how and processes, computer programs and inventories, discoveries, and improvements of any kind, sales projections, and pricing information • information belonging to customers and suppliers of Client about whom

Contractor gained knowledge as a result of Contractor's services to Client, and • other: _____________________. Upon termination of Contractor's services to Client, or at Client's request, Contractor shall deliver to Client all materials in Contractor's possession relating to Client's business. Contractor acknowledges that any breach or threatened breach of Clause 18 of this Agreement will result in irreparable harm to Client for which damages would be an inadequate remedy. Therefore, Client shall be entitled to equitable relief, including an injunction, in the event of such breach or threatened breach of Clause 18 of this Agreement. Such equitable relief shall be in addition to Client's rights and remedies otherwise available at law. 19. Proprietary Information. A. The product of all work performed under this Agreement (“Work Product”), including without limitation all notes, reports, documentation, drawings, computer programs, inventions, creations, works, devices, models, work-in-progress and deliverables will be the sole property of the Client, and Contractor hereby assigns to the Client all right, title and interest therein, including but not limited to all audiovisual, literary, moral rights and other copyrights, patent rights, trade secret rights and other proprietary rights therein. Contractor retains no right to use the Work Product and agree not to challenge the validity of the Client’s ownership in the Work Product. B. Contractor hereby assigns to the Client all right, title, and interest in any and all photographic images and videos or audio recordings made by the Client during Contractor’s work for them, including, but not limited to, any royalties, proceeds, or other benefits derived from such photographs or recordings. C. The Client will be entitled to use Contractor’s name and/or likeness use in advertising and other materials. 20. No Partnership This Agreement does not create a partnership relationship. Contractor does

not have authority to enter into contracts on Client's behalf. 21. Assignment and Delegation Either Contractor or Client may assign rights and may delegate duties under this Agreement. OR Contractor may not assign or subcontract any rights or delegate any of its duties under this Agreement without Client's prior written approval. 22. Applicable Law This Agreement will be governed by California law, without giving effect to conflict of laws principles. Signatures Client/Owner: ____________________________________________________

Printed Name ________________________________________________

Signature _________________________________________________ Date Contractor: _________________________________________________________ Printed Name _________________________________________________________ Signature

_________________________________________________________ Date _________________________________________________________ Taxpayer ID Number

-Inventory and Expense Spreadsheet Profit Where Date Price Listed Sold Cost Fees Name Purchased Paid Price Price to Ship

X. Works Cited Ackert, L., & Deaves, R. (2009). Behavioral Finance: Psychology, DecisionMaking, and Markets. United States: Cengage Learning. Tarman, D. (2018, June 4th). eBay Impact. Retrieved from eBay.com: https://www.ebayinc.com/stories/news/a-look-at-the-ebay-economy-inthe-us/ Whitmore, N. (2013). Three Reasons Why Ecommerce Sites Fail. Retrieved from sellbrite.com: https://www.sellbrite.com/blog/three-reasons-whyecommerce-sites-fail/

About the Author Joey Ruffalo was born and raised in New Jersey. At a young age, he learned the skills and compassion to help others while assisting and volunteering with his father who happens to be blind. The golden rule of “treat people the way you want to be treated” was the first life lesson taught to him and served as the foundation for the work he is providing today. Several other life lessons were infused into his makeup, including the words of Jim Valvano: “don’t give up; don’t ever give up” and that of his high school Chemistry teacher, Vincent Harris: “You can’t see the forest cause the trees get in the way.” These lessons shaped him as a young adult to pursue his dreams and life goals. After high school, Joey moved to California to attend college. He graduated from San Francisco State University with a BA in History. He is married to his wife, Bettina. Joey was also a victim of the financial crisis teetering on the verge of bankruptcy. Many sleepless nights later, he stumbled upon a radio show where the host was spouting hope and teaching how to deal with situations like he was in. That changed his life and set it in a different direction. He knew he wanted to help people. He wanted to be a guiding hand to those who were scared like him, to walk with them and tell them it would be okay. This started his journey towards financial planning. In 2017, Joey was able to finish one of his life goals by attending and graduating from UCLA with honors with a certificate in Personal Financial Planning. In 2018, he graduated with his MBA in Financial Planning from California Lutheran University. He is currently pursuing his Doctorate in Business Administration from Liberty University. Josey and his wife have owned and operated several small businesses. They continue to own and run the award-winning Ruff Ruff Pet Care. They are also top-rated Powersellers on eBay, operating their store Favorite Treasures and More. Joey’s goal is to help guide new and old sellers alike along the path of financial planning. Helping them to think more about their business and their

legacies. Joey and J.R. Financial Coaching was named the Best in East Bay 2020 by Bay Area Parent Magazine. Joseph was also honored to be included in the 2021-2022 Marquis Who’s Who in America and was named one of Marquis Top 100 Professionals as well as a Marquis Top Business in 2021. Joseph is also a Ramsey Preferred Coach. Joey has been a frequent guest and contributor on the eBay for Business podcast where he has discussed topics such as inventory management as well as financial planning for your eBay business. He can be heard on his own podcast, Kill The Noise as well as on Instagam at @JRFinancialCoach Joey’s other works include the #1 International Best Selling multi author book The Transformation Within: Words of Wisdom From a Collection of Coaches To Help You Win at the Game of Life.

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