A Step-by-Step Guide to Accurately Tracking Your eBay Sales
Do you need help keeping track of your accounting history for your eBay account? Most of us have bought or sold items we loved in the past but no longer need. As an e-commerce seller, it’s crucial that you keep track of the financial records of products you have sold and purchased on eBay in order to address disputes and stay organised for tax season when filing with HMRC.
eBay is a leading platform in the e-commerce market. The last thing any seller wants to deal with come tax season is to scour all their previous sales and fees as the deadline approaches. Not only is this time-consuming, but it’s stressful. Don’t procrastinate! There are various methods to help you keep an accurate account of your eBay transactions, and getting started isn’t difficult. Here’s a step-by-step guide to help you successfully document your accounting eBay history.
Why Should You Accurately Document Your eBay Sales?
How do you define what items you should include on your tax form? Any monetary gain collected from trade on e-commerce websites such as eBay is considered a business by HMRC. If you are an eBay seller, accounting transactions that are accurate when recorded and submitted by 31 January may protect you from extra fines.
Business sellers on eBay will want to keep detailed accounts of their transactions on the e-commerce platform as they will need to provide gross prices and the VAT rate used to calculate gross costs on all of their available listings. VAT is the value-added tax on an item. The standard rate of VAT in the United Kingdom is currently 20%. If you do not supply the specific gross prices and VAT rates, eBay typically places that product’s price at the net worth and will add VAT on top of that net price.
Here are a few steps you can take to ensure you have appropriately documented any transactions on eBay.
Do you want to be more efficient when managing your accounting on eBay? You can significantly reduce time and monetary loss by transitioning from filing physical paperwork stored in filing cabinets to digital documentation.
Digital documentation is a readable document that is paperless and that you can view through any source of technology. In the growing age of improved technology, digital documentation is easier than ever. There are a large array of benefits for digital documentation as an e-commerce user.
If you are an eBay seller, accounting can be easily recorded and carefully encrypted through digitised media. While paper filing is a familiar medium you can copy whenever needed, there is a greater risk of loss and theft. As a business, losing confidential personal information can be devastating to your company. Placing your paper files in one or two cabinets can also be risky in case of potential fire or water damage. Should the unspeakable occur, you could lose valuable information and records.
Digital storage is more secure as you can enable an electronic documentation system to digitalise signatures, encrypt forms, and redact personal information, keeping you and your clientele safe from possible corruption. Ensure that the programs you use for digital documentation comply with the guidelines for privacy information for eBay.
Are you looking to take steps to be more sustainable in your business practices? By switching to digital documentation, you can save money and the planet from unnecessary paper usage. Reduce the cash your business spends on paper and save thousands of trees annually through eBay Xero integration.
The more successful your business is on eBay, the more space paper files take as you properly document each transaction. It costs more money to store paper files as you have to find office products such as filing cabinets and folders to place these paper forms in. It can also be frustrating to dig through these files and retrieve them. Free up your personal space and downsize the number of paper files for new e-commerce ventures.
Digital documentation is easier to access and share than physical paperwork. As eBay is an e-commerce company operating through the internet, interactions run smoother and more quickly when you are able to pull up digital files. With the increased technological advancements, people enjoy the instant gratification and access that digital media provides. Digital documentation is more time efficient which means it’s more cost-friendly than paper records.
Manually reviewing and entering data can be a time-consuming process. Digital records ease the process of collecting data in real time. Access your digital files at any time of day to check on or update information for your business.
Keep Your Personal and Business Finances Separate From Each Other
As an eBay seller, accounting records should be kept separate from your personal files. Forming an individual record for your personal finances and accounting on eBay will ensure you are organised and reduce any problems that may occur during tax season.
Establish a Separate Legal Entity For Your Business
If you run a business through eBay, you should establish your business as a separate entity from yourself. When you create a company, you enable advantages for yourself, such as the ability to protect your personal valuables from business debts, lawsuits, and losses. Protect yourself and protect your business too.
Obtain a Business Debit Card or Credit Card
A business debit card or credit card establishes a clear boundary between transactions you spend on your personal card and business expenses. As an eBay seller, the accounting will be significantly easier to organise when you document your finances on two separate cards.
Open a Business Checking Account for Business Alone
In addition to a business debit card or credit card, separate checking accounts are an excellent way to keep your personal and business finances separate. You will be able to examine the profits made through your business individually compared to the time-consuming process of reviewing your individual account to remember which expenses were personal or business needs alone. Gain a clearer idea of the profit you make for financial payoff by simplifying your bank statements with a checking account dedicated to your business.
Separate Your Receipts and File Them
Whenever you spend money, separate your personal and professional ventures by separating your receipts. Create separate folders for your personal and business financial receipts to easily document each transaction you’ve encountered in the last three years. Separating your personal and professional financial records for accounting on eBay will ensure you’ve prepared for the risk of the HMRC auditing your account.
Add a Software to Your Platform That Makes Accounting Easy
Are you looking for eBay-Xero integration that will rid you of bookkeeping headaches? Accounting software benefits eBay sellers as they keep account of your expenses paid and received before categorising them to help you gain a better understanding of your financial transactions. It can be challenging to keep precise records of invoices for each purchase a client buys from you. Accounting software, such as Link My Books, removes the need to store paper receipts at the risk of them being misplaced and helps detail invoices and bills that keep your business functioning.
Are you looking to track your eBay sales accurately? Link My Books helps e-commerce users keep accurate, detailed information about their business so they can focus on growing their business. Keep thorough record keeping for tax season and disputes on any e-commerce platform.