Need help with business transactions for tax time
Summary: dont_waste_dollars started a discussion seeking assistance with managing business transactions during tax season. davewil1964, chameleon54, and kh_safal participated in the conversation, contributing their thoughts and suggestions. The discussion centered around techniques and best practices for handling financial records effectively to ease tax filing. Participants shared their experiences and offered practical advice to help ensure a smooth process.
Gday,
this year ive started buying a selling on ebay for a profit but recently have realised next financial year im going to have to pay income tax on my profit but i have no idea what programs to use to keep decent records. today i registered my business name and got an ABN but im a little but clueless in the whole record keeping area
also if i complete a transaction and then three months later get credited 5% cashback from a cashback website, how do i keep a record of that? and if i dont include that in my profit.. will the ATO find out?
currently all im doing is doing various calculations SELL PRICE - FEES - BUY PRICE = PROFIT rounded to nearest dollar. Then i add on the cashback figure to get my final profit and just put that figure in a notepad document.
Im guessing thats definately not a decent record keeping device but i have no idea what else to use... i mean i could put it in excel and not round it to the nearest dollar... but is that good enough proof? do i need to include transaction receipt numbers etc? ive used many different accounts to pay for the items, paypal, credit card, bank account. ARGH any help would be GREAT
THANKYOU very much in advance
kh_safal
·2 months agoHi everyone,
This topic has been locked due to the age of the thread. If you’d like to share more or ask a related question, we encourage you to start a new topic.
Thanks!
eBay moderation
chameleon54
·12 years agoThere are a lot of different systems people use to keep records, some simple others harder than they need to be. My wife and I have two stores in different ownership structures , plus another account for private non business sales.. We have tried to stay away from the GST system as I havnt got time or patience for the extra bookwork involved. ( using a legal ownership structure under the advice of our accountant ) . We dont have an ABN for either store.
I use the 30 day & 120 day sales figures provided by ebay in my account summary as my official sales figures, simply noting them in a note book. I buy most of my stock in bulk lots several times a year, so these are easy to keep track of. Smaller stock purchases are also noted in the note book. ( one page for each store, each month.) I also note monthly ebay & paypal fees in the book.
I have a seperate credit card purely dedicated to postage, not being used for anything else.The monthly statement figure at the bottom of the page gives me my postal costs.( split between the stores on a pro rata basis ) At the end of the financial year I go to the bottom of each page of listings on my stores and add up the total stock listed on ebay. I then just use a % figure that represents my average mark up to work out my stock on hand. I give these simple figures to the accountant who then calculates depreciation on stock etc. You should also be able to claim internet connection fees, maybe some allowance for your car to drive to the post office etc. ( talk to an accountant about this ) . As others have noted regardless of what system you use you are still required to keep your reciepts for transactions for a number of years ( depending on your ownership structure ) . I just throw them in a shopping bag for each year and will sort through them if I ever get audited.
The systems I use are much more basic than most people use, but they are very quick, simple and accurate and only take a few minutes each month plus around 1.5-2 hours at the end of the year. They may not suit everyone but they work for me.
dont_waste_dollars
OP12 years agoI got rid of the excel template and created my own. how does it look? am i missing anything?
also this is small but i only learned excel umm 1 hour ago haha so why havent i got a dollar sign in my second total box 😛
jodsta
·2 months agoYou can change that, select format cells, numer then currency and it gives you an option to include a $ sign in it. Also for others just learned how to calculate some of the Ebay reports that include AU$ in front of the numbers. I couldn't calculate the total column but finally found out if you select the column/s you can click on Find/Replace All type in AU in the part where it says find and select ok. This takes out the AU in front of the $ and then you can calculate your columns and figures. It was driving me crazy hope this helps heaps. Cheers Jodie Here at Jodstas
jodsta
·2 months agoHi could you please elaborate how you calculate stock on hand. Sounds useful.
Just be aware anyone with your receipts to not store them in any type of plastic, includes plastic sheets or folders or boxes. The receipts over time fade so you will have a harder time with an audit. It's amazing how quickly they can fade. Cheers Jodie
chameleon54
·2 months ago"Hi could you please elaborate how you calculate stock on hand. Sounds useful."
WOW that post was 2014 and I,m still here ( occasionally 😀 ).
OK so i,m still using the same system to calculate stock on hand. I check the value of listed stock and divide by 5. ( I mark my items up around 500 % on average )
As for checking annual sales, ebay fees etc. If you click the little arrow alongside your 30 day bar chart for sales, ( assuming you have a store ) you can search custom date ranges. I select July 1 to June 30 of the year I want details for and this gives me total sales for the year, total ebay fees etc.
I still use paper receipts for stock purchases and the separate credit card purely for my postage costs. I still have two active selling accounts, one in my name and another in the wifes name to allow income splitting ( with separate bank accounts etc to keep it all legal) . Its very simple and takes less than an hour to do my complete tax records for ebay. Collating receipts is the most time consuming part.
Hope this helps some-one with tax time coming around again.
davewil1964
·12 years agoYou definitely need to talk to an accountant. As a registered business (bad move if you're not going to turn over at least $75k pa) you will also have to have your accounts audited annually.
Rule of thumb -
Keep receipts for ALL purchases
Keep receipts for ALL expenses.
Keep receipts for ALL income
Paypal and eBay will provide you with information for the income and part of the expenses bits. You need to be aware of what is a tax-deductible expense, what is a capital outlay only recoverable on sale (your stock), what constitutes income. I suspect a 5% rebate on stock counts as a deduction on your expenses/capital.
I use a spreadsheet, but others use professional accounting software.
dont_waste_dollars
OP12 years agofrom november 18 2013-july 27 2014 my turnover has been 30k
I was told that if i was turning over 20k i should have an ABN and if im turning over 75k thats when i have to start paying GST
so aslong as i stay under 75k i should only have to pay income tax on my profit correct?
ive downloaded an ebay excel spreadsheet and ill start putting all my data into there.
With the receipts should i save monthly my paypal received transactions, my ebay sales and the invoices for every item i buy?
so like a folder for paypal folder for ebay and a folder for invoices just saved in my documents will that suffice?
clarry100
·12 years agoMy wife and I operate two stores and two auction IDs. We have our ABNs in place.
I spoke with my tax accountant last year before we started selling seriously as you indicated.
He said keeping your records in a spreadsheet is fine and that's all he needs to transfer it all into his tax return software.
Like you we are over $20K but under $75K sales in the tax year. So we are subject to income tax but not GST yet.
I have setup my own spreadsheet as I'm OK with Excel.
I have created a bunch of tabs each one for a different aspect of income/expenses.
Then I just roll up all the various totals to a summary page at the top. And I track each expense as a percentage of total sales so I can see where the money is going. At the bottom is a profit figure after all allowable expenses are deducted.
The Excel worksheet tabs I have are something like this:
Gross Income (sales) for each ID we have
Stock Purchase costs
Fees for ebay & paypal
Rent (not sure what happens if you have a mortgage. Maybe the interest portion only!)
Utilities Costs
Phone/Internet Costs
Postage Costs
Asset Costs
Stock value on Hand (Counted each July 1st)
Floor Space Calculations
Vehicle Log Book (for low usage you only need to log a single week in the year)
Other Allowable Expenses
According to my accountant if you use a certain floor area of your home that is dedicated 100% to ebay work then that percentage is in general what you can claim for things like rent, utilities and the like.
Phones & internet costs are apportioned to business/private use. Be realistic with this and you will be OK.
Above all, keep ALL receipts for ALL expenses. And I enter them into the s/sheet as they occur. This way I dont forget.
Hope this helps some.
jodsta
·2 months agoHi great information. Just be aware if you calculate utilities based on a square percentage this has Capital Gains Tax implications. Much better to use the quick office expense calculations (this may have been removed sorry it's been awhile I have looked at this. Your accountant should go into the pros and cons of the different calculations Cheers Jodie
davewil1964
·2 months agoOP has probably sorted this out in the last TWELVE years.