Paypal: Asked to Provide Business Information

scooter100_2

jenniferpa wrote:

I'm still not certain that this is what the OP meant, he keeps saying "made" which to me equals profit, or does Paypal automatically generate this message when total volume reaches £4500? That I wouldn't be surprised by.

Jennifer

in that case how would paypal KNOW he had made £4500 PROFIT.

jenniferpa

Paypal wouldn't. All they would know is that a total of £x had passed through the account. That's why I said total volume. I was wondering whether this triggered some sort of automatic message which Soo, as a seasoned ebayer, was aware of.

soolin

£4500 is the limit for money laundering regulations to kick in on paypal, so i was making the assumption that it was this limit that had been reached and had nothing to do with profit, which has been quite rightly pointed out, paypal would know nothing about.

Also bear in mind that the £4500 includes all the post and packing charged on the auctions as well.

Soo

Stuart_P

you know i wonder how many ebayers who are selling enough to declare actually do so? unless you are clued up in all things 'tax', i'd say not too many.

i'm pretty sure there is little or zilch guidance from ebay on the site. perhaps it is not their 'place' but they do have plenty of their own rules & regs that you would think they'd publish something...

cazmanian_minx

soolin wrote:

I think this has been debunked on different threads already. There was certainly no hobby exemption last time I saw the IR regulations.
If however anyone can post a link that confirms this exemption I am sure several users would be greatly interested.

Soo

When I rang up the IR to register as self-employed for the ebay shop, I asked if I should be letting them know about the odd £70 here and there I earned from writing for magazines. The bloke on the other end asked me how much I thought I'd get per year from doing it, I said about £500 tops and he said not to bother until I got to about £800 as that's where they'd start to take an interest. I think it's probably one of those unwritten things where it costs more to investigate and get the tax out of you below a certain amount so not worth their bother.

Caroline

funkyBase

Hi,

I'm a student and have a business hobby online. I have been through the process of getting everything in order. I've had help from the tax people/government free business courses etc to make sure I'm all OK. It's amazing what you can get out there for free.

You need to register within 3 months of starting your business for tax, if not an automatic fine of £100 is slapped on you.

What I'm going to say is general and like everything there are exceptions, loopholes etc. It's my take on things and what I do. I'm sure many people do it differently. It's just what I am doing to keep myself right and it's not that much of an effort. I'm in touch with the tax people and declare what I do and have had free business advice and know exactly what to keep in terms of receipts etc.

Even though in my first year my turnover was over my £4800 tax free allowance (joys of being a student with no other job), my profits were not over that but yet I am still resgietered for tax, and I fill my tax return in (I just got all the info through the post). You still have to be registered from what I know. Then next Janurary, I will pay any tax I owe plus half for the next year (phone the tax people to sort that one out but that's the way it is). Even if you are not making huge profits or even a loss they need to know. I suppose it's to keep tabs on you as one day you could have a huge turnover.

What I think the OP means by taking in £4500, that means turnover. From trading online it seems like a lot but if you take a look at things, ebay fees, paypal fees can make a big dent in it. Properly looking at things from the view of paying tax, I realised I was not 'making' as much profit as I thought and was able to adjust things and get more profit out of my hobby business so it could be worth it.

Paypal and ebay have invoices and they are great for keeping records. I also keep my own books (you can get special book-keeping books from most hishstreet stationary stores) and record your own records and keep your receipts.

You need to keep all receipts up to 6 years (or is it 7 well you get the idea, check the tax website as it has all the info).

If you have bought things to sell them on, and not kept the receipts you cannot prove what you paid for it therefore it will seem like all the money you receive is pure profit.

If you have another job that will eat into your tax free allowance so you will start paying tax sooner.

I know I want to keep myself OK and I have found the tax people so friendly and helpful. I think they will even help you with your tax return should you need it.

You will have to fill in those details on paypal if you want to keep using paypal, even opening another account if it's at the same address and same name they will know (I have a personal and business paypal account). The information you have to provide is very basic. You won't have a VAT number as you don't have to be registered unless your turnover is more than £60k in any given consecutive 12 months.

As for people telling the tax people on you. They have upped the number of people checking the yellow pages, local papers, flyers etc for people avoiding paying tax. They have even requested information from ebay on poeple who sell online. I have heard people who use ebay have been contacted by the IR. Check out ebay forums and they have the best advice or phone the tax people. All it takes is one disgruntled customer or a tax person to find out and you could end up with a problem.

Another thing, I have a bank account for business (it doesn't have to be a business account just as long as it's not muddled with your personal acocunts). Keeps things nice and tidy to see what is going on. This is a personal thing, doesn't say it anywhere you have to do it as you are a sole trader and what money you earn is yours (you don't pay yourself or anything) but you do need to pay tax on what you earn. Another thing is you need to pay national insursance. Basic is £2 a week and you can easilt set up a DD for that.

I hope this helps. You may not even have to pay tax but it's best to register avoid fines, and trouble.

Good luck.

jenniferpa

Well thought out post, funkyBase.

Sugar_Coated_Owl

Thanks for that information funkyBase, that's very helpful

funkyBase

Cheers guys. I've been lurking for a while and decided to start posting. I'm glad I did :j

As much as I want to save money, I'm not going to skimp on paying tax.

funkyBase