How do I record transactions in cash with private individuals who don’t give me receipts or invoice?

Omar22

Free Member
Oct 17, 2021
2
0
Hi everyone this my first post here and I just had some general queries. As someone who wants to be a reseller and has started reselling video games and electronics to other businesses and through online marketplaces, would it make more sense for me to register as a sole trader or a Ltd company. I may intend in the future to bring my brother in as an employee to help me. Does this change whether I should register as a sole trader or Ltd company? Also when buying stock most is done with cash and in person with people I have met from either gumtree or other online forums. How would I have to record these transactions as most of these sellers don’t provide receipts or invoices and are even reluctant to share their name or address with me and how would this differ in regards to whether I was a sole trader or a Ltd company? Finally I do intend to scale this business to where I would be buying large amounts of inventory weekly which would involve large amounts of cash as well as possibly having to register for VAT. So would me continuing to buy from private individuals in person and with cash when they wont provide me a receipt or invoice and give me their personal details (name and address) be a problem for me trying to book keep and record my transactions to show HMRC. Would switching to a business account help with this as it would be easier to see the cash being withdrawn to buy stock and when it happened?
 

Scalloway

Free Member
Jun 6, 2010
17,469
3,760
Shetland Islands
would it make more sense for me to register as a sole trader or a Ltd company.

If you are just starting up I would suggest being a sole trader. The formalities are a lot less than a limited company needs.

in the future to bring my brother in as an employee to help me. Does this change whether I should register as a sole trader or Ltd company?

A sole trader can employ staff so it makes no difference.

How would I have to record these transactions

people I have met from either gumtree or other online forums.

In the first place you should keep a record of any dealings you have with them online. If you are meeting them in person I would suggest getting a recipt book from a stationers and recording the details of the transactions as it happens and give the seller a copy.
 
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paulears

Free Member
Jan 7, 2015
5,016
1,375
Suffolk - UK
I've always done this - if I buy without a receipt - I just create one myself with the details.

My Police Officer son ticked me off the other day. "so, some random person phoned you up and asked if you wanted to buy some virtually brand new radios?"
Yes
"This random person then arrived at your office, handed them over, and you gave him £40 in cash, with no receipt, no name and address and you know they're worth ten times that amount?"
er, yes


Now I look back, I don't suppose that does actually look very good, does it? I've got them sitting there, just in case they turn out to be nicked - but so far, looking good! However - they're in the accounts! Miscellaneous cash purchase - unknown seller.
 
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Bob Morgan

Free Member
Apr 15, 2018
1,264
414
My Police Officer son ticked me off the other day. "so, some random person phoned you up and asked if you wanted to buy some virtually brand new radios?" . . . . "This random person then arrived at your office, handed them over, and you gave him £40 in cash, with no receipt, no name and address and you know they're worth ten times that amount?"

"It's a fair cop son, oh sorry 'Officer' - You've got me banged to rights and no mistake! Put the bracelets on, take me to the station, and I will sing like a Canary!"
 
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I may intend in the future to bring my brother in as an employee to help me.

If you are a Ltd company it is a legal requirement for you to buy Employers Liability Insurance. However as a sole trader, you are exempt and do not have to buy this insurance if you are employing a family member!
 
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MyAccountantOnline

Legacy Full Member
Sep 24, 2008
13,652
2,589
UK
www.myaccountantonline.co.uk
...As someone who wants to be a reseller and has started reselling video games and electronics to other businesses and through online marketplaces, would it make more sense for me to register as a sole trader or a Ltd company. .

That depends on many factors we'd need to know a lot more about your personal circumstances and finances - probably information you'd rather not, and would be best not, sharing on a public forum. It's a really important consideration and proper specific professional advice from an accountant is best for that.

I may intend in the future to bring my brother in as an employee to help me. Does this change whether I should register as a sole trader or Ltd company? ...

No

Also when buying stock most is done with cash and in person with people I have met from either gumtree or other online forums. How would I have to record these transactions as most of these sellers don’t provide receipts or invoices and are even reluctant to share their name or address with me and how would this differ in regards to whether I was a sole trader or a Ltd company? ..

What you need to have is evidence of a payment being made - so an invoice or receipt and a payment on a bank or card statement is ideal but isn't always possible. If you have to pay in cash as you describe keep emails and screenshots showing the transactions as well as recording the transactions in your accounting records. It's the same for a sole trade or limited company.

..Finally I do intend to scale this business to where I would be buying large amounts of inventory weekly which would involve large amounts of cash as well as possibly having to register for VAT. So would me continuing to buy from private individuals in person and with cash when they wont provide me a receipt or invoice and give me their personal details (name and address) be a problem for me trying to book keep and record my transactions to show HMRC. ..

I would certainly be looking at some way of keeping a record of the cash transactions. Maybe insisting sellers complete some form of purchase documents. You are leaving yourself open to HMRC challenging the payments made and with no evidence whatsoever you have no way to prove payments were made. A cash withdrawal on a bank statement is not evidence a business expense was incurred.

....Would switching to a business account help with this as it would be easier to see the cash being withdrawn to buy stock and when it happened?

No, but you should be using a business bank account anyway.
 
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Pezza55

Free Member
Aug 20, 2021
14
1
I think when buying through gumtree etc. normally you can gather sufficient information to make a receipt for your purchase. You can always screenshot any messages with the buyer and have them stored as proof. Try to contact people by text or email then you have a greater paper trail.
 
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