Bit of a business question.

**predator** · 03-07-2011, 06:13 PM

Ok i have finally gotten to the point in my life where I might be able to get my money to make me money. Here is what i like to do and would like any insight you can give me.

I on alot of occasions see cars for sale that are really good deals. Not cars i want for my own, but non the less good deals... I would like to have a way to purchase these cars and sell them off as I can and make a little profit...

Here is my issue... AR has a sales tax on used cars purchased for over $2500 (I do not plan on buying rat hole cars so please dont suggest i go this route). If i purchase a car for say $12,000 and sell it for $15,000 then that's not a bad profit, but the problem lies when you consider that if i pay a 6% sales tax on that car when i purchase it then i am left with a profit of $2280. Then i pay roughly 25% of that in income tax and I'm left with a profit of $1710... The government has taken roughly have of my profit on an extremely good deal (this isnt even counting if i had to pay property tax on these things)... I dont really like this...

So i looked into getting a dealers license which i think would exclude me from sales tax but when you look into all the things like getting a building and so forth my expenditures would be like $15000 a year... Way more than i ever will make off of this idea...

WTF am i supposed to do? I just want to be able to sell a few cars a year for a profit, but its stupid for me to pay sales tax and the the person after me pay sales tax on it within just a few weeks of me paying it...

Help?

I do know i need to do alot more looking, but honestly im up against a wall and about to just give up unless there is an avenue im missing here...

-me

**35th-ANV-SS** · 03-07-2011, 06:23 PM

I guess you've already contemplated what will happen when you purchase a car from someone and then can't sell it and have to sit on all that money being tied up in something that is only diminishing in value over time.

**c5z28** · 03-07-2011, 06:35 PM

In Ca you need a commercial license after selling 5 cars in a year.

**2001camaroSS** · 03-07-2011, 06:44 PM

my buddy does this sort of. he buys wrecked cars at the auction, fixes them, and then sells them. his way of avoiding the taxes is he just never plates them. in IN they collect the sales tax off of the car when you go to plate the car. myabe i have no idea what i'm talking about but theoretically couldn't you just avoid the taxes by not plating the car. As far as income tax, how would that be recorded if you were just cashing checks or being paid cash for the cars people are buying.

**dav-02ws6-m6** · 03-07-2011, 06:53 PM

Originally Posted by 35th-ANV-SS

I guess you've already contemplated what will happen when you purchase a car from someone and then can't sell it and have to sit on all that money being tied up in something that is only diminishing in value over time.

i was thinking the same thing.

**Smittro** · 03-07-2011, 07:33 PM

Be the person people come to when looking for particular higher end vehicles..

Charge a fee for the service..

Put the perspective buyers in touch with sellers only after a forehand contract (signed) stating an xx% finders fee will be included if a pruchase is made..

Won't ever have to touch a single car or buy them yourself..

just an idea and my .02

**tnthub** · 03-08-2011, 07:15 AM

Back when I sold computer hardware I ran into all kinds of issues where if we didn't have "inventory" people would come in to look around and if we did have inventory people always wanted something slightly different than what was in stock.

Just because something is a good deal doesn't mean a buyer wants it. I cannot calculate how many parts and pieces we sold at cost (or a loss) just to clear the shelves...

Automobiles are no different, but it is a far more expensive playground.

I suggest that whatever you do, you focus your investment on yourself, not the item(s) you offer.

Being a specialy buyer is one way to demonstrate your value and provide a service that is needed.

You might consider being a paid buyer for people looking to purchase a car? I know my Mom always hated car shopping because she thought she was getting ripped off and at the same time didn't want to jerk the salespeople around.

I have always though a flat fee buyer or a comission buyer model might work in the right demographic.

**predator** · 03-08-2011, 03:13 PM

Originally Posted by 35th-ANV-SS

I guess you've already contemplated what will happen when you purchase a car from someone and then can't sell it and have to sit on all that money being tied up in something that is only diminishing in value over time.

Yes... This is why i was considering only going for cars that are older... If i have to sit on a 70 chevelle for a few months or a year im not really worried about it...

Originally Posted by c5z28

In Ca you need a commercial license after selling 5 cars in a year.

True also in AR, but with a commercial license you are also required to atleast sell 5... Its alot easier to stop selling after 5 then it is to insure that you sell 5. (another reason i am trying to avoid getting a dealers license)

Originally Posted by 2001camaroSS

In IN they collect the sales tax off of the car when you go to plate the car. myabe i have no idea what i'm talking about but theoretically couldn't you just avoid the taxes by not plating the car.

Theoretically you can only drive a car for 30 days after purchase unless it is tagged... I seriously doubt that i would be able to sell ever car within a month... And i would like to be able for people to legally take the cars for drives... (no plate no drive)

Originally Posted by Smittro

Be the person people come to when looking for particular higher end vehicles..

Charge a fee for the service..

Put the perspective buyers in touch with sellers only after a forehand contract (signed) stating an xx% finders fee will be included if a pruchase is made..

Thought about this, but looking for cars is such a hassle and you would waste so much time trying to make a few bucks... and you would have a dead line and someone to answer to... If im not in the mood to buy me a car i dont have to... Not only that for my time i would have to charge prolly $2000 to find someone a car... Once you add that on top of the price of the car they might have well just paid what the dealer wanted and not bothered with me...

I (as always) am stuck in the middle... I dont want to be a dealer (or have time/budget to get a building and maintain enough of an image to sell enough cars), but without getting some kind of break its just not worth my hassle... Life sucks... Its always something...

-me

**krese** · 03-08-2011, 03:49 PM

Originally Posted by predator

without getting some kind of break its just not worth my hassle... Life sucks... Its always something...

THAT is why you fail......

**Sarge** · 03-09-2011, 05:13 AM

Originally Posted by predator

Ok i have finally gotten to the point in my life where I might be able to get my money to make me money. Here is what i like to do and would like any insight you can give me.

I on alot of occasions see cars for sale that are really good deals. Not cars i want for my own, but non the less good deals... I would like to have a way to purchase these cars and sell them off as I can and make a little profit...

Here is my issue... AR has a sales tax on used cars purchased for over $2500 (I do not plan on buying rat hole cars so please dont suggest i go this route). If i purchase a car for say $12,000 and sell it for $15,000 then that's not a bad profit, but the problem lies when you consider that if i pay a 6% sales tax on that car when i purchase it then i am left with a profit of $2280. Then i pay roughly 25% of that in income tax and I'm left with a profit of $1710... The government has taken roughly have of my profit on an extremely good deal (this isnt even counting if i had to pay property tax on these things)... I dont really like this...

So i looked into getting a dealers license which i think would exclude me from sales tax but when you look into all the things like getting a building and so forth my expenditures would be like $15000 a year... Way more than i ever will make off of this idea...

WTF am i supposed to do? I just want to be able to sell a few cars a year for a profit, but its stupid for me to pay sales tax and the the person after me pay sales tax on it within just a few weeks of me paying it...

Help?

I do know i need to do alot more looking, but honestly im up against a wall and about to just give up unless there is an avenue im missing here...

-me

My humble opinion is your totally missing the business model of used car sales. Dealers do not really make their living off buying low and selling high. They make their money off financing those cars. So the profit or turnover time-lines are a mute point. You buy cars and finance them to people who have bad credit.
Your in the repo/finance business. You will sell the same car a hundred times.

**tnthub** · 03-09-2011, 08:13 AM

Originally Posted by Sarge

My humble opinion is your totally missing the business model of used car sales. Dealers do not really make their living off buying low and selling high. They make their money off financing those cars. So the profit or turnover time-lines are a mute point. You buy cars and finance them to people who have bad credit.
Your in the repo/finance business. You will sell the same car a hundred times.

One of our local dealers has a "credit express" department. They specialize in financing sub $10,000.00 vehicles for people with poor credit. The interest rate is very high and they end up with an almost 50% repo rate... It is a big profit center and as much as I dislike high interest rates and businesses gouging people with bad credit, the concept provides a means for poor credit people to purchase transportation. Where I live in Maine there is no public transportation sufficient to deal with life activities because everything is too spread out and the population too low to sustain public transportation.

**blue02Z** · 03-09-2011, 09:53 AM

Originally Posted by Sarge

My humble opinion is your totally missing the business model of used car sales. Dealers do not really make their living off buying low and selling high. They make their money off financing those cars. So the profit or turnover time-lines are a mute point. You buy cars and finance them to people who have bad credit.
Your in the repo/finance business. You will sell the same car a hundred times.

exactly how our dealer does it on the used car dept

**predator** · 03-09-2011, 03:02 PM

I think you are missing the point... I am not in this to deal with a bunch of poor sacks of crap that constantly require me to track down my cars just to sell them again... Im not in this for more than a supplementation of my income than it is to rip off a ton of people. (even if that is what is the so called way to make cash)

Never mind...

-me

**Sarge** · 03-09-2011, 03:48 PM

Huh?

**35th-ANV-SS** · 03-09-2011, 04:57 PM

As a business owner you should be in it to do one thing...make money.

**predator** · 03-09-2011, 05:08 PM

would this thread have gone in a direction that somewhat followed the original intent of the post if it were named "bit of a side venture question"?

I just want some info on attaining cars without paying sales tax if at all possible... I thought someone might have a loop hole that i could look into without having to qualify for all the red tape associated with getting the actual license (as in having to sell 5 vehicles per year and having a stable location with signage and a dedicated phone line)

-me

**Smittro** · 03-09-2011, 05:19 PM

Many new businesses have to be willing and Capital-able to loose money for a while.. (ask me how I know)

As many new upstart Inc./Co's do loose money the first year or two....

Seems as though you're only looking for positive responses to a quick buck "business"..

Non-existant....

**predator** · 03-14-2011, 03:39 PM

Originally Posted by Smittro

Many new businesses have to be willing and Capital-able to loose money for a while.. (ask me how I know)

As many new upstart Inc./Co's do loose money the first year or two....

Seems as though you're only looking for positive responses to a quick buck "business"..

Non-existant....

This is not the case... I just dont plan on up and quitting my job and getting a business loan and devoting my entire life to this... I want a way to make a few (maybe $5-$10k) bucks a year... The issue is that it appears that there isnt a way for me to do this... If i was looking at going with cars that were under $2500 (the area where i wouldnt have to pay sales tax) i would have absolutely no issues. The issue is that i would like to go bigger and when i go that route i cant make much profit for my work because of the loss of money due to the sales tax...

I understand that setting up a business is a money venture, but think of this more along the lines of a guy that makes furniture in his garage and then sells it for a bit of profit... More of a hobby that makes enough money to make the time you put into it more bearable...

-me

**TLS_Addict** · 03-14-2011, 03:46 PM

How many cars can you buy and sell in your state without having to have a dealers license?

Sell them as private party sales and stay under the radar by not selling more cars than you are permitted by the law.

I know a guy who did this and he got caught because he sold a shit ton of cars (in NY state) and the government somehow got a hold of it. Not sure exactly how nor do I care.

You could just try to turn a quick couple thousand on a car. No different than buying a car and selling it a few months later when you found something else you wanted.

As pointed out, the sale isnt the money maker in the sale of a product like cars. Its the financing and maintenance.

**LS2 KLR** · 03-14-2011, 10:18 PM

In the exact same boat. However I am lucky in that a friend at work already has everything setup but of coarse I have to give him a cut and I get none of the business owner write offs.

I went to the auto auction last week but didn't buy anything. I"m going back tomorrow and plan to pick something up. Ultimately I want to buy homes but gotta start somewhere.