Question by Shawn P: Need Help with Starting Internet Business?
I need some help with starting internet business. I hear there are alot scams with online business. I do not know how to start with ebay business or something similar with that? Do you need business license for internet business & Tax ID Number? Is Paypal account system safe to used with transaction money?

Best answer:

Answer by Lewis Thurgood (The 3rd)
Ok, technically you do need those things, but most people dont. Unless you are making over $ 100,000 a year, I wouldnt worry about it. Most people just pay the self employment tax when the time comes. It seems the IRS doesnt care about the business licenses for small time people, because its hard for them to classify what is a business and what is just selling things online as a hobby to get rid of some things. I would suggest you stay away from ebay though. I mean go ahead and try to sell on there, you never know, you might get lucky. But most people are not making money on ebay anymore, those days are over and ebay is losing visitors every month because they made some bad changes last year with the new CEO. So I would suggest you build your own website and sell off there. I was a powerseller on ebay, and along with thousands of other powersellers, we had to set up our own websites overnight when ebay changed their policies without any warning. So starting a business on ebay, is like putting all your eggs in one basket. If that basket breaks, you’re out of business and living on the streets (especially in this economy with few jobs out there). So I would have a backup plan and work on selling on other sites or on your own site if you do go that route. Paypal is safe, but its not 100% safe. They will sometimes hold your money for ridiculous reasons (If you sell 2 or more of the same thing in one day, they may put a 21 day hold on your funds, which is what they have been doing to many sellers, and they did to me once, even if its only $ 5 for each item. They held $ 34 of mine for 21 days.). They say this is “suspicious activity”, but anybody who owns a business should be able to sell more than 2 of the same items in a day, how else can you stay in business? If I have 20 pairs of shoes Im selling and they are all the same, why cant I sell 2 pairs the same day? So sometimes paypal does this, not everytime, but they just started this. The truth is, they are being sneaky. Its really their way of holding peoples funds in the bank account, so they can earn interest on it during those 21 days. So I think every day, they find thousands of people who made more than two transactions, and hold all their money. So lets say they hold 1000 people’s money in one day, and all of those 1000 people had transactions of $ 50 or more. Thats $ 50,000 that ebay/paypal is holding on to for 21 days, imagine the interest they make each time they do this. So ebay made some dumb changes last year, and it affected their visitor base, so now they are trying to make those profits back through their paypal company, since ebay owns paypal. I actually worked in ebay’s mail room a few years ago for about 9 months before I quit. They are a very dishonest company, not just to ebay sellers, but also to their own employees. So I still use paypal on my website, because many people prefer to pay that way, but I also try to offer google checkout and other forms of payment too. Try not to put all your eggs in one basket. For the amount of money you spend on ebay fees, you could just as easily set up a website, put paypal buttons on it, and then pay to advertise your website instead of paying ebay fees to advertise your listings. Ebay is also unfair now, because sellers can not leave negative feedback for buyers. So if a buyer does not pay, you cant really do anything to them. If you file an unpaying bidder form, the buyer may retaliate and leave you negative feedback. If you get just 1 negative feedback on ebay, they will take your listings and put them to the back of the line, or not show them at all. So basically, you would be paying ebay to advertise your item, but buyers wouldnt be able to find it on ebay, so they would be ripping you off. Very dishonest. I mean go ahead and try ebay, you may get lucky, but a warning: Even if things go good for you on ebay, which I doubt they will, you should also be working on making your own business on a website, just to be safe. Ebay was a good website to sell on until John Donahoe became the CEO. That guy has no idea what hes doing, he keeps trying to change things, and everytime he does, he angers the sellers, and scares off the visitors.

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