Accounting, VAT, and invoicing help.

[Gemma Adair]

Hello everyone,

I just joined up today after coming across a few posts with regards to Linnworks and various software I was researching.

I'll try and keep this short.

I've been running my business for 5 years using Quickbooks and doing my own tax returns. I will need to register for VAT soon and I'm not sure how to move forward to accommodate the changes I will need to make. I send between 200-300 orders per day, most are £1.99 / £2.99 in value, so lots of small orders. It would ruin me if I had to invoice each one separately. This Christmas I was up to 500/600 orders per day.

I currently do an end of day total amount of income, minus my expenses, so it's very simple at the moment. I use eBay and Amazon to sell on.

I have looked into Linnworks, with Tradebox & Sage.. but after reading others' opinions I'm now not too sure what to do. I'm happy processing the orders on eBay and Amazon directly, that's no problem for me. It's just the logging of the orders for the VAT return.

I will be starting on the flat rate VAT scheme, but I expect within 2 years to go over the £150,000 limit for that.

Does anyone have any ideas on what would be best?

 

[Ola1]

For your information, according to the HMRC site, the threshold for leaving the flat rate scheme is £230,000.

Meanwhile, I thought that Ebay an Amazon system invoices your clients for you

 

[Gemma Adair]

Ah, that makes things a lot simpler for me then.

So as it would be a flat fee, do I need to account for every single transaction? Or can I still do the daily total and then mark the VAT payment each quarter as an expense?

eBay and Amazon does produce an invoice yes, it was more a case of how I was going to do the administration for VAT purposes, but I guess I won't have to worry about that on the flat rate scheme?

 

[Ola1]

As long as you continue to have access to the detailed Amazon and ebay transaction reports, you should be ok.

Flat rate VAt is worked out as a percentage of total gross sales for the relevant period.

Remember to set up Amazon and Ebay to charge your customers VAT or else,,

 

[UK Contractor Accountant]

Why don't you use Transaction Pro Importer & Linnworks to just export all transactions from Amazon & Ebay and then import into QB - only takes a few minutes each week

http://www.transactionpro.com/

 

[Gemma Adair]

Okay, thank you for the advice, it's much appreciated.

I know I can register my VAT number with eBay and Amazon, but I have a feeling that is as far as they go with it. So if I'm charging £1.99 for a product now, it would still be £1.99 after registering for VAT. Technically I will lose 20% of the sale price, but that's something I will have to just accept as I'm not sure if putting my prices up will be beneficial really.

I don't believe they provide a VAT receipt to the customer, just a purchase invoice type of receipt. I get a very occasional request for a VAT receipt, but have so far had to explain that I'm not VAT registered. So I will have to consider sending a paper invoice with every order.

 

[David Griffiths]

You can simply enter daily totals

 

[Gemma Adair]

Transaction Pro Importer & Linnworks

I've not heard of the first one.. I'll take a look. Do you use this yourself?

 

[Gemma Adair]

Thanks David - that's what I'm hoping to do, it's so much easier for me and means I won't have to make too many changes. I just don't have the time (or desire) to change the way I do things, but if it's really necessary then I will.

 

[kevin.doran]

I'd log the Amazon sales fortnightly in line with their invoicing and eBay monthly in line with the PayPal report.

 

[Gemma Adair]

Kevin - I currently do the logging of daily totals as a daily process, then I know how much profit I am running at.

Is that what you meant? Or have I misunderstood?

 

[john1989]

@Pish_Pash uses a similar set up. He might be able to give some further insight.

 

[Gemma Adair]

I've read loads of posts by @Pish_Pash and they are brilliant, I'm just worried about my ability to use the method he uses as I'm sure he said he had to learn Access?

I'd be grateful for any help he can offer though.

 

[kevin.doran]

Nope, I meant singular fortnightly/monthly totals. Unless you're running daily management accounts with daily stock movements you're never going to get a true view of your daily profit anyway.

By all means record your daily sales externally but from a bookkeeping/accounts perspective I see no major need to record them so frequently.

 

[Gemma Adair]

It takes me all of 2 minutes, so I'm happy doing it daily. There is a report function in PayPal I use, and on Amazon the daily disbursement has all the financial information on it, so again, it's simple to use.

I agree that there is no major need to do it daily, but I like to see what I'm making.

 

[kevin.doran]

2 minutes a day is still an hour a month as opposed to 2 minutes a month, 58 minutes that could perhaps be better spent elsewhere.

Daily sales like that can also sometimes make reconciliation more difficult, especially if there's an error to spot.

Anyway, just food for thought....

 

[Gemma Adair]

I will take your comments on board, thank you.

 

[Pish_Pash]

I'll tell you the main problem as an online seller who then goes VAT registered......customers asking for VAT invoices!!! I typically only receive between 50-80 orders per day, but - even in the light that I've automatically emailed them their VAT Invoices prior - I still get at least 2-3 requests per day asking for a VAT invoices. So believe me, if you receive 500-600 orders, you're going to use up all your time just attending to VAT requests (before I had something in places, even a few rquests is a burden, with the amount you'll receive it'll be totally chaotic)...you need to automate.

I couldn't actually find a solution I was content with ...so my solution (as you've guessed), was to 'roll my own'. If you are already using quickbooks, then I can certainly recommend Transaction pro importer. The problem is, that it simply allows easy importing of data...it doesn't add much value other than that (though it's worth its weight in gold for simplifying getting data into Quickbooks)....and once you become VAT registered, then there are many 'scenarios' that you need to cater for to end up with the correct VAT code for quickbooks, for example..

Sale to a UK buyer - VAT Code 'S'

Sale to an EU retail customer - VAT Code 'S'

Sale to an EU Business customer with valid VAT ID - VAT Code 'EGZ'

Sale to a USA customer - VAT Code 'Z'

Sale to someone in the Channel Islands (with a UK type postcode!) - VAT code Z

....& so on. So, you'll need to have a system that looks at shipping addrdress data & then 'adds value'. I had my 'lightbulb moment' shortly after becoming VAT registered (until then I was winging it with spreadsheets) & soon realised I needed a database (on the face of it, a database is not an obvious answer, *but* a database doesn't just hold data, it allows you to write code to act upon the data...for example code to generate a VAT receipt & automatically email every one of your customers for that day....or code to sum all your sales by product, then use this data to forward predict what you need to order from your supplier)...the problem was, I knew nothing about them, so with baby steps I've built a small database, & built a bit more onto it as a need arose....it's now quite an elaborate system - but it's not something that can be shared (it's *very* bespoke to my way of operating).

If you are not keen to build your own, there are meant to be systems out there that will do what you seem to require (look up Linnworks->Tradebox->Sage ....or look up Brightpearl), but they are far from cheap & word on the street has it that some 'one stop solutions' are buggy & difficult to work with.

I still shake my head in disbelief that in nearly 2016 we're still faced with these issues.

P.S. One gotcha for Quickbooks entry levels editions ...is that when you get to something 12,000 distinct customers (& you will with 500 sales per day - quickly!), it stops - no workee no more. You need to pony up for the Quickbooks enterprise edition (which they've just discontinued for the UK market!!! Like I say, this whole genre is unbelievably backward)

 

[kevin.doran]

12,000 distinct customers? Can't you just create a single bulk customer to post everything to and just have the actual customer name as a ref somewhere?

 

[Pish_Pash]

12,000 distinct customers? Can't you just create a single bulk customer to post everything to and just have the actual customer name as a ref somewhere?

That's sort of how I approached the problem initially, but it got a bit cumbersome....there's also software that will workaround the restriction for you....

http://quickbooks14500.com/

(I was wrong about the 12,000 distinct customers bit, the killer number with entry level quickbooks is 14,500 ....but it's not just customers, it's a cumulative total relating to customers + suppliers ....that's just 24 days operating if you've 600 distinct customer orders per day)

 

[kevin.doran]

I honestly can't see the benefit of having so many distinct and presumably one-off customers/suppliers listed within the books. As you say though, it works for you...

 

[Pish_Pash]

I honestly can't see the benefit of having so many distinct and presumably one-off customers/suppliers listed within the books. As you say though, it works for you...

Because it's as easy to have them all listed individually vs.listing as a lump (it's not as if I'm typing/entering everyone into my accounts software)

Also how would you automatically email each customer a VAT receipt, if you've lumped them all together? (& most customers want they particulars on a receipt)