Need help with business transactions for tax time

[dont_waste_dollars]

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

[chameleon54]

      There 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.

[cherry*135]

"how do i keep a record of that? and if i dont include that in my profit.. will the ATO find out?"

ATO could audit your business. They would expect you to provide documentation for every transaction.

[cherry*135]

"so as long as i stay under 75k i should only have to pay income tax on my profit correct?"

Your TURNOVER needs to be under $75 000. If it isn't in the future, you need to register for GST.

[dont_waste_dollars]

I 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 😛

[davewil1964]

Whilst the narks MIGHT be right about whether or not you need your accounts audited, you will have to provide the ATO with BAS statements if you have registered an ABN. Or not. it might have changed over the years, but it was certainly a requirement when the system was introduced.

I would still talk to an accountant.

Your spreadsheet is probably lacking in the detail the ATO require. it seems to only record sales and doesn't break the expenses down. eBay and Paypal are separate legal entities and need to be recorded as such. Also listing/shop fees are separate to FVF. As is postage and any other expenses.

So your spreadsheet as it stands will record nett on sales, but doesn't actually break the components down, nor allow for other expenses, or cashbacks on purchases.

[jensmanchester-australia]

I agree with Dave - best thing to do would be to talk to an accountant so you have everything set up correctly.

Spending a couple of hundred dollars now getting the right advise could save you a lot more than that in the future as well as possibly saving you a lot of headaches if the ATO choose to check your records.