Sole trader, some book keeping questions. Buying and selling.

Discussion in 'Accounts & Finance' started by amandajoe07, Aug 21, 2012.

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  1. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    Hi My Name is Joe, after having an interest in collecting Militaria for approximately 20 years I decided in mid April this year to give it a go buying and selling it as I saw some niche markets.

    My company name is Fritz and Brits Militaria, I sell German and British Militaria. I am a sole trader. I also have a full time job.

    I buy 50% Online and 50% for cash (Mainly from local markets, antique shops etc but also off private people), I sell almost exclusively online as I realise maximum profits that way as I ship internationally.


    I have been buying and selling since then and it's been going ok. I have been recording everything in huge detail what I've bought sold etc but now I'm increasing volume hopefully by quite a bit. I really want to record just what is required so it is easier.

    I have a few questions,

    1) If I bought say 100 various items for £500 off a seller that I could sell for different values do I have to list each individual item I've bought separately e.g 100 entries? or can I just list 'job lot' £5 per item?

    1) When I sell them individually do I list each one, with purchase price, selling price and costs? Or do I just list the sale price and just inventory what I have left at the end of the year with approximate value?

    3 ) when buying for cash do I write myself an invoice of what bought and cost?

    4 ) If I exchange an item, sometimes for equal value for something that is easier to sell, sometimes for more, how do I record this? Sometimes I even do a part trade + cash how do I work out profits etc?

    5 ) I can get British Militaria over here no problem, I struggle to buy German Militaria at a price I can make money on. In Germany it's very easy to get Militaria I can make money on as I have built up contacts over my years of collecting. I went over this weekend, alone with the sole purpose of buying stock. The hotel, flights, transport around and all the bits I came to is approximately £1000. I will be able to sell everything for approximately £2000 (eventually, there's a lot!), can I put the expenses down legitimately? This was a bona fide business trip!

    I would like to make more trips as it will be a nice little earner and great way to get exotic stock that sells well so I would really like it to be ok.

    6 ) Some items I've had for many years but I wouldn't mind selling them, when I sell theses do I have to pay tax? Some items have increased in value from what I paid, some have also depreciated so it could get complicated! Can I just record as capital introduced?

    What columns should I have in my 'purchase' and sales book?

    Any help would be much appreciated!

    Regards,

    Joe
     
    Posted: Aug 21, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  2. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    One more point, here is how I've been keeping my records but it is long winded as I have blanks in pages until it sells and I have to keep going back and with lots of tranactions this will be very confusing:

    1) 01/05/12 Medal. Bought £50 sold 15/05/12 £100 Costs £11 eBay £4 PayPal. Posted 16/05/12 Profits: £30 all on the same page. It gets confusing as things sell in different orders to bought so not chronological for sales. Referring to different invoices can be confusing!

    How am a best doing it?

    Thanks again,

    Joe
     
    Last edited: Aug 21, 2012
    Posted: Aug 21, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  3. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    Sorry double post!
     
    Last edited: Aug 21, 2012
    Posted: Aug 21, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  4. Eagle

    Eagle UKBF Legend Free Member

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    For bookkeeping purposes, in simple terms you need to record:

    Sales



    If you're going to be a sole trader, you need only record purchases of stock and business equipment, together with other costs like bank charges etc as you can generally offset them against your self assessment tax return.

    Your minimum responsibility to the tax man is simply to declare your income from all sales. Don't concern yourself with profits/margins etc - they're not interested!

    :)
     
    Posted: Aug 21, 2012 By: Eagle Member since: Oct 3, 2004
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  5. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    Thanks for the reply.

    Just for clarity, I don't need to link individual costs to each individual sale? Shall I just do a monthly total of costs inc purchase and sales?

    If anybody can address the rest of the points I would be most great full.

    Many thanks again,

    Joe
     
    Posted: Aug 21, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  6. Scalloway

    Scalloway UKBF Legend Free Member

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    1. You need to keep your purchase invoices. Just list the total in your expenditure.

    2.Keep what records you think are appropriate. I would just list each bank pay in in your cash book.

    3. If the seller won't provide a receipt that will have to do.

    4. Swaps with no cash element can be ignored. If the exchange involves cash one of you should provide an invoice detailing what was involved.

    5. Travel for business purposes is tax deductible. Don't try and charge for a fortnight's holiday just because you spent a couple of hours looking at stuff you might buy.

    6. Any items of your own should be brought in as capital introduced
     
    Posted: Aug 21, 2012 By: Scalloway Member since: Jun 6, 2010
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  7. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    Thanks for the reply!

    Many thanks again indeed, I'm already much more in the know than this morning, and it shows I have been making excessive records that would have been extreamly time consuming as I grow!

    Regards,

    Joe
     
    Posted: Aug 21, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  8. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    If anybody could clarify the points in red above I would be most grateful.

    I'm finding it difficult to grasp the capital introduced and if I calculate it as a profit, cost to the business etc.

    Many thanks,

    Joe
     
    Posted: Aug 22, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  9. Scalloway

    Scalloway UKBF Legend Free Member

    15,127 3,211
    1. Yes

    2. Yes. Just use the Paypal documentation

    3. Then do your own document, date, seller if known, what for, and amount. Head it up "Cash Payment"

    4. You can match it with a zro sales invoice to keep your records straight

    5. If the purpose is business then you can take a companion. Just don't charge anything you spend on them to the business.

    6. In an accounting terms capital introduced would have a matching entry of purchase of goods for resale.
     
    Posted: Aug 22, 2012 By: Scalloway Member since: Jun 6, 2010
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  10. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    Thank you very much indeed!

    I'm much more clued up now and I was really making work for myself the amount of accounts I was keeping!

    Just one final question, I promise.

    End the end of the year what exactly do I do with stock remaining, do I total the approximate value of everything?

    Do I add this anywhere on the self assesment or does the stock just carry over to the next year, then when I sell it for say £100 I just have to pay the £20 tax and £9 Class 4 N.I on the whole amount sold for as it's already been offset as an expense the year before, thus less profit the year before?

    I hope that makes sense!

    Thanks again,

    Joe
     
    Posted: Aug 22, 2012 By: amandajoe07 Member since: Aug 21, 2012
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  11. Anna Chandley

    Anna Chandley UKBF Ace Free Member

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    Joe

    At the year end you value your stock at the lower of cost and net realisable value.

    For example, you purchase an item for £5 which you can sell for £6 then stock value is £5. if you could only sell it for £4 the stock value is £4.

    Where you have purchased job lots then you will have to allocate part of the cost to any items still held as stock.

    The cost of sales to be included in your tax return is

    opening stock + purchases in year - closing stock


    Anna
     
    Posted: Aug 22, 2012 By: Anna Chandley Member since: Jun 2, 2008
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  12. Scalloway

    Scalloway UKBF Legend Free Member

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    At the end of the year you take the value of the stock you have in hand and deduct it from your purchases. When you come to do the next financial year's accounts you will add this amount on to your purchases for the year.
     
    Posted: Aug 22, 2012 By: Scalloway Member since: Jun 6, 2010
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  13. amandajoe07

    amandajoe07 UKBF Newcomer Free Member

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    Fantastic, thank you all so much again!

    Regards,

    Joe
     
    Posted: Aug 23, 2012 By: amandajoe07 Member since: Aug 21, 2012
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