EBay accounting and why it's important to your eBay businessAuthor: Craig Cosford
As an eBay seller you should understand that keeping records of your finances is very important, this article will briefly discuss eBay Accounting and why ot's important to your business. Many sellers start off on eBay without giving a thought to keeping accurate records and this usually results in a massive headache at a later date. Each and every transaction in and out of your business needs to be recorded to keep track of how much profit you are making but more importantly for your tax records. It doesn't really matter which method you use to log your transaction history as long as you can provide this information to the appropriate people at the end of the financial year. For example if you live in the UK you would be required to complete a tax return and submit it to HM Revenue & Customs.
Selling on eBay you will most likely take payments via PayPal. This is a good advantage as PayPal will allow you to download all your sales history (go to history > download history) to a CSV format which can be opened in Excel. The report will show all sales, purchases, refunds, etc. Setting up a spreadsheet to log your sales is probably the easiest solution for most people as it doesn't cost anything however as your business grows you may find that you need something a little more advanced. There are many options available these days and my advice is to just trial them until you find something you are happy using. There are also online accountancy/book-keeping packages you may wish to consider such as http://hubpages.com/hub/kashflow-review">Kashflow which can completely automate your record keeping process saving your hours if not days of your time.
Accounting & book-keeping is also necessary to find out how well (or not) your business is doing. By recording your business transactions you will be able to product a profit and loss report each month which will detail exactly how things are going allowing you to make crucial business decisions moving forward. Seeing money coming into your business it's very easy to assume that things are going great when in reality after all expenses are taken away you are losing money. Having accurate book-keeping will allow you to analyse your business finances and establish areas that can be improved.
Automated online accounting software can really help organise your financial records and save you the headaches. You may wish to take a read of my Kashflow Review to read more about the benefits.