The storage auction resale business is a great way for a family to work together and make money on the side. Since it is a business, you could have a great year and earn a nice part or full time amount of income. If you earn enough, you need to report it for taxes. Another thing to consider in this business is privacy. Who do you want to know and who do you NOT want to know that you buy and resell abandoned storage units? Here are some tips to cover both of those topics.
The storage auction resale business is a great way for a family to make extra money on the side. Since it is a business, here are some tips on taxes and privacy in storage auction resale.
Taxes and Privacy
Talk to a local accountant in your area and get to know your tax laws. I live in Wisconsin, USA, so my laws may be different than yours, if you live in the UK, for example.
Get a receipt book that has carbonless pages, so that when you write through the first page it shows up on the second page. When someone purchases an item from you in person, write a receipt and keep the copy to keep track of your income in an easy fashion. I suggest you have a separate receipt book for your purchases. You may want to take it with you to storage auctions if the ones in your area do not give you a receipt. You could write one yourself and have the auctioneer or storage unit facility owner sign it. If you sell storage units online, you should be able to print reports. I suggest you get in the habit of printing them monthly. are on a site like eBay, you can print a copy of the invoice or print out a report in the finances section. f you sell at a group consignment sale or local online auction business (where they sell your items online for you), you will get a receipt or check stub so keep track of those. Pawn stores and resale stores will give you a receipt for what they pay you for your items. Keep track of all income.
Be sure to keep track of your mileage with an auto mileage log book for each vehicle. It will have a space for what your starting and ending mileage is for the year and spaces to write the date and where you went and how many miles it was. This is a business and mileage counts.
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Here are some things to keep track of for expenses (again, talk to your local accountant about expenses):
- supplies – shipping materials, printer paper, printer ink, pens, markers, garbage bags, rubber gloves, consignment sale supplies (hangers, safety pins, plastic tags, etc.), etc.
- advertising fees (for selling items)
- online selling fees (eBay, Etsy, Amazon, etc.)
- consignment sale entry and advertising fees
- equipment – flashlight, measuring tape, storage tent or building to put on your property, label maker, appliance or furniture moving dollies, shelving, laptop or computer, etc.
- training – eBooks, books, eCourses
- website fees
- travel meals
- shipping expenses
- cell phone (the portion that is used for business)
- internet fees (portion used for business)
- utilities and square footage of your house and garage (if garage has electricity)
- measurement of your business room(s) in the house
- garbage and recycling fees from this business
- storage unit auction purchase prices
- receipts from what you paid your accountant
- whatever else your accountant thinks you should keep track of
We keep all our new, incoming receipts in an empty ice cream container with a lid (fancy, right?). You will frequently need to go through the receipts and list them under departments like income, supplies, garbage, equipment, etc. We recommend hiring an accountant for the business (this is so important – that’s why I keep saying it). They have the time to keep up on all the laws and know how often you will need to report your earnings. It may be once a year or 4 times a year. It might depend on what you are earning or where you live.
In this business, we have had times at the beginning where we didn’t want to tell anyone what we were doing for several reasons. What if the person you are talking to knows someone who lost their storage unit and we bought it? Or what if they themselves have defaulted on a storage locker in the past? That would be awkward.
What if they want to do this too and decide to start coming to the auctions? Then we will have more competition and have to pay higher prices. What if they judge us or our children thinking that everything we wear is used? We actually do buy some new clothing (especially socks, underwear, swimsuits and shoes) and have the receipts to prove it, but we love the savings when we can find items in units.
Now that we have been doing this for a while, it is part of our life and we treat it like a family business and are more open to talking about it. If we ever do discover that the person we are talking to or their buddy has lost one, we would try and comfort them. It would be very hard to go through for sure. We are now willing to share what we have learned on this blog and even more secrets of where to sell different types of items in our eBook. But, you will have to decide for yourself whether you want to tell others about it or not. When we weren’t telling people, and they asked where we got something, we simply said, “at an auction”.
Some of the pros with telling people is that you can ask them if they are looking for anything or need anything and you can decide if you want to write down what they are looking for and call them when you find it. Or, if you want to bless someone. We had an old friend who went through a house fire and we were able to offer many items for free as we had already gotten our money back on the unit by selling some large items. If your kids have friends going off to college, you can help them to find a microwave, loft bed, desk, lamp, etc. They could pay for it by helping you clean out a unit. If your church youth group is having a rummage sale to earn money for a missions trip, you will have many items to donate.
We never stop learning in this business. There are always new items we find that we have to figure out, how do I get money out of this? We learn new tips and tricks from other storage auction buyers. You may have noticed by now that they don’t want to give you any information because you are a competitor to them. After you are kind to them for a few years, that may change and you may share secrets and help one another.
You learned all about preparing for taxes: what to keep track of and what categories to record them under. We talked a little about business privacy and whether you want to be public or private about what you do, and some benefits of being public about it.
Tomorrow could be the day that you attend an auction, make a purchase and find a treasure. This week you could sell all the profitable items and can be making money buying storage units! We hope you enjoy these blog posts and feel more prepared for tax season.
Happy treasure hunting!
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