Ebay business ABN and accountant

[perfect_pixels]

Hi everyone. I’ve had a pretty great run when I started my store earlier this year. I average a sale of $8000 in products in 1 month and I have to admit while I have a lot of things down pat I’ve been completely blindsided by the forgetting of government tax on amounts over a certain threshold and I realised I haven’t been tracking anything and if I don’t start now I could face a possible audit and tax fraud for not reporting. I also realise because I buy and sell..there’s a huge amount not accounted for in stock prices for my store. Basically my question is, after I register as a business what is my next step in getting my affairs in order

Any help and information at all would be greatly appreciated. I want to do everything by the book 🙂

Regards NickyD

[davewil1964]

The goverment requires you to declare all income, even $1.

If you're going to get an ABN, you should definitely get an accountant.

You can download your eBay invoices for the last several years, your Paypal transactions ditto.

How you go about accounting for your stock costs will be down to you.

[eol-products]

If you have sold more than $75000 including postage then you will need register for GST so I would find an accountant that you feel comfortable with and discuss your options. If below $75000 and your good at numbers there is plenty of information around to be able to do your own tax just have to work out if you will better of paying someone while you concentrate on selling or a mix of both.

[digital*ghost · Accepted solution]

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@perfect_pixels wrote:
I average a sale of $8000 in products in 1 month...

Basically my question is, after I register as a business what is my next step in getting my affairs in order

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I'm not sure if that's just worded strangely, but if you are averaging $8k in sales per month, that would mean your projected annual turnover will be in excess of $75k, which in turn means you will be required to register to collect GST on your sales. 

I would definitely seek an accountant for your situation, as it sounds like there might be undeclared income for the last financial year, they can also advise on the best way to move forward in your specific circumstances.

I decided to cease trading for a week when I registered for GST, so there was a very clear line between pre and post GST sales, and I had enough time to dedicate to getting things organised and updated. 

For some general tips - sort out an accounting method that tracks your revenue and expenses, and can account for the GST component on your sales and purchases (if required), and be diligent with it (I record stuff daily so I can ensure nothing is missed; it only takes a couple of minutes a day at most, and then every 3 months I work out and record everything, total revenue, total expenses, total GST paid / owing etc - if you don't get in the habit of doing your bookkeeping regularly, you will be overwhelmed doing your BAS and/or tax returns). Also get receipts for as much as possible, if not all business-related purchases, be it stock, postage supplies or other equipment, or at least pay for things with a method that provides a record (credit/debit card, PayPal etc) - you may not need these for your accounting, but you'll be glad to have them if you are ever audited.  

[k1ooo-slr-sales]

I average a sale of $8000 in products in 1 month 

@nickydgames

can I just get some clarification please?  Have you averaged $8,000 in sales each month for 12 months?

If you have then the only advice you need is (as dave posted) go and get yourself to an accountant.  That level of sales will not slip past the ATO.

Not only will there be GST tax implications for full tax years, you will be slugged income tax as well.

***important note***

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**disclaimer**

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[lyndal1838]

Get an accountant before you get an ABN and be guided by him.

As far as I know you cannot backdate all your trading to be covered by the ABN

You may need to do a personal tax return for the trading to date then start ith a clean late with the ABN.

[etb321]

You'll be asked to report quarterly to the ATO. Probably be required to pay anticipated tax, eg each quarter in advance. 

[lyndal1838]

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@etb321 wrote:

You'll be asked to report quarterly to the ATO. Probably be required to pay anticipated tax, eg each quarter in advance. 

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You only pay provisional tax if you make a profit on your business dealings.

Depending on your tax deductions it may not be necessary.

I have not had to pay provisional tax in 30 years......if the company is going into profit I just up our personal income as personal tax is lower than company tax.

[eol-products]

I just re-read your message and you only started this year so you would be below the 75000 for last financial year and may be getting close in the next 2-4 months for the current year. 

I would recommend keeping below the 75000 for the current financial year until you get your current situation sorted before you make things harder by adding GST. When you do hit the 75000 you have 21 days to register 

If you plan to deal with other businesses you will need an ABN number otherwise you may not need one and there is information on the ATO website.

One thing you really need to do is have a seperate bank account and only use that account for your business so all your transactions are in one place.

If you have any questions you can call the ATO and they can be helpful in some areas but for most things you need to pay an accountant.

[chameleon54]

If you are buying stuff privately from garage sales, markets etc. and not paying GST on your stock purchases, you really dont want to have to register for GST if you can help it. This is because you will be paying 10% of your selling price straight to the Government. You may be able to reduce this a bit with any input tax credits you can claim back, but basically a lot of your profit will go to the ATO

   Buyers wont pay you 10% more for your item than some-one elses just because you are registered for GST so it will make your items less competative on ebay.

There is a possible answer. The threshold for registering for GST is $75,000 on a rolling 12 month basis. ( not taxable or financial year ) If your average monthly turnover is $8000 as claimed, you will hit this pretty quickly.

It may be possible to set up a second ebay selling account in the name of a wife, partner or partnership. The second selling account would need a seperate paypal account and bank account in the name of the selling entity and they will need a different tax file number to yours. 

 This is the system I use for my ebay selling. ( under guidance of my accountant ). It is legal, it does work and can save a lot of hassles and money in the long run. It also opens up possibilities with income splitting your ebay income between yourself and your partner either through a partnership arrangement deeming income or more crudely through putting the most ebay effort into the store owned by the partner with least taxable income. Using this system you can sell $150,000 on ebay for two stores before you need to register for GST. This would work for your current $8000 per month in sales.

Its slightly complicated and must be set up correctly. As others have mentioned IT IS ESSENTIAL you discuss this with an accountant before you start.