I am not sure the tax laws in the Us, but in Canada $500 on eBay would be immaterial, and not worth even coving through the effort of setting up a properemplyment contract, filing taxes for the kids, which would then come off the dependant credit, and most likely a CRA audit which would also put you ion the audit list for years. You then have to prove that he was adding or doing something for the business on your behalf.
I would chalk this up to an hobby or just add it on your return.