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Old 01-23-2019
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Default Scaling eBay Stores - Strategies

Hi All,

First post here. I've been drop-shipping on eBay with ~10 of my own/personal stores over the past couple years. Most of them were anchor stores until recently (suspension which might be permanent), so I'm looking into stealth accounts as a potential risk mitigation strategy going forward.

Based on the profitability of each store and some goals that I set, I'd like to get around 50 stores running this year. I keep reading that we should use 1 PP per EB account. Since I'm trying to do things legitimately and pay taxes, etc, I figured I'd create an LLC for each store to associate with the PP account when they ask for my EIN. But wait -- that's 50 LLCs!

What's the overhead involved in that? Is that even feasible? Surely there are some people here who have massively scaled to 100s of successful eBay stores. My original thought was that I could group 5 EB --> 1 PP, and simply group my risks into buckets like that (with a separate PP "alias" per EB account). Even if one whole group gets taken down, that's 10% of my business at a time. That way, I'd only need 10 LLCs and 10 legit bank accounts hooked up to the 10 PP accounts. That seems more manageable.

My issue with the above strategy is that, with my recent personal suspension, I've realized that PayPal might limit your account if associated eBay accounts are restricted. That's crazy to me -- I've had a couple suspensions before, but they were fairly short-lived and they never limited my Business PayPal account.

I've also read these forums quite a bit and noticed that many sellers rotate between eBay accounts to keep their sales low on each one, in order to avoid having to give PP an EIN. I'm not particularly interested in this strategy since it doesn't seem very scalable or feasible to have so many low-volume accounts, each with their own legit bank account to withdraw funds.

Anyway, I'm wondering if anyone here has some good insights on scaling strategies or some potential things to try. My main goals are 1) enabling massive scaling with 1million+ items listed, while 2) eliminating complexity/overhead.

I have the software to manage almost every aspect of multiple accounts in a stealthy fashion, even coordinating listings across the accounts. I'm really just down to the logistics of managing the bank accounts / federal taxes / state LLC kind of stuff. I believe I read that each multi-member LLC has to file a federal return, even though the profits are pass-through. That could get super-costly, but would be worth it at 1 LLC per 5 stores. Not sure about 1 LLC per 1 store, though.

Appreciate any and all input! Thanks for reading through all this.
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Old 01-24-2019
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Default Re: Scaling eBay Stores - Strategies

Just seems like an awful lot of work for the amount of stability you get. Considering how things are going for dropshippers I dont consider it a viable business option any more.

A handful of successful listings (dropship those if must) are worth much more than incredible amounts of mediocre to moot listings. Managing tools' API are what's getting accounts suspended apparently.

It's really only going to get worse given how ebay/amazon feels about DSing, though. May want to consider more sustainable alternative models for peace of mind. Just my 2 cents.
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Old 01-24-2019
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Default Re: Scaling eBay Stores - Strategies

If you want to go this route, google up "series LLC". It lets you have a master LLC with a series of LLCs under it. Each one can have its own EIN. This is how we handle dozens of accounts with full EINs and tax reporting. Each has its own bank account (they're free), all under the master LLC since the name doesn't matter. The bank may have its own requirements for a DBA, but those are easy to get. This whole setup is pretty affordable and doesn't have nearly the overhead of separate LLCs.

What kind of software are you using? Custom developed stuff or have you found a decent off the shelf solution?
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Old 01-25-2019
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Default Re: Scaling eBay Stores - Strategies

Thanks for the replies guys!

Quote:
Originally Posted by Sunspot144 View Post
It's really only going to get worse given how ebay/amazon feels about DSing, though. May want to consider more sustainable alternative models for peace of mind.
Man, I've been seriously considering dropping this business model several times over the past few months. The thing is, I already have 95% of the business automated and the "hard" part seems to be the paperwork. It does seem very risky though, as you're at the mercy of fast-changing policies of several different companies.

Quote:
Originally Posted by saiko1
If you want to go this route, google up "series LLC"
Thank you so much for this! This is exactly the type of thing I was looking for. When you get the EIN for each series in the LLC, what naming format do you use (it has to match the business name in PayPal, right?)?

Quote:
Originally Posted by saiko1
What kind of software are you using? Custom developed stuff or have you found a decent off the shelf solution?
Yeah it's all custom developed for my needs (I'm a SWE by trade), specialized in managing many accounts and some good product-finding automation built into it. I was managing ~100k items with only 1 VA handling support/cases and around 1 hour/day of my own time. If anyone is interested in taking a look, I'm totally open to a partnership of some sort if we have some high-limit accounts ready to go.
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Old 01-26-2019
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Default Re: Scaling eBay Stores - Strategies

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Originally Posted by turok317 View Post
Thank you so much for this! This is exactly the type of thing I was looking for. When you get the EIN for each series in the LLC, what naming format do you use (it has to match the business name in PayPal, right?)?
So, this is not legal advice and this is a highly simplistic view of how this works. Set up a series LLC ("Master LLC"). Add LLCs to it ("Series A LLC", "Series B LLC", etc.) Make DBAs for each: "Master LLC DBA Series A LLC". Get EIN for "Series A LLC". Use EIN and "Series A LLC" on Paypal. No need to mention "Master LLC" anywhere aside from the bank. Note only certain states allow series LLCs.

Go down the rabbit hole here (I don't use them- we do this ourselves, but they have lots of info): https://www.lonestarlandlaw.com/LLC-Formation.html

Quote:
Originally Posted by turok317 View Post
Yeah it's all custom developed for my needs (I'm a SWE by trade), specialized in managing many accounts and some good product-finding automation built into it. I was managing ~100k items with only 1 VA handling support/cases and around 1 hour/day of my own time. If anyone is interested in taking a look, I'm totally open to a partnership of some sort if we have some high-limit accounts ready to go.
Cool, same here (BS in CS). It's fun balancing inventory across multiple markets and accounts all the while simplifying things from your end and obfuscating things for the market's side. I originally started way back with book selling with off the shelf software. Then ebay changed their API and the software guys took forever to issue a fix, so I started replacing each component until I was able to drop them entirely. It's constantly evolving, but at one time we had 6 million items in several warehouses listed on 50+ marketplace accounts (along with a conveyor system, USPS presorting system, and packaging systems.) (Of course, then the economy tanked..)
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Old 01-26-2019
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Default Re: Scaling eBay Stores - Strategies

Be carefull with this advice as the states below are the only ones allowing series LLC's, if you are not resident in one of them, then that option is off the table.

Alabama
Delaware (Limited Liability Company Act)
District of Columbia
Illinois
Indiana (http://www.in.gov/sos/business/2426.htm)
Iowa
Kansas
Missouri
Montana (Montana Limited Liability Act)
Nevada (Nevada Revised Statutes)
North Dakota
Oklahoma
Tennessee
Texas
Utah
Wisconsin
Wyoming
Puerto Rico
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Default Re: Scaling eBay Stores - Strategies

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Originally Posted by degsey69 View Post
Be carefull with this advice as the states below are the only ones allowing series LLC's, if you are not resident in one of them, then that option is off the table.
Yes, not all states allow them. However, you do not have to be a resident of a state to form an LLC there. Case in point, there's a ton of LLCs registered in Delaware (due to favorable business laws) that have nothing to do with the state. You do need to have a registered agent in the state, but that's fairly cheap.
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Old 01-28-2019
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Default Re: Scaling eBay Stores - Strategies

Quote:
Originally Posted by saiko1 View Post
So, this is not legal advice and this is a highly simplistic view of how this works. Set up a series LLC ("Master LLC"). Add LLCs to it ("Series A LLC", "Series B LLC", etc.) Make DBAs for each: "Master LLC DBA Series A LLC". Get EIN for "Series A LLC". Use EIN and "Series A LLC" on Paypal. No need to mention "Master LLC" anywhere aside from the bank. Note only certain states allow series LLCs.
Nice, I was worried about having to include the Master LLC name in each series. Looking into WY, they have naming requirements like that, so WY is probably a no-go. When you create the EINs, does the IRS check with the state on your LLC name? I guess I'm wondering how they connect "Series A LLC" with your master LLC, which is the single legal entity (right?).

For federal tax reporting, do you simply file one return for the master? Are there other documents that you have to provide to them to help them connect all the EINs to your master?

It seems a lot of this is relatively new to the legal/tax/business world and finding non-conflicting info out there is hard. I'm looking for an attorney that can help, but trying to do some due diligence of my own in the meantime
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Old 01-28-2019
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Default Re: Scaling eBay Stores - Strategies

You can get an advice from a tax prep who deals with ebay and amazon, just call around and they'll tell you what you can or can't do.

I'd do this if I were you
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Old 01-30-2019
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Default Re: Scaling eBay Stores - Strategies

Quote:
Originally Posted by turok317 View Post
Nice, I was worried about having to include the Master LLC name in each series. Looking into WY, they have naming requirements like that, so WY is probably a no-go. When you create the EINs, does the IRS check with the state on your LLC name? I guess I'm wondering how they connect "Series A LLC" with your master LLC, which is the single legal entity (right?).
I believe this is still up in there air with how the IRS handles series LLCs. Normally IRS only cares that they are being paid. By filing for the DBA and then using the DBA name to get an EIN, it should be fine. Since Paypal or whomever will be reporting to the IRS in the name of the DBA and EIN, it matches IRS records.

Quote:
Originally Posted by turok317 View Post
For federal tax reporting, do you simply file one return for the master? Are there other documents that you have to provide to them to help them connect all the EINs to your master?
Sorry, not much help here. I have someone who deals with this. I would assume since each one has it's own EIN, each needs to file. Think of the series more of a master LLC that is the owner of the individual LLCs. The state gives each the rights of an individual organization, so each one is technically it's own business.

Quote:
Originally Posted by turok317 View Post
It seems a lot of this is relatively new to the legal/tax/business world and finding non-conflicting info out there is hard. I'm looking for an attorney that can help, but trying to do some due diligence of my own in the meantime
Yep. In our case we had to educate the local bank about series in order to get them comfortable with opening multiple accounts. It's always something. The good news is we've yet to have a problem with using these with ebay/pp/amazon.
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