What is the best card to purchase inventory for online sales?

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s.jessica
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What is the best card to purchase inventory for online sales?

Postby s.jessica » Sat Apr 27, 2013 8:46 pm

It's not that I'm going to to this, but it has kind of sparked some curiosity. I hadn't really thought to much about eBay and online sales until I needed to figure out a way to dump some stuff, then I started taking a closer look at eBay. I've been away from there for at least 7 years and even then I didn't go very far.

What I've noticed lately there are very small profit margins on a few things - everyone is there looking for a bargain, so things tend to sell cheap. I was kind of staying away because what I was looking at was I would need to make a $300 investment in order to make maybe a $10 to $20 profit and my potential profit for the month might be $50. That would make about $600 per year and I just kind of figured the IRS would think I was joking if I reported a $600 income.

Here's what someone just suggested, get a rewards card, use it to purchase a small inventory then try to turn the inventory quickly then order more. Of course the amount that I make from the sale would cover things like eBay fees, shipping, etc so any fees could be paid with the card. Would it be worth it to start such a business for the purpose of racking up reward points, cash back or air miles? I suppose start out slowly while exploring the waters so I don't get a bill I can't pay, then slowly build up depending on how well things sell.

What kind of a card would work best for this? A business card or just a personal card? As I understand it, a business card won't help your personal credit but the main concern is if the rewards would make the business worth messing with. I could see myself at some point charging up to $4,000 a month to make less than a $1,000 profit, but that's when I'm confident I will make the $4,000 in sales before the bill is due. I'd also want a couple thousand in the bank before I did that in case there was a problem with sales that month.

Would there be any real disadvantages to getting a personal card just to use for this? As I understand, a business card can only be used for business expenses, correct? So something like buying gas for the business use of a personal auto-mobile would be a no-no. I do get to claim business use of my vehicle for going to garage sales if I'm buying stuff to resell and I get to claim mileage to the shipping center, I already checked on this.

I've never flown, I have some friends trying to get me on a plane, but it would be a personal trip - not business so I'm not sure a business card with air miles would work. I'm assuming the money from the sales could only be dumped into a business checking account - assuming the business is mine and I have no employees - would I be able to move the money to a personal account? That would be plan B, if I don't get the Business card I want.

I guess my big question is what would be my best option for buying inventory I plan to sell online? If I'm only able to spend, say $300/mo. would it still be worth it or just a big headache that's more trouble than it's worth? I want to stay away from annual fees, because I may not be able to make them pay out.


cashback
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Postby cashback » Sat Apr 27, 2013 10:37 pm

I didn't read your whole post, but when you use rewards cards for a business, it is counted as a reduction in the cost of the goods you buy. Therefore, any rewards earned would be counted as profit and taxed.
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Bksuper
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Postby Bksuper » Sun Apr 28, 2013 12:45 am

What type of inventory are you purchasing? Are you interested in obtaining multiple cards for this purpose or just one?
Sole Ownership Cards:
1st Financial Bank Platinum Student Visa, $500 CL, Open Since 3/2012
Citi Forward Student Visa, $6k CL, Open Since 10/2012
Costco TrueEarnings Amex, $6k CL, Backdates to 1/2012
SallieMae Rewards Barclay Mastercard, $2.5k CL, Open Since 4/2013
Jointly Owned Cards (co-owner with mom, not AU, used and paid only by me):
Chase Amazon Rewards Visa Signature, $2k CL, Open Since 8/2012
US Bank Cash+ Visa Signature, $13.5k CL, Open Since 10/2012
Authorized User (Parents Pay/Use)
Costco TrueEarnings Amex $29.4k CL, AU since 11/2012

s.jessica
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Postby s.jessica » Sun Apr 28, 2013 3:20 pm

I won't be giving up my day job, that's for sure. So far I just starting having fun with this and doing it for a hobby. I did something I shouldn't have, bought some stuff resold it on eBay and made a small profit, now I owe income tax on this and my tax advisor said now I needed to try to get as many sales as I could the rest of the year.

This isn't a huge money maker, but I was wondering if there was any way to make the credit card rewards worth it since I could end up spending several thousand every month. I have a friend who wants me to earn air miles, so I would maybe only be doing this for a year, but if the trip doesn't work out, the miles will be completely useless to me. I've never flown before in my life and not sure I want to. Points I've never had and don't understand, so I'd likely have to get someone to explain to me what I had. Cash back, easy to understand but at say 1% cash back, would that even be worth it? Let's say I spend $3,000 a month on a 1% card, then I get $30 back every month in taxable income that I would have to report.

I was looking at Capital One Spark and see there's a 2% cash rewards and a miles card. I've had their platinum card for about a year, the stupid one with the low limit one CLI only and annual fee so I don't know if they would approve me or not. My big question is if I take the miles card if I could use the miles for a personal trip, my little hobby business doesn't require any travel. As I understand it, a business card, even if it's just for a hobby business can't be used for any personal expenses such as gas for a personal vehicle or hotel stays on a personal vacation. In that case, can I use a personal card to cover business expenses if my credit limit is too small on my business card? Now like the other week I went to an estate auction and I purchased a box of business band mobile radios for $1. There was about 15 radios in the box, they all tested out to work okay and I sold them all for a starting bid of $25 each on eBay. I was told going to the sale was business use of my personal vehicle so then I could have purchased the gas with the business card and paid for a motel room with my business card, but I didn't keep track of my miles since I didn't know I was going to buy stuff to re-sell so it kind of came up after the fact. I would think it would be a little tricky to know if you can or can't use a business card in these cases.

Bksuper
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Postby Bksuper » Sun Apr 28, 2013 4:31 pm

If you're trying to keep your taxes and paperwork requirements simple, I'd recommend NOT getting a miles card for personal use (too difficult to work out values), and using a personal credit card not a business one. If its random ebay purchases, paid out via paypal, Id recommend a 2% on everything card. The best one is the 1st Financial Bank Platinum, which issues 2% back, not points equivalent for such in certain redemption minimums, every month when the statement cuts with no minimum. However, you have to be a student for that one.
Don't go with Capitol 1, they are horrible with customer service and limits from what I've read. If you're not a student, go with the Priceline Barclaycard visa, which is essentially 2% back used properly. Ebay purchases can only be paid with a credit card through paypal, and no credit card gives more than 2% on purchases made through paypal, as its coded as a general professional service. Thats why its best to just use a 2% on everything card. Be sure to enroll in EbayBucks, to earn an additional 2+% back from ebay as store credit if you're doing lots of repeat purchases there too.
Sole Ownership Cards:
1st Financial Bank Platinum Student Visa, $500 CL, Open Since 3/2012
Citi Forward Student Visa, $6k CL, Open Since 10/2012
Costco TrueEarnings Amex, $6k CL, Backdates to 1/2012
SallieMae Rewards Barclay Mastercard, $2.5k CL, Open Since 4/2013
Jointly Owned Cards (co-owner with mom, not AU, used and paid only by me):
Chase Amazon Rewards Visa Signature, $2k CL, Open Since 8/2012
US Bank Cash+ Visa Signature, $13.5k CL, Open Since 10/2012
Authorized User (Parents Pay/Use)
Costco TrueEarnings Amex $29.4k CL, AU since 11/2012



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