Question regarding selling CDs and LPs

I am soon planning to embark on a hobby to sell some of my used records and CDs. I am sure some of you have done the same.

I checked with my city Commissioner of Revenue and they said that I would first have to apply for a permit to operate a business out of my home, and then I would need a business license for the actual selling. Does this sound logical to you guys?

I am certainly not planning to become a Fortune 500 company or anything. Who knows in this day and time of downloading, maybe nobody will buy a thing I have to offer anyway. So in some ways it sounds like overkill to me.

All I plan to do is list some things on Ebay and advertise in Goldmine. I will be surprised if it takes off to any great level at all. So what do you guys think......... a necessary evil that I should have known all along or just a way for my town to get some extra income out of me?

Why not sell on Discogs?

Dave, I would just go ahead and sell. I've never heard of any need for a license.

I second Ralph. Don't bother with registering a business. The commissioner is telling you this so they can make money off of you via all the fees and taxes. It's not necessary. It would only be necessary if you're going to turn this into a full time job/source of income, and if you're anticipating on making a significant amount of money. People sell off estate items all of the time when someone passes away or they're downsizing to a smaller living situation. They don't register for a business permit in such cases and neither should you. Happy selling!

I would not get a business license since it is a collecting hobby. Your sales most likely will not be 50% of your income, nor will your business space be more than your residential living space. Many people are working from home and not registered as a business. There are local meet up groups that discuss jumpstart entrepreneurships and the business information about them.

If you're getting paid through PayPal, they'll send you a 1099 if you make over $20k in a year. Even then, you still shouldn't need a business license to sell through an online marketplace like eBay or Discogs.

Thanks guys. I was thinking along those same lines....i.e. that it should not be necessary because people sell all kinds of things all the time. I certainly don't think I will make anywhere up in the thousands even though I might have a few rare items here and there. If it makes any difference in anyone's opinion, I am retired and this would be my only income other than Social Security.

Hi David, I'm in the UK so can't offer a view on your local business registration obligations, other than to say it sounds overkill for what will most likely be rather modest sales proceeds.

By way of example, I embarked on selling some 45s on Discogs for the first time in early March. The very first day after listing I was surprised by a deposit of £300 into my PayPal account for a Brothers Of Soul 45. Almost immediately there followed £105 for Five Towns disc, plus some Brenda Holloway and Tamla Motown EP sales. That was it. No further sales in the last five weeks have been made. My experience has led me to concluding:

Most of the money is in 45s. Albums and CDs generally sell for peanuts. For example the Brothers of Soul 45 on Shock which sold for £300 is freely available on the Brothers of Soul cd with many other tracks for less than £10. Other examples: I have every Willie Hutch album and every The Originals album on vinyl in great condition, most of which are not available on cd or streaming, but the sales valuations are low and there is no shortage of such albums on discogs, so lots of competition and disappointing returns on what are allegedly in-demand albums.

After a lifetime of collecting thousands of soul 45s, albums and cds, I have reluctantly come to learn that the valuation of the collection is far less than I thought it would be. The generation that grew up on soul and passionately collected is dying off. Re-releases of relatively scarce albums on cd, coupled with the advent of streaming, and the inventory on ebay and discogs has undermined the demand for vinyl albums. By far the greater part of my collection is in vinyl albums, cds and cassettes. At the outset, I made a strategic decision to purchase albums rather than singles. Wrong strategy. All the money is in 45s.

I will continue to sell some scarce 45s, cds, cassettes and albums on discogs but I suspect the greater part of my collection will go to a dealer, a charity or landfill.

There is a lot of work involved in quality control, grading, posting, tracking, packing and shipping. Postal charges and packaging materials also impact the returns. And the time you need to devote if you want to seriously market each item is considerable.

So if you approach this project as a hobby, that's a great strategy. You will be able to offload some of your collection, but I am guessing running this project as a hobby you will not achieve anywhere near the level where business registration and licensing is required.

All the best and enjoy your new hobby.

Mike

Thanks Mike for your detailed response. By the way, what exactly is Discogs? I am not familiar with it although I will Google it here momentarily to see what I can learn.

As for your success selling 45s as opposed to LPs or CDs, I must sadly confess that many years ago [[30 or more by now) I found myself in a financial pinch and sold almost all of my 45s in one lot to a dealer. That by the way is one of the reasons I want to sell things while I am still alive and healthy enough to do it. Why should I leave such a valuable asset here on earth and have my heirs call up some dealer who would make it sound like he was doing them a favor by giving them $50 or $100 to take everything off their hands, only to then turn around and sell it for thousands?

Another observation I will make is that I never understood back in the day why 45s cost so much as opposed to albums. For most of my early record-buying days, the 60s and 70s, a 45 cost almost a dollar but you could buy an album with 10-12 songs for maybe $3-4. So value-wise, 45s never added up for me. Yet I bought plenty of them.

Hi David, Discogs is the perfect site for listing the precise details of specific records...the label variations including matrix/run out details[[etchings on disc), the countries released in, the condition gradings from mint to poor, and very importantly the sales history of prices already achieved, and other sellers’ prices for the same record. This all means you can very quickly identify your record version, list the specific version for sale, at the appropriate price, as you know the sales history and what you are competing with.
It also tells you how many people out there “want” the record so you can anticipate demand. When you list your record on Discogs, it will automatically alert all individuals who have indicated they want the record.

The other mainstream alternative is eBay, but it is very hit and miss and much lower prices are generally achieved.

If you need any help with using the Discogs site, happy to help guide you through it

cheers

Mike

Thanks. It sounds quite promising for what I have in mind. I have used Ebay before and the excitement with it comes from the auction aspect of it. I have had things sell for much more than I ever dreamed they would. So if Discogs involves setting a specific price, it might not be as much fun to watch, but it does sound as if it is the better tool to use. Thanks again.

I think it would be different for those of us here in the UK.
I doubt if any record would attract taxation unless it had been bought with the intention of selling it. As a hobby rather than a business, it would be subject to Capital Gains Tax, the rules of which are really complicated. Allowances are fairly generous, and anyone disposing of their records would have to have an incredible collection to be liable.

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Originally Posted by daviddesper

Thanks. It sounds quite promising for what I have in mind. I have used Ebay before and the excitement with it comes from the auction aspect of it. I have had things sell for much more than I ever dreamed they would. So if Discogs involves setting a specific price, it might not be as much fun to watch, but it does sound as if it is the better tool to use. Thanks again.

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As the kids say, "there's [also] an app for that"! It's a godsend.

How are you supposed to arrive at the cost of the records you sell to deduct from the sales proceeds? You probably won't have any invoices or receipts from when you bought them, and only collectors' items are likely to make a profit.

Mike in the UK;

I sent you a private message with a few more questions. Just wanted to make sure you know to look for it since I don't use that feature very often. Thanks.

Hey Guys. Thanks again for all your input on this question. I have also discussed this new venture of mine privately with Ralph and he has been kind enough to say that I can distribute my list of available items to any of you guys who might be interested as long as we have those discussions by private e-mail correspondence as opposed to open dialogue on here. So any of you who are interested can e-mail me privately and we can discuss things. Thanks.

I "think" that I successfully sent you a private message. If indeed I did, then we will soon be communicating. Sorry for the extra hoops but Ralph wanted me to keep this project of mine low-key, which I understand. Thanks.