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Sole trader ebay accounts or tax

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Hi
I'm looking for advice please. I started as a sole trader in January just selling a few things on ebay. It's quite fun but I'm really daunted by the record keeping especially what is needed for tax purposes.
I have a excel spreadsheet that I'm writing everything down on but am getting in a bit of a mess. What columns do I need?
What happens when I transfer money from paypal to my bank account then withdraw it in cash to pay for goods. Do I have to show that as a withdrawal or just write the amount spent?
Also what expenses can I legally claim. Can I claim car mileage for driving to the post office?
I've been searching the internet for an idiots guide for accounting for ebay sellers but no luck. Anyone want to write one I would buy it!

Thanks for any advice you can offer. :A
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Comments

  • magic57
    magic57 Posts: 736 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Of course the title of this thread should be Sole trader ebay accounts FOR tax not or tax but I can't edit that bit sorry!! :o
  • SeniorSam
    SeniorSam Posts: 1,673 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    As you have been asking similar questions for the last six months. It would probably be best to go see an accountant to discuss what is needed. The accountant will probably not charge you for an initial meeting and he could give you a clear idea of what was needed. As a sole trader, you will need to have proper accounts for the Revenue and will need to submit a tax return, the first of which is now due for the year ending 5th April 2012.

    Sam
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.
  • magic57
    magic57 Posts: 736 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Ok thanks, Wish I'd never started it now!
  • patman99
    patman99 Posts: 8,532 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker Photogenic
    As you are a sole trader, is this your only source of income ?.
    If yes, when you do do your self-assesment tax return just put-down what you have actually made. Deduct what you have spent from what you have made. This is hat you will pay tax/NI on. Btw, there are several calsses of NI. The one you want to make sure you pay is the same one as if you were PAYE as this gives you the same rights to benefits should you have a slack period.
    Never Knowingly Understood.

    Member #1 of £1,000 challenge - £13.74/ £1000 (that's 1.374%)

    3-6 month EF £0/£3600 (that's 0 days worth)

  • magic57
    magic57 Posts: 736 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Thank you patman for your very helpful reply.
    Yes I am a sole trader and I also have a job were I work part-time and pay tax. I'm earn just enough to pay tax, so any extra I earn, I know I'll be taxed on.
    My reason for starting an ebay business is just to earn a little extra as like most folks we are struggling in the present economic climate. I don't want to get into trouble and get it all wrong but I can't afford an accountant. A few years ago we ran a very small business and ended up paying an accountant £500 to do our accounts which wiped out the very small profit we earned.

    I already pay NI so I'm hoping I can be exempt as I'm only making a small amount. I think there's a form I have to fill in.
  • patman99
    patman99 Posts: 8,532 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker Photogenic
    When you do your tax return, you will need to fill-in the main form and also tell them you have income from another employment. What you put in here will help HMRC calculate if you owe them any Tax/NI. You can't really do your return until your employer gives you your P60 though as it contains info you will need.

    If you owe the Taxman then you can simply pay-up on the spot or opt to have the payments taken through your wages via an adjustment to your tax code.
    Never Knowingly Understood.

    Member #1 of £1,000 challenge - £13.74/ £1000 (that's 1.374%)

    3-6 month EF £0/£3600 (that's 0 days worth)

  • magic57
    magic57 Posts: 736 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Thanks that's really helpful. I'm trying to make sure all my records are up to date so it will be easier to fill in the return when I have to. Figures are not my strong point! :o
  • Savvy_Sue
    Savvy_Sue Posts: 47,336 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    magic57 wrote: »
    I already pay NI so I'm hoping I can be exempt as I'm only making a small amount. I think there's a form I have to fill in.
    You need to ask HMRC for a certificate of exemption, which is available if your self-employed income is less than £5-6000 (I don't know the current figures).

    It doesn't sound as if you've registered with HMRC yet, you should do this as soon as possible. (I say that, because if you HAD registered I believe they'd have been asking for NI contributions automatically.)

    We do have an Ebay forum, may be worth you browsing there.
    Signature removed for peace of mind
  • John_Pierpoint
    John_Pierpoint Posts: 8,401 Forumite
    Part of the Furniture 1,000 Posts
    edited 10 April 2012 at 5:03AM
    None of this is rocket science, it only needs primary school maths skills.
    You have to understand that there is a weekly tax called National Insurance for which you will be liable and from which you can probably claim exemption:
    Here is the link:
    http://www.hmrc.gov.uk/working/intro/class2.htm

    One of the purposes of this tax registration is to trigger the issue to you of a notice to complete a tax return for the annual tax called Income Tax.
    This annual income tax can be paid using a simple on-line system that does all the calculations for you and on which you can play "what if" games before you decide you have finally got it right and submit you final figures.

    It is really simpler that using Ebay, once you have got the idea clear in your head.

    All you will have to tell the tax man is how much you were paid. How much you were forced to spend by way of costs and expenses. Take one from the other to get your taxable profit.

    Have you kept your receipt and payment paperwork?
    Did you hopefully put your Ebay business money through its own account?
    The accountancy angle comes into its own by pointing out that you might be able to claim extra expenses and if you need to buy things for your business then you have choices about how to do it to save the most tax.

    Just get started, the people on here will help out as you go along.
  • magic57
    magic57 Posts: 736 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Savvy_Sue wrote: »
    You need to ask HMRC for a certificate of exemption, which is available if your self-employed income is less than £5-6000 (I don't know the current figures).

    It doesn't sound as if you've registered with HMRC yet, you should do this as soon as possible. (I say that, because if you HAD registered I believe they'd have been asking for NI contributions automatically.)

    We do have an Ebay forum, may be worth you browsing there.

    Thanks. I registered with HMRC in January for tax but they have not contacted me about NI contributions yet although I got a letter saying they would send a self assessment form which actually arrived today. I'm just panicking a bit about filling in the form. :o
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