It’s a wonderful thing, eBay. A magical place where you can buy pretty much anything your heart desires – and sell it, too. But if you’re using eBay regularly to trade your services or products, you need to know where you stand with tax.
The good news is that for eBay sellers there’s no tax to pay on the first £1,000. But for start-ups who are serious about being a successful online business you’ll soon be over that threshold – and that’s when you and HMRC need to get acquainted. Fail to register your business and submit a tax return and you’ll be fined.
Don’t be thinking that you’ll be able to operate under HMRC’s radar. They can easily uncover tax evaders thanks to the 2016 Finance Act, which gives them the authority to snoop into eBay activity, including transactions and payments. And with billions of pounds in tax going AWOL each year due to businesses not declaring their online income, HMRC are on a bit of an eBay crackdown.
Once you’ve declared your online business and are legit, your next smart move is to get an accountant. If you’re not a number cruncher, it can be tricky to get to grips with your accounts at the best of times – but when you’re an online business selling on eBay things can get even tougher.
There’s a lot to do. For a start, you’ll need to keep track of numerous transactions from multiple buyers. Then you’ll need to separate the sale price from the cost for postage and packing – important for comparing your P&P charges against what you pay out. And you’ll also have to keep a note of eBay/Paypal fees. Honestly, you won’t know whether your profits are coming or going.
Added to that, you may also be looking at Capital Gains Tax plus you’ll need to consider VAT rules if you’re selling to customers outside the UK. Head hurting now? Well back to the good news – here at Duport Accounting we’re on the ball with eBay trading. If you’re running an online business we’ll simplify the paperwork, put your figures in order, keep your business growing – and keep you in HMRC’s good books.
* To find out more about how Duport’s online accounting package can help your online business call us on 0845 308 1454 or email us at firstname.lastname@example.org