Do I need an eBay Business Account?

Generally speaking, if you are buying with the intention to sell for a profit, you should be a business seller.

Existing retail businesses who want to start trading on Ebay do need a Business seller account. This is a specific eBay policy and you can read about it here.

If you are just starting out or trying things, you don’t need to be a business seller from Day 1, but once you start selling regularly, both eBay and PayPal will expect you to register a business seller.

As an example, my project JM Coins was set up with the intention of buying coins to sell them on for a profit, so technically my eBay account for that project should be a business eBay account.

But it isn’t.

My initial plan to grow that business was flawed and I didn’t make nearly enough profit on the items I was selling.

Even though I started that account with the intention of selling for profit, I don’t sell enough to interest eBay, PayPal or HMRC (The Tax Office in the UK aka ‘Her Majesty’s Revenue and Cutsoms’) as a business.

If I decide to put more effort (and money) into that project then I will change that eBay account from ‘personal’ to ‘business’.

Do I Need to Own a Business to have an eBay Business Seller Account?

No. But it is a good idea.

You don’t need to own a business to set up an Ebay Business Account, but if you are seriously thinking about making a business out of eBay, it is likely to be worth setting up a company at some point.

To set up an eBay Business Account you only need to give eBay the following:

• A postal address or landline telephone number
• Bank account details for an account which can accept direct debits

You can try it for yourself on eBay UK here.

You don’t need to give them any details about a limited company, VAT numbers or anything like that. You can call your business anything you like and they will not check with companies house or HMRC to see if it matches.

What Kind of Business Should I Register as on eBay?

Here in the UK, people who sell on eBay for a living will either be ‘Sole Traders’ or ‘Limited Companies’.

Generally speaking, Sole Traders are for smaller operations and have simpler tax and legal arrangements. A Limited Company is a legal entity in it’s own right and will usually enable a business (and a business owner) to make more profit and pay less tax.

There is a whole industry dedicated to setting up and running businesses, so delving deeper into this topic is beyond the scope of this post.

When Should I Register as a Business?

eBay, PayPal and HMRC have different criteria and thresholds at which they would start to class you as a business seller and take an interest in your transactions.

I am not an accountant but I have started several limited companies here in the UK. HMRC were happy for you to be trading as a business for up to 6 months before you actually registered a limited company / Sole Trader.

This means that you could potentially sell thousands of pounds-worth of items in the first 6 months without having a limited company.

eBay and Paypal judge your business by the amount of money passing through your account, not in terms of time.

Once you sell more than a few hundred pounds-worth of items in a single month, you will set some alarm bells off at PayPal and they will ask you for some additional tax information or encourage you to switch your account to a business seller account.

If your selling becomes a significant source of income, the tax office would take an interest and the money you make from selling would be considered ‘capital gains’.

HMRC doesn’t talk to eBay or PayPal and they will not know that you are selling things unless you tell them.

If you have a significant income on eBay and don’t tell HMRC and they later find out, they will be asking you some hard questions.

If you are thinking of setting up an eBay business you should check out my post eBay Business Ideas.

To make your eBay listings stand out and make more sales, be sure to check out this post: Top 10 Tips for Selling on eBay.

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