Most flea market vendors are resellers, people who buy merchandise wholesale, or from sources such as garage and estate sales, and resell it for a profit. Flea market vendors are legitimate small businesses that can benefit from many of the same business processes as other small operations, including cash flow management. A formal accounting system can be helpful for tracking sales, measuring profit and loss, and filing taxes.
While small-business accounting software programs can streamline how you handle your flea market finances, a paper ledger many be more practical, given the portable, cash nature of the business. However you opt to do it, establish a spreadsheet-style accounting process that lets you record where you buy merchandise and the price you pay, as well as the final price you resell the goods for. You should also have a separate record-keeping system for your expenses, such as licensing, travel and transportation, vendor rental agreement fees, and business expenses, such as packaging, display tables and canopies.
Ask for receipts for every product you purchase with the intent to resell, even if you’re buying from yard sales and storage locker auctions. If the seller doesn’t give you a receipt, keep track of your purchases yourself so you can include them in your accounting process. Include the date, purchase method and price. This will give you a paper trail, both for your own reference, and in the event your taxes are ever selected for audit.
Categorize your merchandise within your accounting ledger. This will help you make determinations about what types of products sell best at flea markets, and what the typical profit margin is for various goods. For example, categories could include household goods, collectibles, antiques, clothing or miscellaneous items.
While a flea market is often a hectic environment filled with on-the-fly bargaining and cash transactions, try to provide simple receipts, both to establish professionalism and to maintain accounting records. Using a two-part receipt book will help you keep track of sales, and if you sell in a venue that requires profit-sharing, you'll have accurate tallies to figure your contributions from.
Your tax obligation may vary based on where you sell, what you sell, how much you earn, and whether you charge sales tax. The U.S. Internal Revenue Service requires that all income from flea market and swap meet sales be reported as earned income on your taxes. Local and state taxes and sales taxes vary, but you can learn about your financial obligation by visiting the website for your secretary of state’s office.
