As you will find like so many others, selling goods on eBay can provide you with a very powerful way to earn money. In fact, the number of people who have created successful online businesses through selling on eBay has grown quite a bit in the last few years. But what many do not know is what types of taxes they would be expected to pay. Below we take a look at the taxes the eBay seller is likely to be faced with.

1. Sales Tax - Whether you buy things from your local store or online you will find that the price you will pay for these goods includes a local sales tax. How much you pay will of course depend on where you live. In some places it can be as much as 10.75%, whereas in other places you may find yourself not having to pay any sales tax at all.

For those who are only going to be selling a few items through eBay, then they won't need to worry about collecting any sales tax on their goods. However, if you are intending to sell lots of items through eBay, then the first thing you need to do is register yourself as a business in the city or state where the business is located. Then you will need to make sure that you do collect these taxes and deposit with the local government every 3 months. However it should be noted that you only need to collect sales taxes for orders you ship to your home state.

2. Self Employment Tax - Those who only intend to sell items on the rare occasion on eBay don't need to concern themselves with this form of tax. However, if you are intending to sell goods all the time through eBay then you will be required to pay this form of tax. By law as you are self employed you will have to pay your social security taxes yourself and this amounts to around 15% of what you earn.

3. Income Tax - This form of tax must be paid on all income that you earn. However, you will only need to pay this form of tax from any profits you make. Of course, if the items you have sell for less than you paid for them, then you shouldn't owe any income taxes. To protect yourself should you find yourself in an audit at any point in the future, you should keep any documentation that you have relating to the goods regarding how much you paid for them and how much you sold them for.

Above we have looked at taxes that the eBay seller may be required to pay. Making sure that you set your eBay business up correctly when it comes to the payment of taxes will ensure that you can benefit from other things that could help to reduce how much you actually end up paying.