E-commerce Bookkeeping Requirements?

[MDE200]

I sell on eBay and from my understanding, as a business, the bookkeeping needs to show each individual transaction (which I am fine with doing). However, all the items I purchase for reselling are also made individually (not bulk/wholesale).

Does my bookkeeping need to also show each purchase I make individually, or would it be ok to just put the total amount spent on purchased goods, via a bank statement (I only use this credit card for purchased good).

Thanks!

 

[Scalloway]

What you need to have is a paper trail that can lead you from the total in your accounts back to the individual transaction. So if the card total each month is just goods for resale then entering a total would be ok. As backup I would staple all the individual payment invoices to the statement before filing.

 

[MDE200]

Thanks!

I have all individual goods purchased invoices stored and accessable online. So a paper trail wouldn't be a problem if checked by HMRC.

If they don't require the bookkeeping to show each individual purchase, so I can just put the total with a monthly bank statement; that would save me a huge amount of time, instead of going through all receipts and entering them into my bookkeeping individually.

 

[MDE200]

Sorry, I should also note that I am VAT registered, does this change anything?

As all my purchased goods are always 20% VAT, will it be fine in my bookkeeping to just take 1/6 of my monthly bank statement to reflect input VAT? And having individual VAT invoices stored online if ever questioned.

 

[Ecomccountant]

If you are VAT registered you need software to have a link with HMRC, you cant do paper/online returns anymore. I would suggest quickbooks for bookkeeping and VAT. You should be able to get it as cheap as 8 quid a month from a partner.

 

[MDE200]

I have software setup with my Excel bookkeeping for HMRC making tax digital. My only concern is whether I need to show purchased goods and VAT on them for each individual transaction on my bookkeeping, or if it's ok to just put the total amount and total input VAT, via a bank statement that I only use for purchasing goods.

 

[Mr D]

My accountant was fine with me entering monthly figures rather than thousands of individual figures.
Still need to have them somewhere but can be backed up electronically or printed.

 

[John Hemming]

You are allowed to use the value from a supplier statement, but not the total from a bank statement. In other words you would need to put in the figures for each payment on a bank statement.

You can use digital links as well if you have the data digitally.

 

[MDE200]

The items are bought from all different suppliers, therefore I do not have supplier statements. However, the bank statement shows the total of all these purchases and there is a paper trail back to all individual transactions, with VAT invoices all stored online. Why would that not be allowed?

 

[John Hemming]

Its not really a question of logic, but a question of law.
The relevant law is Vat notice 700/22

https://www.gov.uk/government/publi...t/vat-notice-70022-making-tax-digital-for-vat

You have to keep digital records (if over 85k turnover, but it is good practice to do things the right way just in case you go over the limit).

(from the link above)
4.3 .3.1 Use of supplier statements

The following rule has the force of law:

Where a supplier issues a statement for a period you may record the totals from the supplier statement (rather than the individual invoices) provided all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown.

 

[MDE200]

OK, thank you.

However, 4.3 .3.2 is specifically referring to using supplier statements, not bank statements.
So surely, there must be a same or different rule to using bank statements, which isn't covered in that VAT notice?

 

[John Hemming]

Bank statements don't come anywhere close to being from the supplier and don't the last time I looked at them have any VAT information on them.

4.3.3.1 is an alternative to recording all of the supplier invoices. So there is your choice. You can record all of the invoices or collective statements based upon payments - which will be the payment that goes through the bank account. Be careful to make sure there are not mixed vat rates as you need to record those if there are.

 

[MDE200]

Yes, as all payments go through the same bank and they are all 20% VAT rate, it would just be the same as a supplier statement. The problem here is I do not use one specific supplier, I suppose it is more of a flipping business in that sense. So I would have thought there would be an alternative option, such as using bank statements and having all individual VAT invoices stored online.

 

[John Hemming]

I think the nub of it is that you need to put in a value for each entry from the bank statement rather than one sum of money for the money in the bank. There should be some way of finding the invoices that you are paying each time. The main thing is that you now (it changed recently) don't have to enter all of the invoices in your digital records. You really could do with a statement that links the invoices to the payment. One would presume there is something like that somewhere as otherwise how do you know you are paying the right amounts to the suppliers.

 

[MDE200]

I pay for each item individually from multiple different suppliers. Therefore there is no supplier statements, just individual invoices.