NEW STEP-BY-STEP GUIDE FOR EBAY ACCOUNTING TAX RECORDS

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This guide will show you step-by-step how to record your eBay sales and fees, and also what information to record.

The guide has colour pictures and a sample Microsoft Excel XLS spreadsheet file to start you off with little effort.

The solution is intended for eBayers who are trading as sole traders and not VAT registered. Please note the advice offered is general and it is strongly recommended that you discuss your record keeping methods with your accountant to ensure it fits your requirements. However the solution offered should be sufficient for new eBayers starting out and sole traders whom are not VAT registered.

Step one

You will need to decide which method you wish to record your sales and purchases.

Most people now use a computer to record accounts, but if you decide you want to use a good old book and pen then just draw colums with the same headings in my spreadsheet.

In this guide we will be using Microsoft Excel to create a spreadsheet and record sales and purchases, if you want to skip creating a spreadsheet and would like to use my sample spreadsheet then skip to step three.

Step Two

Firstly create a new spreadsheet in Microsoft Excel and save it with the name "eBay Accounts" (or whatever you wish to call your file) in your documents folder. You will need to rename the three default worksheets. Rename the sheets from Sheet1, Sheet2 and Sheet3 to Sales Ledger, Purchase Ledger and Mileage. (in Microsoft Excel simply rightclick the tab at the bottom and select rename).

Step Three

For the example spreadsheet file I have personally created for you, please visit my ABOUT ME page, as eBay guide policy forbids me to have any external links within my review/guide. Please click below to visit my ABOUT ME page and use the link there. 

http://members.ebay.co.uk/ws/eBayISAPI.dll?ViewUserPage&userid=e*b*a*y**k*i*n*g

The Sales Ledger is where you will enter everything you sell into your accounts. We'll look at each column separately:-



DATE - The easiest way to keep your books is using a method called "Cash Accounting". With Cash Accounting you ignore the date of the sale, or the date an invoice to you was issued. You track all payments in and out of your business on the date you received payments, or paid for purchases. This is a recognised method by Revenue & Customs and accountants and removes the worry of entering a sale into your accounts and then the buyer is a Non-Paying-Bidder. Because you only enter sales the day you are paid you only have to enter credits if you issue a refund after receiving payment.

ITEM NUMBER - Normally this will be the eBay item number. You may occasionally have sales outside eBay (maybe to friends or family). In this case use either a PayPal Transaction ID, if you create your invoices use the invoice number, or get a simple receipt book with numbered pages, write a receipt and enter that number.

METHOD OF PAYMENT - This is simply method of how payments are received eg:- Paypal, Nochex, Cheque, Creditcard, Postal Order

SALE PRICE - This is the amount you receive for the item only (not including postage, packaging, or eBay/Paypal fees)

POSTAGE PRICE - This is the amount you receive for Postage Packing and Handling. It is important that you separate this cost as in the future you will want to analyse what you charge for postage and compare with what you actually pay for postage, packaging etc.

TOTAL GROSS SALE PRICE - This is the total amount that the customer sends you. If there is a cost to receiving payment (such as with PayPal) you enter the total before deduction of costs, NOT the amount you actually receive after deducting costs, we deduct this later.(if using my sample spreadsheet this will automatically add the TOTAL GROSS SALE PRICE!)

PAYPAL FEE - You need to enter the amount Paypal charged you for receiving the money and do not forget to use a minus sign, to make it a negative amount as this is a fee

TRACKING NUMBER - This is not neccissary but is usefull to refer back to if you quickly need to lookup a tracking number.

NET AMOUNT - This is the total amount you receive after paypal fees (if using my sample spreadsheet this will automatically add the NET AMOUNT, please remember to enter the PAYPAL FEE colum as a negitive or the NET AMOUNT will be wrong!)

Step four

The Purchase Ledger is where you will enter EVERYTHING you BUY into your accounts. We'll look at each column separately:-


DATE - Simply write the date of your purchase

PURCHASE - Enter a catorgory of purchase eg:- postage, stock, utilities, or rent, etc.

SOURCE - This is the source of purchase eg:- Royal Mail, Suppliers name, Telephone compainy, Landlord, etc.

REFERENCE / NOTE - This is where you can and a reference or short discription of purchase.

STOCK FOR RESALE - If the purchase is in this catorgry then you enter the amount you paid (do not forget to enter a minus sign as it is money out) If not leave blank or enter "N/A".

STATIONARY / OTHER - If the purchase is in this catorgry then you enter the amount you paid (do not forget to enter a minus sign as it is money out) If not leave blank or enter "N/A".

POSTAGE / COURIER - If the purchase is in this catorgry then you enter the amount you paid (do not forget to enter a minus sign as it is money out) If not leave blank or enter "N/A".

EBAY / BANKING - If the purchase is in this catorgry then you enter the amount you paid (do not forget to enter a minus sign as it is money out) If not leave blank or enter "N/A".

RENT / PHONE / UTILITIES - If the purchase is in this catorgry then you enter the amount you paid (do not forget to enter a minus sign as it is money out) If not leave blank or enter "N/A".

Step Five

The Mileage Ledger is quite easy all you need to enter is the date, destination, reason for trip, and the total "all round" trip mileage.

At the end of the tax year you can claim a set amount per mile against your tax return.

Sumary

So that is all the basics of accounting for eBay.

It is advised that you enter your sales and purchases daily, once in routine it should not take more than 30-40 minuites for 100 items,  if you fall behind it can be hard work to catch up!

Below is a summary of what you should do...

  1. Print out your eBay invoices once a month (or save to disk).
  2. Print out your Paypal invoices once a month (or save to disk).
  3. If you make a purchase or sale enter the record on your spreadsheet.
  4. Keep ALL recipts and file into envolopes monthly.

 

If you have any suggestions that might improve this guide, or information I should add please contact me through eBay, Thank you! 

I have spent some time creating this guide for you, if it has helped you could you please vote below this text.

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