How do I account for money received in other currencies?

[delicious3141]

Hello everyone,

I have an online eBay/Amazon business and have recently started listing on some of the foreign versions of these websites. amazon.de, ebay.fr etc.

My question is in regards to how I account for the foreign currencies that come in.

For example. My eBay.fr sales arrive in Paypal in Euros and stay that way until I convert them to GDP.

How would I be expected to account for my sales in different currencies? Say I were to convert all my Euros to GDP at the end of each month and then add that to my total turnover is that acceptable or am I supposed to somehow declare my Euro turnover in GDP at the exchange rate that was applicable at the time the sale was made or is it okay to record it at the time I actually exchange to GDP as that is my eventual 'earnings'? I ask because exchange rates vary day by day of course and I'm sure the revenue has something to say about the right way to do all this?

Thanks in advance for any help you can offer.

 

[YrHenOgledd]

I use the HMRC bench rates, published on the HMRC website. They change once a month. When I issue a EUR invoice, it gets entered into the books at the appropriate GBP amount prevailing on that day.

Any discrepancy between that amount and what you actually get when the invoice is paid can be entered into the books as an exchange rate gain or loss, as appropriate.

HtH

 

[delicious3141]

Thanks! So for a business where I don't send invoices and money just comes in automatically as eBay makes sales for me would be it be okay to take a monthly sales report in Paypal which shows how many Euros came in that month and then convert that to GDP using the corrosponding bench rate for that month?

 

[YrHenOgledd]

Sounds reasonable. But check with your accountant first ;-)