4-Part Complete Checklist:
Turning spare room clutter or a passion into a profitable online business? Treating your eBay venture as a proper business from day one is the secret to long-term success.
Moving from a casual seller to a successful business requires more than just listing a few items. It means planning, understanding your legal and financial responsibilities, and creating efficient systems. This is your ultimate checklist.
PART 1 OF 4
Before you buy a single item of stock, you need a solid plan.
Don't just sell what you think will be popular. Find out what people are actively buying.
Analyse Sold Listings
Use eBay's search filters to see "Sold Items." This shows you what's selling, for how much, and how often.
Use Terapeak
This powerful research tool (free for business sellers) gives you detailed data on what's hot, average selling prices, and seller trends.
Assess the Competition
Who are the top sellers in your chosen niche? Look at their listings, pricing, and feedback to see what they do well and where you can compete.
Your products are the heart of your business. Consider these popular sourcing methods:
Wholesale/Distribution
Buying in bulk from a UK-based distributor.
Retail Arbitrage
Buying discounted goods from retail stores to resell online.
Dropshipping
Selling products shipped directly from supplier to customer.
Second-hand/Vintage
Sourcing from charity shops, car boot sales, house clearances.
This is the most critical calculation you will make. Before committing to a product, work out your potential profit:
The Profitability Formula:
Sale Price
MINUS
(Cost of Item + eBay Fees + Payment Processing Fees + Postage & Packaging)
= Your Profit
If the final number is too low, the product is not viable. Don't forget to factor in potential return costs.
A £5 profit on an item is great, but not if it took you an hour to photograph, list, pack, and post.
Calculate Your Effective "Profit Per Hour"
Ensure your efforts are being rewarded fairly for your time investment.
PART 2 OF 4
This is where you transition from a hobbyist to a business owner.
You must operate under a legal structure. The two most common are:
Sole Trader
You are the business. It's simple to set up, but you are personally liable for any debts.
Limited Company
The business is a separate legal entity, protecting your personal assets. More tax-efficient for higher profits but has more administrative duties.
Don't skip this. You will likely need:
Stock Insurance
To cover your products against theft or damage in your home or storage unit
Public and Product Liability Insurance
Essential if you sell items that could potentially cause harm (e.g., electronics, toys)
Calculate your start-up costs: initial stock, packaging materials, postage scales, and any software subscriptions.
Crucially: Open a Separate Business Bank Account
This keeps your finances clean and makes bookkeeping infinitely easier from day one.
Step 8: Write Down Your Goals
• How many hours per week will you dedicate?
• What are your sales targets for the first 3, 6, and 12 months?
• What is your marketing plan beyond just listing on eBay?
PART 3 OF 4
With the foundations in place, focus on creating smooth operational habits.
From your very first sale, you must keep accurate records. Track every single sale and every single expense.
Use: Simple spreadsheet or cloud accounting software like Xero or QuickBooks. This is not optional; it's a legal requirement from HMRC.
Selling an item you no longer have in stock leads to unhappy customers and negative feedback.
Use a system to track what you have, where it is, and when you need to reorder.
UK buyers expect fast, reliable delivery.
✓ Offer a clear, fair postage price
✓ Use reputable couriers (Royal Mail, Evri, DPD)
✓ Dispatch quickly and always upload tracking
You must have a clear returns policy. Under UK law (Consumer Contracts Regulations), online buyers have the right to change their mind.
Handle this process politely and efficiently to protect your seller rating.
PART 4 OF 4
Ensure you are compliant with UK law and tax regulations.
As a business seller, you must comply with UK consumer law. The most important is the Consumer Rights Act 2015.
Goods Must Be:
Of Satisfactory Quality
Fit for Purpose
As Described
Misrepresenting an item is against the law.
This is non-negotiable. You must declare your eBay income to HMRC.
Registration
You must register as self-employed (sole trader) or form a limited company
Income Tax & National Insurance (Sole Trader)
You will pay these on your profits via a Self Assessment tax return
Corporation Tax (Limited Company)
Limited companies pay this on their profits (19-25%)
VAT Registration
You must register for VAT once your turnover reaches the threshold: £90,000 for 2025/26
Starting a successful eBay business is an incredibly rewarding journey. By planning carefully and treating it with the professionalism it deserves, you can build a sustainable and profitable enterprise.
The key is to get the foundations right, especially the financial and legal structures.
You don't have to do it alone. Contact Taxwise Accountancy today for a free consultation, and let our expert accountants help you set up your eBay business for success from day one.
Expert eBay accounting • Tax compliance • Business setup