Guide to reducing accountancy bills for eBay sellers

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The year end has come around again! The accountant has been in touch and requests the books so the year end accounts can be prepared. You provide them with all your receipts, invoices, cheque books and paying in books – all mixed together in a carrier bag! This is a costly mistake!

When the records are taken back to the accountant’s office, they will be given to a junior member of staff who will spend a lot of time (depending on how many transactions you have) getting the raw information into a form that can be used to prepare your accounts. This can be very time consuming and therefore costly!

You would be able to save yourself a fair bit of money if the raw information is presented to the accountant in a way that saves them time.

Firstly you need to record your individual transactions properly. I use Excel spread sheets but you don’t have to. It can be done the old fashioned way with pen and paper if you prefer. I set up a template and then every month I use the same blank one each time.
You need a book or spread sheet for each type of payment such as each bank account or petty cash or credit cards. Each one must be kept separate. You would normally separate each month as well.
 At the top of each column you write a heading for each of the common payments you make. For example, date, total payment on the left and then, purchases, postage, advertising, stationary, utilities, miscellaneous and this type of thing on the right. If you paid £100 for advertising you write the date,  £100 in the total column and then £100 in the advertising column  - simple as that! You then total each column and cross check the totals (make sure your total column equals the sum of all the other columns when added together.)
 All receipts should be kept in date order to mirror the entries in the cash book.
If you are VAT registered you will need an extra column named “VAT” to separate out the vat element.
You also do the same with the incoming money – different columns such as date, total, sales, other receipts etc.
For the cash book that relates to a bank account you should then do a bank reconciliation – you are making sure your cash book is correct. In simplistic terms you take the total bankings less the total payments and compare that to the balance on the bank statement on the relevant date – normally the end of the month. You have to account for any items such as cheques which have not cleared yet. If you can show the accountant that your books agree to the bank statement this can save them a lot of time!  In the event your books do not agree with the bank statement the accountant will have to spend a lot of time looking for the error – this involves ticking all of your transactions for the year against the bank statements to find the problems! You can imagine that if you have a lot of transactions this can take a long time especially if you have made lots of errors! It is very important to reconcile your bank account every month to make sure it is correct.
The next thing to save you money is to summarise your cashbooks – this is called a “cash book summary”.  You set up another spread sheet very similar to your cash book. At the side you have all the months, Jan, Feb, March etc and then the columns across the top are named the same as your cash book headings. You simply enter each cashbook total onto the summary sheet for each month.
The next thing that can save you some money is to analyse some of the columns in your cash book. This needs to happen if you have columns with mixed payments such as miscellaneous. You need to take a sheet of paper and go through the relevant column for the year. For example, I need to analyse miscellaneous. I may have various payments in there such as PAYE, office party, bank charges, repairs, staff coffee!  All this needs to be separated out – if you don’t the accountant will have to spend time doing it! Separate all of them out onto your paper under the various headings and then add them up making sure your total agrees with the cash book summary.
If you present your accountant with a cashbook which agrees with your bank statement, the receipts/invoices all in date order, the cash book summarised and columns analysed as necessary they can save a lot of time and therefore charge you a lot less! The key thing is to do your books regularly – at least once a month!
Good luck!
 

 

 

 

 

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