10 TOP BUSINESS TIPS.... FOR BUDDING EBAY ENTREPRENEURS

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Here are my ten top tips for eBayers who want to turn their eBay activities into a regular income. This is one of a series of no-nonsense, advert-free, "coffee break" guides I have written for UK based eBayers. They're not too short, not too long, and I promise not to try to sell you anything. You can see my other guides by following the links at the bottom of this page but please let me know what you think, by voting for each one you read. Many thanks.

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Why should I want to register as a business?


You've bought some items on eBay, dabbled with selling items on eBay, and before you know it you've started buying things specifically to sell on eBay. But deep down you  have a nagging feeling that sooner or later you are going to have to do something  about declaring your activities to the tax man, especially since you've heard that the Inland Revenue is targeting eBay sellers in some way. Well, it's true about the tax man. Last year, they launched a "tax-bot", a special piece of software that trawls through eBay listings trying to spot non-business sellers who are shifting lots of stuff. But the worry shouldn't stop there. What about your potential competitors? Business is business, and many legitimate sellers won't think twice about dialling the tax evasion hotline if they start to lose sales to your new enterprise. If you accept that business registration is inevitable then you've already taken the first step, and once you've crossed the rubicon then you can concentrate on making your business a success, instead trying to avoid getting caught. And of course, remember that your tax bill will be offset by the extra business you generate as a bona fide business seller. So let's assume that this is what you want to do, and that you can either have consent to run a business from home or you have somewhere else from where you can trade.

That dreaded first phone call.


I won't give you the number as things tend to change, especially with government departments (!), but you need the HMRC central advice line.  Call them on the day you buy the first item that you intend to sell on for a profit. Technically, that's the day your business starts. They won't be trying to catch you out. If you've already started trading it's not a problem, just let HMRC know within 3 months of your business start.

Keeping records.


I know someone who keeps their records in three shoe boxes, and that's just fine, but things could be better. Just keep everything in a manner that allows you to checks things as necessary, but if you plan to employ an accountant then it will be cheaper to file things in a format that allows them to do their job efficiently. After all, you're paying for  their expertise as an accountant, not a book keeper. Try and get a receipt for everything you buy, but if you can't (at a car boot sale, for instance) then make a note of the transaction yourself, and include in your file when you get home. Be wary of using software, which is fine so long as you know what you're doing but may not be the best way to start with. And in any event, your future accountant, if you use one, is bound to get you to change to a different system, aren't they?

The bank account.


Open a separate account at your bank.  Start as you mean to go on and ensure that you run your business finances completely separate from your private bank account. Most banks will do you a deal on business banking so it won't cost you a penny in charges for the first year or two.

Visit the tax office.


If you don't want to see an accountant then you might as well get some free advice from tax man. Make an appointment with your local tax office and arm yourself with a list of questions. Depending on your circumstances, ask them about the implications of husbands and wives working together, what you can claim against, self assessment, book keeping, and schemes such as the one that allows you to claim a mileage allowance for using your private car for business use, for instance. They may not like being used as tax advisers, so glean what info you can and follow things up with a few phone calls to their helpline. Tax information on the cheap, but if money is tight then why not? Presumably, you have access to the internet, so don't forget to have a look at the HMRC website first, so you can concentrate on those questions you can't get resolved without face to face help.

The accountant.


Take advantage of the free advice you've gained from the Inland Revenue, but consider consulting an accountant too. Quite often, the initial meeting is free. Why not visit more than one? For many small businesses, an accountant can save more in tax payments than what you pay to the accountant in fees and, if your business is straightforward, it may well be worthwhile to engage one straight away, particularly since you may be able to claim against all sorts of things you already possess.

VAT.


There's no getting away from it. Very few businesses enjoy high enough profit margins to enable you to be self employed full time but still remain under the VAT threshold.  There are some big advantages to being registered for VAT, especially from a business kudos point of view or if you are selling predominantly to other businesses, but many people try to stay below the threshold. Some husbands and wives  successfully run a business each and keeping below the threshold for each business, but this is dangerous territory so take advice. Remember that if your eBay business takes off in a big way, and that VAT registration looks inevitable, you can claim the VAT back on all your business purchases for the last three years (all items in your possession that is, so not consumables you've already used or stuff you've already sold), so your first VAT return should result in them paying you, so long as you've kept the receipts. Get some good advice, follow it to the letter, and exploit any business advantage VAT registration gives you. Another reason for engaging an accountant from day one.

Make your tax work for you.


Paying your tax can be painful, so why not ease the pain by putting it in a high interest bearing account until it's time to pay the tax man. Try to set aside the  correct amount each week,  and resist the temptation to exploit the money to help ease your cash flow problems, which can be a very dangerous thing to do.

Tell eBay.


Register with eBay as a business seller. And while you're about it get your Paypal account upgraded, if you haven't already done it.

Promote your new business.


Finally, give some thought to the many ways in which you can encourage more buyers to your listings. Have a look at how other business sellers use their status to drive new business to their stores. Many eBayers will gravitate towards business sellers, particularly those on the lookout for higher priced items. As a registered business seller, you will not only attract more buyers, but will also qualify for discounted eBay selling fees dependant on your feedback scores.

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And there you have it. If you've enjoyed reading my guide, and appreciate the fact that I didn't try to sell you anything (I did promise), then please give me the thumbs up by voting YES below. Thank you very much.

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