A simple bookkeeping question

121

Member
I currently only want to buy used items on eBay to resell on eBay. This might sound silly, but I'm not sure what exact data I'll need to submit to HMRC or how to make it submittable. Please note, I maybe on the spectrum, so please advise like I'm a 5 year old :facepalm: I just need the basic layout info and I'll try to take it from there.

As you can see, this is a very simple starting venture that I want to do from my laptop on my own. I've already registered myself as self-employed. Can anyone offer advice on the basic info I'm required to log and how to format it so it's submittable?

So say hypothetically, I bought a used PS4 with intent to relist it for profit. The buyer paid postage costs and I sent it using Royal Mail at the post office. How should I log the data? What is required? What software should I use that HMRC will accept at the end of a tax year? A free software would be preferred atm.

Starting from scratch here and haven't made enough sales yet to submit that I'm a business. I've just been buying things I want and selling things I don't need anymore, but want to start a business venture now and see where it goes. I need the basics please avforums. Go easy on me if poss ;) I get things.. but some things just need to be spelled out at first, then I'm on page.

That's why I made up the PS4 for you to possibly help me grasp the minimal info required that HMRC will accept with accuracy.

I don't want to relist the items I've recently aquired for resale until I know I'm within the law regarding the bookkeeping HMRC will require from me.

All replies are appreciated.
 
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swingaleg

Active Member
I'm not sure about the software because I'm still on paper tax returns

In general you need start with a sum that represents the total income from sales. Which is what it says ..... you add up all the money you make from selling things and that's your Sales figure

From that there are certain items that can be deducted

The largest item will be the cost of buying the stock that you subsequently sell

Then smaller items will be costs that are necessary for the business to operate, so things like postage, stationery, business insurance if you need it. I guess you're working from home so you can claim a 'reasonable' share of household bills like phone, electricity. I must say that looks too complicated for me so I don't bother claiming any of that

So your basic accounts might look like this

Sales £10,000

Deductible costs

Stock (cost of buying the goods) £8000
Postage £200
Stationary £50
Insurance £100

Total deductible costs £8350

Profit - Sales minus Costs - £1650 (this is the taxable income)

As I say I get a paper tax return and basically just fill in 3 boxes ...... Sales, Costs, Profit
 

121

Member
Ok thanks for explaining that. So Sale Figure is 'gross' and 'net' is after deductions.

The part I don't understand is how to prove transactions took place if they're done on eBay or Facebook Marketplace. The only evidence I'll have for items bought and sold will be in my eBay and PayPal accounts, plus physical Post Office receipts. How is that info proven to HMRC? Are they expecting detailed, itemised accounts of each sale?
 

thekilljoy

Active Member
Keep all your receipts (numbered for convenience) and a record of all sales and expenditure in case you are ever audited by HMRC, although this is very unlikely . This may sound onerous but if you write them down daily it wont be much effort.

In the normal course of events they will not want to see them and they will just give you peace of mind
 

BobBob21

Well-known Member
The information you will submit to HMRC is very high level, irrespective if you fill in the paper form, electronic form or have software do it for you.

Assuming you are doing this as self employed and have no other income (ie no jobs, benefits, interest from savings etc) then you'd simply fill in the self employment section declaring your total revenue, total allowable expenses and it then minuses one from the other to give you the profit. If for example you also have a job then you'll need to complete both the self employed section and fill in the employee section with information off your P60.

You yourself will need to keep much more detailed records as HMRC can ask you to prove the values you've entered. My business is slightly different but I have an excel spreadsheet, one tab details every expense I incur (date, vendor, price, category) and another details every sale I make (date, customer, price, items).

Whilst I don't buy/sell on eBay on the buy side they have a printer friendly version of each transaction that I'd be saving down as a PDF and giving it a file name that'll make it easy to find from my spreadsheet - so in my case I name them by date. Any physical receipts I similarly scan to PDF (there are phone apps that can do the same) and use the same naming convention. It is likely that for the sales side of eBay there is similar and I'd take the same approach.

This is basic cash accounting and will do you fine for most the time. If you get bigger and hold lots of stock or start buying equipment (eg computers to run the business or expensive camera to do product shots etc) then it gets a little more complex
 

swingaleg

Active Member
Ok thanks for explaining that. So Sale Figure is 'gross' and 'net' is after deductions.

The part I don't understand is how to prove transactions took place if they're done on eBay or Facebook Marketplace. The only evidence I'll have for items bought and sold will be in my eBay and PayPal accounts, plus physical Post Office receipts. How is that info proven to HMRC? Are they expecting detailed, itemised accounts of each sale?
The way it works basically is that the Revenue trusts you to supply honest figures. You just file the total figures..... you don't have to file receipts or itemised details of every sale

You need to keep receipts and your own records of sales and costs even though you don't need to file them because the Revenue reserves the right to investigate your tax return if they wish. When you sign and date your tax return it says 'If you give false information you may face financial penalties and prosecution'

I've been self employed for 25 years and never had any queries from HMRC about my stated figures on my tax returns
 

121

Member
Thanks for all the replies. They've cleared up a lot of confusion.

If I was to list an item on Facebook Marketplace and the buyer contacted me via Messenger to arrange cash on collection, how could I keep a record of that transaction?
 

BobBob21

Well-known Member
Sales = revenue in = more taxes

HMRC will rarely think that you are making up sales that didn't happen... they are more concerned about you making sales that you don't report and/or under declaring the value of the sale.

Ideally you'd have an email address or such and could email them an invoice but a screenshot of the conversation or such is a reasonable set of evidence for the agreed sales price.
 
Take a screen photo of the messages between you and keep it with photos of the item. The messages can be your version of an invoice. Declare the cash as income.
 

Desmo

Distinguished Member
A simple spreadsheet will be fine and HMRC will never likely want to see your receipts. You should always keep a paper trail button't fret over it too much... I've been in business over 20 years and have never been audited by HMRC in any way so even though we have all paperwork, it's never ever been looked at.
 

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