Advice on Bookkeeping methods for sole trader

Accounting
1

Hi,

I am looking for some help and advice on my current methods of bookkeeping.

I am currently registered as a sole trader and my business involves selling supplements on eBay, Amazon, a couple of my own websites and also wholesale to distributors.

For eBay and my websites I use only PayPal. In my Quickfile account I have my business account, PayPal account and Proprietor drawings account.

I have it so that PayPal imports all transactions automatically into Quickfile currently, however since I sell a reasonable amount of products my account size is XL and I think it is quite messy tagging everything.

My question is since I run everything through my one business account, would it be more efficient to simply get rid of the PayPal account and only have my business account so I would only be tagging withdrawals from PayPal to the business account instead of individual sales. The average price of a product is around £30.

I am trying to do my self assessment tax return for 14/15 financial year, this is my first time doing so and I am finding it quite messy.

I’m not sure if this is the right place to ask but if anybody is located in Leeds and would be willing to provide advice I would greatly appreciate it. I am also considering becoming a limited company and would love some advice on this too.

Many thanks in advance.

Regards,
Will

2

What I would suggest is the way I would do it.

Keep the PayPal account, but unless you need to store the customer details as separate clients, then log them under one record, effectively treating it like you’re running a shop (see here). Then, lump the transfers together.

So, each day you would have, for example, the following:
Monday - Sell 2 x £30, 1 x 25.
Tuesday - Sell 5 x £10
Wednesday - Sell 1 x £10

Assuming all these are paid for by PayPal, log them under one:
Monday - Sales £85
Tuesday - Sales £50
Wednesday - Sales £10

And you would have just one payment coming in, and tagged to one invoice, assigned to a client called, something like ‘eBay Marketplace’

Then, when the £85.00 is transferred to your account (minus the fees - check out this article), you would have just one ‘transfer in’ for your main bank account.

In terms of your wholesale customers, they would probably require their own invoice, so I would set them up as a new client each, and treat them all separate (i.e. literally invoice them for what they order).

In terms of the limited company, I’m not an accountant so can’t advise on what’s best for your business. But you can contact several accountants through your dashboard when you log in. I’ve used this, and they’re pretty quick and really helpful too:

Hopefully all that makes sense!

1 Like
3

Thank you for your reply.

I’ve had a look at the links you sent and they were indeed helpful.

So could I do what you mention but put all payments under one client and simply tag these once a month as an invoice for say ‘November PayPal sales’?

The bit where I get confused is when I pay for supplier invoices with PayPal but my PayPal balance only covers some of the payment, so money is taken from my business account to make it up to the full amount.

I find tagging things like this and making sure I match them up can be quite time consuming.

Would it still be possible to do all of this process having no PayPal account set up in Quickfile, as the transactions to/from my business account are much simpler.

Thanks

4

As long as the dates fit, I can’t see an issue with it (but I’m not an accountant, so it may be best to check).

The things to be sure of are different accounting periods, different tax periods (e.g. when VAT rates change, albeit not very often), etc

5

Okay great thank you. Been going through all of the accounts today to try to find any errors.

Has anybody else got any advice on going limited etc?

Really appreciate any replies.

6

Yes, basically the way Parker1090 does it is also how I run my Ebay shop.

I do not use the PayPal feed as it makes far too many entries so all I do is during my month end procedure, make a single transfer of the sales funds from PayPal to the company bank account (Ltd. I’ll get to that in a sec.). The only thing you have to do though is keep some kind of record of each individual sale and to whom/where as you may have to watch out for the VAT threshold. HMRC will expect a list and the reports from Ebay aren’t good enough for me although the PayPal sales export should be ok. I then add up all the sales to foreign countries during the month and split the single QF PayPal invoice for the month into the correct nominal codes.

In QF I have created a rolling 12mth sales report that excludes international sales and this allows me to monitor for the VAT threshold.

With regards to being a Ltd company, I’m sure there will be many factors to consider so I would certainly recommend proper advice from an accountant. However, just a few observations I have made recently for the small, one-man-band type home business is that in April 2016 the rules are changing on withdrawing Dividends from the business which will negate a lot of the tax benefits from being a Ltd. Also as a Ltd you have to file your accounts and prepare them and you will need to allow at least £500 ish for that. The SA is much simpler when you have your bookkeeping in check. Also as a self-employed person the tax deductible benefits for use of home as an office etc are better. Insurance is easier too.

I currently have 2 Ltd Companies for both aspects of my business life and the last thing my accountant said was "maybe we should look at going SE on the little one at the end of the financial year "

Hope that helps,

Nick

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