I have been reselling products on ebay since last year and I have encountered a huge problem to my business- the Taxman. I need some help to understand my total taxes and such. As I've had calculated the total tax on profit goes something like this= 15% social security+lets say~20% federal tax(15-25% bracket)+~7% New york state tax= 42% tax just on profit. In addition some expenses include ~12% ebay and paypal fees, shipping ~5% (I offer free shipping) So basicly, If i buy an item for $200 and sell it for $300, i have 50-60 profit before the taxes. So after taxes (42%) I have left with around 30 bucks. If I had to pay sales tax for new york state there would be no profit at all. As I understand the sales tax only applies to customers in the same state. Out of state there is no tax. Have I done my calculations correctly? Please help me out, I have to figure out if its worth it to continue with the business, I don't understand how other small businesses survive with such an income tax.