Tax discussion -was -At the risk of being flamed !!

Snooze_Control

soolin wrote:

Polite BG reminder

I will remind people again that this is a money saving site and we should limit our discussions to money saving in a legal and honest way. Fraud does not fall into the legal and honest category and any posts suggesting this will be referred to the moderating team for moderation.

Posts will be temporarily removed and referred to abuse where they positively encourage illegal behaviour.

Soo

SC

arushofblood

Sorry Soo, I hope that's not me ?

soolin

arushofblood wrote:

Sorry Soo, I hope that's not me ?

No not you.

It is perfectly Ok to ask for advice about how to get out of a difficult situation, and I'm sure you don't need advice how to make things potentially worse.

cafenervosa_2

Can I ask if its right to count the p&p as an income.

so for example:


Buy It Now £25.00
P&P £2.50
Total = £27.70

So the 27.50 is taxable income or do we only count the sales of £25.00?

if so what do we declare the p&p as?

apprentice_tycoon

My accountant has me show the 'total' sales (£27.50) as one column on the spreadsheet and the and the actual cost of the postage on another (£2.00) - this is not the amount of p&p that was charged (£2.50)

arushofblood

I was going to ask the same thing cafenervosa.

I understood it that you don't include the postage paid by the seller as this is cancelled out when paying for the postage on sending the item.

However, I sometimes make a few 'pence' through rounding the postage up slightly so I guess this has to be added to the profits then too....

soolin

cafenervosa, you are now going to push my limits of being able to explain things intelligently...to the limit. I need several sheets of paper and a laser pointy thingy to explain this one, so stick with me here while I try!

There is probably more than one way to do a set of accounts, as I've mentioned previously I still do accounts manually but virtually every other 'real' accountant is using specialised compuer software that does things automatically so they may do it differently.

Postage is an expense for accounts, however since the post and packing we charge our buyers is arbitary it is easier to add the full costs received to make your income, so your example would give me £27.50 of gross income, added to of course by the hundreds or thousands of other transactions. From that gross profit I would then deduct my initial costs of purchase (all backed by receipts in case HMRC need them) giving another lower figure. From that lower figure I would then deduct the full postage costs or all the sold items (again backed by receipts in case of audit), less all the other associated expenses like packing, envelopes, ink in printer etc..Only after deducting all those associated costs will you end up with a net taxable income, and you may be shocked at how little there actually is.

The benefit of doing it that way is that all your stock costs and ebay listing fees can be deducted as an expense, so if you list a lot of items that don't sell you are still legitimately claiming those costs as a business expense. It is also easier to export the info from paypa or ebay as you can ssee gross turnover including post and packing before any costs have been deducted.

I would stress at this point that I am not qualified to give accountacy advice and am so far out of date that I still do my calculations manually.

Vat where appropriate is tricker as registration will be on pure turnover and I never ever got the hang of that!

cafenervosa_2

I want to just say to the original poster that unless they are making huge profits then VAT will be a killer, I know for me the thought of 17.5% on all turnover plus 22% income tax plus NI is far to much for me to make it worthwhile. I've always been happy with 25% profit but having to pay the VAT of 17.5% leaves just 7.5% profit at most.

So basically I am going to make sure my turn over is under £61,000 because the VAT seems a killer.

If you think about it you would need to make like 50% profit an item not 25% to make VAT worthwhile. I think VAT sucks because how can you even compete on ebay against all the smaller sellers who pay no tax at all.

I love doing ebay but the whole tax situation has made it more of a headache, especially when your used to paying no tax, so to the OP, you need to think very carefully about your future trading once tax is involved.

arushofblood

I've got these columns on my 'home made' spreadsheet:

Cost
Start
Bid
P&P
Act P&P
Diff P&P
Listing Fee
Sale Fee
Paypal Fee
Total Fees
Profit

arushofblood

cafenervosa wrote:

I want to just say to the original poster that unless they are making huge profits then VAT will be a killer, I know for me the thought of 17.5% on all turnover plus 22% income tax plus NI is far to much for me to make it worthwhile. I've always been happy with 25% profit but having to pay the VAT of 17.5% leaves just 7.5% profit at most.

So basically I am going to make sure my turn over is under £61,000 because the VAT seems a killer.

If you think about it you would need to make like 50% profit an item not 25% to make VAT worthwhile. I think VAT sucks because how can you even compete on ebay against all the smaller sellers who pay no tax at all.

I love doing ebay but the whole tax situation has made it more of a headache, especially when your used to paying no tax, so to the OP, you need to think very carefully about your future trading once tax is involved.

I think you're right, I know you're right ! I don't think I'll be hitting those dizzy heights yet though but it's something to think about ! Thanks for your advice !