Since eBay started migrating sellers over to Managed Payments in July 2020 it's safe to say it has caused a bit of upset in the seller community. So if you're an eBay seller and you're using eBay Managed Payments, how do you connect eBay to Xero? Well in this post we'll discuss just that...
We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
Before managed payments you were most likely using PayPal right? With PayPal there was two thin
But we are where we are right? Gone are the days when everything just fed into Xero nicely and it just worked...or are they? The short answer is no, this is still possible - read on to see how.
Now it's not all doom and gloom. With managed payments you have defined amounts deposited into your bank account from eBay made up of all the sales, refunds and fees for that period. So in a way it's all neatly packed up in one payout.
However it's not just as easy as accounting for the amount of the payout as revenue, since it's made up of a mixture of sales, refunds and fees and a mixture of VAT rates too.
What you need is a way of connecting eBay to Xero whereby it feeds in the payouts broken up into sales, refunds and fees with all the VAT rates correctly assigned and it all feeding into the correct accounts in Xero right? Well you're in luck...
With Link My Books you can connect your eBay account and your Xero account and have them talking to each other in minutes.
Link My Books hooks up directly to your eBay account and automatically pulls in each Managed Payments Payout, breaking it down into the following transaction groups:
Sales and Refunds are further broken down into the following tax groups:
Why does Link My Books break down sales and refunds into these groups you ask? Great question!
The answer is simple really...
If you don't then you could end up overpaying VAT...and many sellers do just that before they realise.
Firstly, any sales that are shipped outside the UK after 31/12/2020 are classed as exports and should be zero rated for VAT. In June eBay updated their terms of service for the Global Shipping Program so even these sales now are classed as exports and should be treated as zero rated for UK VAT.
Secondly, eBay started collecting and remitting VAT on certain sales from January 2021 for the UK and July 2021 for the EU.
So if you don't separate your sales revenue into these groups then you could end up paying 20% VAT to HMRC on sales that eBay either already did for you or that have been exported and do not have any VAT on them. The customer didn't pay any VAT on the sale, eBay didn't pass you any VAT so why would you then give it ti HMRC?
Luckily for you Link My Books does all of this automatically, checking each and every order and refund to ensure the correct VAT treatment applies. One less headache for you. 😎
Ok so maybe you're thinking "Would this not be easier if Xero had a bank feed for eBay, like they did for PayPal".
The short answer is no.
If you simply fed in all the payouts as revenue that would be wrong as they are made up of sales, refunds and fees as discussed above. So that wouldn't work.
If instead you fed in individual orders then that would work, but only if you were willing to manually set the VAT rate for each order after checking if it was exported or if eBay are responsible for the VAT. For most sellers this is an easy no.
Really the only solution is to use something like Link My Books to automate the whole lot.
And for most sellers it makes complete sense to do so.
It's great value for money in terms of time saved.
But also by keeping your figures accurate and your VAT return correct you might actually end up better off even after you've paid your fees for Link My Books.
This is actually really common. Lots of sellers end up realising they have been overpaying VAT by not keeping accurate records and as such Link My Books ends up saving them more in overpaid VAT reductions than the cost of their subscription. Crazy right!
If you want to connect eBay to Xero then try Link My Books for free today.