How to deal with paypal for accounting

[Kiwi1234]

Hey everyone,

I'm quite new to the sole trader world. I am wondering if I'm running an ecommerce business, which currently is doing about £200 revenue a day through paypal (about 20 transactions) and at the same time I'm paying for 20 items out of my bank (this is a dropship ecommerce business, if you're not aware essentially I purchase the stock individually once I make the sale) - then I wonder how I do this in my accounts.

Do I have to at the end of the month list 600 transactions in a spreadsheet with all their receipts for me purchasing the goods one by one...

And for paypal with the income, how do I get the information to prove this is legitimate income?

I'm honestly totally lost in how to manage the finances for self assessment etc. I'm 17 years old so that might explain the ignorance, although I need to learn this somehow.

Thanks
Oli

 

[Kiwi1234]

For paypal, if I need to "prove" the transaction is keeping the transaction ID enough information (of course on top of customer info, amount etc)

As surely I don't need to print off a receipt or something?

 

[Scalloway]

You need to invoices to prove to HMRC that what you are buying is for your business otherwise they will assume that it is for personal use. They will assume all paypal income is business sales.

 

[Kiwi1234]

You need to invoices to prove to HMRC that what you are buying is for your business otherwise they will assume that it is for personal use. They will assume all paypal income is business sales.

So I need to attach an invoice to every single purchase I make for a product to be shipping to customer? I am working off aliexpress, similar to ebay or amazon, this is going to take a long time if that's the case.. surely there's an easier way

 

[Scalloway]

You need an invoice for every single purchase. I can't advise on an easier way but if you log in later someone may have a suggestion.

 

[Kiwi1234]

You need an invoice for every single purchase. I can't advise on an easier way but if you log in later someone may have a suggestion.

Alright thank you - do you use an accounting software? As if I have to do the invoices myself, then with high volume (probably 100 transactions a day in the future) then I'm going to need a lot of automation with it.

I was thinking of Xero, Sage, Quickbooks, or something similar, what would you recommend? (or anyone else)

 

[StevensOnln1]

You don't need to send out invoices with your eBay sales unless a customer asks for one. You can download or print all of your sales from eBay or PayPal to keep as records of your income, then just enter the totals each month in your accounts. As Scalloway says, you need invoices or receipts as proof of all your purchases.

 

[Kiwi1234]

You don't need to send out invoices with your eBay sales unless a customer asks for one. You can download or print all of your sales from eBay or PayPal to keep as records of your income, then just enter the totals each month in your accounts. As Scalloway says, you need invoices or receipts as proof of all your purchases.

Alright, so as a final "bank balance" income figure, I can give a single figure, but then within that I need to print off all paypal transactions to prove the figure? Or is there accounting software that can do it easier? - for example using Xero which will have all the transaction IDs, customer names, items etc as proof in its system?

 

[StevensOnln1]

Your income figure almost certainly won't relate to your bank balance. You don't need to print every transaction, just the monthly statement which summarises who paid you, how much and the fee paid to PayPal for each transaction. You then enter the total income for the month in Xero and the total fees under bank charges. There is no requirement to keep any more detailed records than that unless you need stock control etc or you have other sales outside of eBay.

 

[Kiwi1234]

Your income figure almost certainly won't relate to your bank balance. You don't need to print every transaction, just the monthly statement which summarises who paid you, how much and the fee paid to PayPal for each transaction. You then enter the total income for the month in Xero and the total fees under bank charges. There is no requirement to keep any more detailed records than that unless you need stock control etc or you have other sales outside of eBay.

Alright thanks a lot for the information - well yes I mainly sell via Shopify - which is my own websites. Not sure if the requirements are any different there, but through paypal I Assume it would be a similar procedure? The rest get paid via bank deposits every few days so that should be easy enough to sort.