selling as a business on ebay-advice please

missindecisive

hi everyone, I am thinking of becoming a business seller on ebay..am looking for some advice please from those in the know.

Ive already bought and sold a few personal items over the last couple of years, have a paypal account and know the basics. In the first year, I really don't expect to make much money (probably only be a few hundred £) nether the less I will need to declare myself.

Im worried about keeping my future business records..ive not much idea really how to 'present' it on paper. if anyone could recommend any good websites/books/info I would really appreciate it.:jI seriously doubt i'l be using an accountant as I will be a very small scale sole trader.

Im also confused how to deal with my postage costs..at the moment if say, for example, I sell a pair of my shoes, the buyer pays into my paypal account for the winning amount plus postage. Then I post it,paying at the post office with my own personal debit card. If I was to become a business seller, I would'nt want to do this, think it would be too confusing. Ive been looking into getting a paypal top up card. Has anyone else got one for this reason,is it a good idea? I'd have to load it with funds from paypal then use it in the post office to pay my postage. perhaps there is a simpler way but at the moment I just can't think of it:o

the final question is; is it really hard/complicated to fill in your tax return? hope there is someone out there who can give me some friendly advice. TIA :A

cyril82

Hi i'm an ex pro ebay seller i used to make alot of money on ebay at one time. i have also been self employed for most of my working life too so heres a couple of quick and easy pices of advice.

best way of keeping everything in one place financially to help with your accounts is get a business bank account, you should always get a business account if setting up properly as a business even on a small scale.

have all your paypal transfers for items u sell as a business made to your business bank account then use your business debit card to pay for everything from packaging to postage and i mean everything, then your bank statements are pretty good records of your accounts and should be easy to work out.
Also make a note of anything to pay to yourself as salary. if your business gets bigger you may want to use some accounting software, usually available from your bank for around £12 per month or as a one off purchase from about £600 upwards, i don't think you need that yet though.

Filing accounts can be done online but are not exactly simple to file. an accountant will file youre self assessment for you for around £170 - £200 if its straight forward, just remember when you are self employed you are required to pay class 2 national insurance and should deduct your income tax from any drawings at 20% you can structure this to account for your annual tax free allowance but if you get it wrong you could end up owing tax at the end of the year, if you just deduct it at 20% you should come out on top with a little extra cash or "profit" at the end of the year and this should pay for the accountant with a little extra to spare, depending on how much you earn.

Best of luck.

ChrisCar_2

From personal experience, don't worry about getting an accountant, go and have a word with your nearest tax office.
Tell them what you are thinking of doing and ask for their help - before you start.
They have lots of leaflets that give you the basics and they will go into as much detail as you want, at no charge.
Ask as many questions as you can think off.
My last question is always something along the lines of, "is there anything else you think I should know?"
Over the years, I've had some surprising, interesting and useful answers to that.

I get most help face to face rather than on the phone, only take your NI number with you. Last time I went I didn't have mine with me and they wouldn't talk to me.

As for completing a tax return, it isn't not a big problem. It comes with instructions and a helpline number, that you can get through to a real person on, especially if you ring late on a night.

soolin

I really wouldn't get anywhere near that complicated to be honest. For turnover under £30,000 HMRC require a 3 line declaration. Total income, less total expenses = net taxable profit, that's all, honest. I do my online and I get those three lines to complete.

I do however keep paper records and break down my expenses into postage, stock purchase, stationery etc just in case I get audited.

lastly, I do not have a business account nor do I flap around with 'wages' I am a sole trader therefore I receive all the profits and pay tax on it all.

When you register with HMRC they are really helpful, they will even offer day courses about keeping accounts and I even have a business manager who answers daft questions.

cyril82

Soolin gives some good advice in terms of "keeping it simple" however i'm not sure what he means by "not flapping around with wages" if you draw money from the busines at anytime you must remember to deduct your tax or you will be left with a bill to foot at end of the year.

Also i stand by my advice to open a seperate business account as even if you submit your accounts online and they are accepted, HMRC can re-evaluate your accounts and bill you at any time (upto 3 years) if they decide you under paid (it's happenned to me in the past). at this point, should you disagree with HMRC you would struggle to prove any seperation between items sold on ebay as a business and any sales or purchases of a personal nature made on ebay if all the transactions go through your personal account.

also i have been self employed for 8 years and in that time i have filed accounts from £18,000 to £70,000 but to memory always had to fill out more than 3 lines on my self assessment, i now use an accountant and have for a few years so maybe it's changed but i'd be suprised if you could file a tax return in 3 lines, what would anyone need an accountant for??

soolin

For turnover under £30,00 three lines on submission is all that is required. Lots of info about it online but HMRC are the best people to ask:

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073863880&r.l1=1073858808&r.l3=1073968188&r.t=RESOURCES&r.i=1073791891&r.l2=1073859209&r.s=e

A profit and loss account is a summary of business transactions for a given period - normally 12 months. By deducting total expenditure from total income, it shows on the "bottom line" whether your business made a profit or loss at the end of that period.

http://www.businesslink.gov.uk/bdotg/action/detail?r.l1=1073858808&r.l3=1073863880&r.lc=en&type=RESOURCES&itemId=1073789455&r.l2=1073859227&r.s=sc

Self-employed sole traders and most partnerships don't need to create a formal profit and loss account - the information they complete on the self-assessment tax return form amounts to the same thing.

http://www.hmrc.gov.uk/sa/complete-self-emp.htm

If you've registered as self-employed, we'll automatically send you the self-employment pages - SA103S if your turnover was below £64,000, or SA103F if the turnover was £64,000 or more - as well as the core pages. You must fill these in to give us details of your business income and expenses. These figures tell us what your taxable profit is.

If you turnover more than the £30k then yes you need to do proper accounts for submission, you'd also need proper accounts for a partnership.

I am a sole trader I am 'Soolin' trading as 'Soolin' and therefore my full net income is taxed each year and I pay my tax direct to HMRC in a lump sum.

soolin

If I get to the heady days where my turnover exceeds £30k from my sole trading then my accountant will do proper accounts for me, until then he is used just for letting statements etc which I pay him to do (and he is tax deductible as well) to add to my online assessment.

Strapped

Just to say, Soolin is right - if you are just doing small time trading as a sole trader then all you really need to do is to register with HMRC as self-employed, get a small earnings excemption if appropriate (if earnings small enough and you're happy to potentially lose entitlement to certain benefits by not paying Class 2 NIs) and keep careful paper records in case you get audited (unlikely if small earner). HTH.

cyril82

well thanks soolin for clearing that up, i have never submitted accounts on such a low turnover as we are discussing here and i have always claimed expenses, plus my income comes from more than one source so my accounts will never and have never been that simple.

Obviously i expected that the op's accounts would be easier to submit than my own but knowing, and dealing with the lovely folks at HMRC, where i have on a few occasions had to send their letters back to them and ask that they be translated from jargon to english iam amazed you can submit a self assessment in just 3 lines.

So no need for the accountant just yet.

soolin

cyril82 wrote: »

So no need for the accountant just yet.

I pay mine enough as it is and the annoying thing is before other circumstances took over I was trading as an accountant (ATII though not a 'proper' one), so long ago though that I still prefer to actually do my tax with pen paper and sometimes a calculator!

My tax return is complicated as I have several jobs and more than one lot of income source from self employment but I set aside a day, put some music on and plough through it all online. I actually find it easier online rather than go back to paper returns.

The only thing I am discliplined about is putting away money to cover my annual tax bill , although I am only disciplined as I set up an online savings account and have forgotten my log in details so can't touch it anyway!

cyril82

soolin wrote: »

I pay mine enough as it is

i actually like my accountant, he's worth every penny. I wen't to him a few years back when i had been doing my returns myself, on paper and online. every year i had submitted them and ended up recieving an overpayment rebate of a few hundred quid so i was happy.

fast forward a little, HMRC decide my accounts were wrong for the previous 3 years and now wanted £5,500 in "under paid income tax" i nearly fell off my chair :eek: after i couldn't sort it out i approached my accountant and nearly fell off my chair again when he said it would cost £500 for him to sort them out :eek:. but i paid him and god bless his cotton socks not only did he prove i didn't owe the alleged underpaid tax he discovered that HMRC actually owed me £3,500 and he claimed it back for me with interest :j and following that he now submits my tax return every year for £170 which i give gladly as he has never failed to get me a rebate so far of over £1,000 which more than makes the £170 worth while, so to my accountant :beer:.

So anyway, sorry about that little Homage to my accountant, to the op you probably dont need the accountant now but if your business grows and you need help, get yourself an accountant, just make sure they are a good one and they could, like mine, turn out to me worth their weight in gold