I was a tax preparer for 5 years with H&R Block. And have always done my own taxes. It is very common for businesses to operate at a loss. This will be the 3rd year that I saw a loss with my business. Now, that does not mean that I am losing money. But, as a business at home, you are able to take a portion of your home expenses - no need to be a LLC. Also, if you run to the post office or store to pick up supplies, part of that is deductible as well. Standard mileage is better - unless you have a vehicle that you only use for your business.
I am not sure what is happening with Ebay and Paypal reporting. I haven't been to an update class in 3 years since my youngest came along. But, plan to return when he starts school full time.
Marty, if you aren't deducting part of your home expenses as business expenses, you may want to have a tax professional look over your returns. It may not be worth it with what they may charge you. But, when I did taxes at H&R Block, we looked at past returns for free (I think there is a fee now). But, it may give you an idea of expenses that you are entitled to. You can go to the irs website and look for either the Schedule C booklet or Business Use of Home. Or google something along those lines.