Book keeping records - second hand goods / margin scheme

[shox121]

First of all I have to say this is a fantastic forum ! but I now have a question which I am hoping a helpful member of this community can help answer.

I will be VAT registered soon for a second hand electronics business where I buy used stock from private individuals on ebay, gumtree & amazon (so non vat), I then repair, split the item or bundle it up with other accessories and then re-sell for a profit.

When it comes to book keeping, to qualify for margin scheme (where I pay VAT only on the profit I make) I understand I have to have super accurate book keeping.

I am a bit confused as it would have been straight forward if I were to just buy a single item low and then sell high. But as that is not the nature of my business, I am splitting, re-bundling items etc my question is.

Do I assign a unique stock number to the item I buy as a whole or to every single piece of item I intend to split and sell ?

So for example if I buy the following three items, I will have three margin scheme purchase receipts with the sellers name and address:

- I buy a games console with lots of expensive games.
- I buy some cheap games.
- I buy some console decals / stickers

I intend to bundle the console with the cheaper games and improve the look of the console by applying decals and stickers and sell that as a bundle. And then I intend to sell the more expensive games that came with that console seperately. Once all items are sold I am left with profit.

So for book keeping / stock book, do I assign a unique stock code to the three items above as they are and then when they sell just use the same unique stock code for reference in my spreadsheet ?

 

[KAC]

I assume that you ar about to exceed the annual VAT threshold?
Have you considered the Global Accounting System?

 

[shox121]

Hi KAC thank you for that suggestion. Yes that's right, approaching VAT threshold v soon, my account has just registered me as a LTD company and I have applied for a business bank account now. He also suggested the Margin Scheme but did not mention Global Accounting. I am reading through it now and it appears to apply to me so I will run it by him. Still confused by how I will keep books. You would think when your business grows life becomes easier, it becomes harder.

 

[KAC]

If you have not exceeded the VAT threshold on the day you transfer the business to the company and were therefore not liable to be registered on that date, the clock will start again with the limited company and you will not therefore need to register until the limited company exceeds the annual VAT threshold.

 

[shox121]

Hi KAC I understand but unfortunately ebay doesn't care about that ... on a rolling basis I am nearly at the threshold so although legally the clock is starting again, my ebay account isn't resetting itself to 0. And they have sent me emails to register a VAT number. I know I can just create a new account but I have built a reputation.

 

[KAC]

That's expensive if there isn' a way around it

 

[shox121]

I know but I don't have any other option ... creating a new account means starting from the ground up again which I'd rather not do.

In regards to record keeping from what I have read I think I will have to keep seperate records for Margin Scheme stock, margin scheme purchases and sales. Global accounting stock, global accounting purchases and sales (although they don't have to be as detailed as Margin scheme). And any regular VAT purchases / sales seperated as well. I think I will just do the best I can and let my accountant make suggestions as we go along. It's difficult to put things in to words without proper examples.