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

arushofblood

soolin wrote:

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!

Ooo, there's so much I don't know !! I need a College course... but then that'll cost me ! Though can I add that as costs ?

soolin

arushofblood wrote:

Ooo, there's so much I don't know !! I need a College course... but then that'll cost me ! Though can I add that as costs ?

Training, or part of the cost thereof, has always been a legitimate trading expense. :T

cafenervosa_2

arushofblood wrote:

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 !

I've actually just stopped trading on ebay until April 6th due because I want to start a fresh and I am worried about my turnover for this year going over £60,000. I've now got 2 months to sit down and do all the sums and in the mean time all my credit/debit cards, ebay fees will be reset to zero when I begin again.

I have to say I am gutted not to be trading, I miss it because I love my selling and I will miss the money. But I hope its for the best because I will be more organised from Apr 6th.

arushofblood

Ooo, how exciting ! I've always wanted to go back to study but I never qualified for any bnefits so couldn't afford the courses !

I am getting this right then... in effect I would be using profits that would be going to the Taxman to pay for a course ? ( Or anything else I purchase ? )

Sorry if I sound totally dumb !!!

cafenervosa_2

arushofblood wrote:

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 !

Hey its ok, I was in the same boat as you at first.

cafenervosa_2

soolin wrote:

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!

Thanks soo, thats a lot to take in. I'll have to read over it a few times

arushofblood

cafenervosa wrote:

Hey its ok, I was in the same boat as you at first.

I hope you're getting good profits on that turnover ?

Spoken like a true business woman eh ? Lol

arushofblood

cafenervosa wrote:

Thanks soo, thats a lot to take in. I'll have to read over it a few times

I'm up to 5.... Lol, no not quite but I do need to go through it slowly in small chunks ! Great learning though Soo, thx as ever

apprentice_tycoon

arushofblood wrote:

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

Those look very informative!

The ones I fill in on my income spread sheet are -

Total income (then each entry is marked as paypal, cheque, bank account or amazon)

Sales (this is all the money I get from selling stuff)

Interest (these are the odd pennies my bank sees fit to give me for looking after my money)

Private (this is any entry in my bank statement that isn't a sale, like a cheque for my b/day etc)




In my expenditure I have -

stock (this is all my auction house receipts and a hand written notes about car boot purchases)

postage ( all the receipts from the PO)

stationary and packing (paper, ink, bubblewrap, jiffys, tape, biros, etc....)

refunds (they happen from time to time)

ebay and internet fees (as you'd expect)

phone and mobile costs (he works out a percentage)

other ( anything else like car park receipts, petrol etc)

he also enters an amount for the use of the house

The only thing I do each year is the spreadsheets - he does all the fancy stuff that soo was mentioning, to me this is worth the £200 he charges and he enters his fees as an expense too - he also agrees an amount with me that is carried over each year as stock in hand

cafenervosa_2

arushofblood wrote:

I hope you're getting good profits on that turnover ?

Spoken like a true business woman eh ? Lol

I don't want to give my information away but my general feeling on £60,000 turnover is not that brill. I mean if you only make 10% profit per sale after all expenses thats only £6,000, then theres the tax and NI on top. This is why I want to rethink my ideas because from 60k you need to be making 40%+ profit per sale to make a living from it at least, that is not easy to do when clearly there are competitors happy to work on 10-20% profit for the same item!