Guest Author - Kim O´Shea
When you start any business you must have a clear direction of the route the business is to take if you are to make the business successful. This includes home based businesses. Many businesses fail because there was no planning ahead or no follow through.
When you start selling in online auctions it is advisable to start by selling off clutter and unwanted items from around your home. This allows you to fine tune your selling technique and find out what sells well and what does not.
Once you decide to move on and start to buy goods for resale the business changes. Now you will have creditors or have to pay for goods up front. Most companies insist on payment before sending out the goods so you will need to know that you can meet these expenses.
The up side is that you will not owe any money for your stock but the downside is that you will have to turnover the stock quickly to make your money back.
Once you are established, you may find that companies offer you credit. This will improve your cash flow initially but at the end of the month the bills will be due for payment so you will have to work hard to sell your goods and turnover your profit within the month.
An LLC or Limited Liability Company while a relatively new business concept may help alleviate the worries of what you should do if the business goes slowly. This type of business arrangement allows you to protect assets like your home from creditors.
For the small business just starting up an LLC may prove to be too costly. Some states levy a franchise tax which is basically a fee for having the limited status. There is also an annual renewal fee and a charge for filing accounts.
The big Online Auction sites like eBay have policies in place and plenty of free advice to help you become successful without risking your home. Pay special attention to the terms and conditions and make sure when you are selling that you include your terms and conditions at every stage of the transaction as this will help to ensure that your payments arrive into your account on time.
Start small, do not be tempted to buy 1,000 items just because you get an extra 5% discount. Only spend what you know you can afford. If the items sell well great! Go back and get some more. If the items sell slowly at least you know that they are paid for and that in time they will turn a profit.
A Limited Liability Company may be just what you have been looking for to move your business to the next stage but don’t rush in. Plan your business well and you will succeed slowly but surely. If you do decide that you are ready to take that step make sure you speak to your tax advisor, business advisor or any other relevant person and get all the facts before you make up your mind.
It’s your business and only you can decide what feels right for you.
