Small Ebay business help??
Discussion
Hi All.
I need some help and advice on something that is slowly starting to drive me insane.
about 4 months ago I set up a small ebay business selling Nintendo DS pens & Ipod headphones.
It started great taking about £20 every day, which took about an hour every evening to fulfill and post out envelopes, however in the last 6 weeks it has gone mental, I am now making £100 a day in orders and it is taking over my life, bearing in mind I have a 9 - 5.
Anyway apart from the fact its taking over my life and it was just a bedroom hobby, I have come to realise that there may be a slight problem with the TAX and VAT man which I will need to sort out asap.
So the ebay business and paypal accounts are all registered in my partners name and address, reason being is that I was banned from ebay about 6 years ago for not paying my ebay and paypal fees, therefoe all the money I make goes into her bank account and then over to my account where I am paying off all my debts which is great.
So I now need to find out if I need to be paying VAT and Tax, I dont have a clue about this and how its going to affect me, I have not really kept any books or any records of transactions but I suppose they could all be dug out.
I inport all my pens and headphones from Hong Kong I have only bulk ordered twice but I will need to make another order vairly soon as stock is running low.
So anyway I need to find out what I need to be doing and how I go about doing it as I have turned over £3,000+ in the last 4 months now which I believe is the legal threshold.
Advice please
I need some help and advice on something that is slowly starting to drive me insane.
about 4 months ago I set up a small ebay business selling Nintendo DS pens & Ipod headphones.
It started great taking about £20 every day, which took about an hour every evening to fulfill and post out envelopes, however in the last 6 weeks it has gone mental, I am now making £100 a day in orders and it is taking over my life, bearing in mind I have a 9 - 5.
Anyway apart from the fact its taking over my life and it was just a bedroom hobby, I have come to realise that there may be a slight problem with the TAX and VAT man which I will need to sort out asap.
So the ebay business and paypal accounts are all registered in my partners name and address, reason being is that I was banned from ebay about 6 years ago for not paying my ebay and paypal fees, therefoe all the money I make goes into her bank account and then over to my account where I am paying off all my debts which is great.
So I now need to find out if I need to be paying VAT and Tax, I dont have a clue about this and how its going to affect me, I have not really kept any books or any records of transactions but I suppose they could all be dug out.
I inport all my pens and headphones from Hong Kong I have only bulk ordered twice but I will need to make another order vairly soon as stock is running low.
So anyway I need to find out what I need to be doing and how I go about doing it as I have turned over £3,000+ in the last 4 months now which I believe is the legal threshold.
Advice please
For a start, you are trading so you are under a legal obligation to notify the Revenue that you are doing so. You should have done this within three months from the date of commencement of the trading so you could already be due a £100 fine for late notification.
If your PROFIT (not "sales") from trading is going to be less than £4,825 for tax year 2008/09. you can apply for exemption from having to pay the Self Employed Class 2 National Insurance Contributions. However, you must APPLY for this exemption. You cannot assume it automatically.
Depending on when you started, you might have been under an obligation to complete a 2007/08 Self Assessment tax return. The filing date for this was 31 January 2009. If there was any tax liability arising on your 2007/08 trading profits. That was also due and payable on 31 January 2009 and any unpaid amounts will be attracting interest as we speak. If the amount of tax due remainms unpaid at 28 February, a further 5% surcharge will be levied.
Secondly, you have set the business up in your girlfriend's name which is extremely naughty as you could be landing her with all these problems. After six years, I would suggest that ebay should be able to reinstate you on their system - do they ban people for life?
VAT should not be an issue for you as you are not obliged to register for VAT unless your annual turnover (sales) exceeds £67,000).
If your PROFIT (not "sales") from trading is going to be less than £4,825 for tax year 2008/09. you can apply for exemption from having to pay the Self Employed Class 2 National Insurance Contributions. However, you must APPLY for this exemption. You cannot assume it automatically.
Depending on when you started, you might have been under an obligation to complete a 2007/08 Self Assessment tax return. The filing date for this was 31 January 2009. If there was any tax liability arising on your 2007/08 trading profits. That was also due and payable on 31 January 2009 and any unpaid amounts will be attracting interest as we speak. If the amount of tax due remainms unpaid at 28 February, a further 5% surcharge will be levied.
Secondly, you have set the business up in your girlfriend's name which is extremely naughty as you could be landing her with all these problems. After six years, I would suggest that ebay should be able to reinstate you on their system - do they ban people for life?
VAT should not be an issue for you as you are not obliged to register for VAT unless your annual turnover (sales) exceeds £67,000).
Thanks Eric.
In regards to the setting up of the business, I believe I had an ebay account since July last year, this was just a personal ebay account for myself, however I started actively trading in September / October.
So I should notify Inland Revenue now, or should I try and put it all in my name first?
I am worried about contacting ebay and putting it all back into my name as they could then just turn around and close the whole thing down for me which would be devestating.
I say the business is set up in her name, its only the ebay account and paypal account is set up in her name and the money goes into her bank account.
Im worried now!
In regards to the setting up of the business, I believe I had an ebay account since July last year, this was just a personal ebay account for myself, however I started actively trading in September / October.
So I should notify Inland Revenue now, or should I try and put it all in my name first?
I am worried about contacting ebay and putting it all back into my name as they could then just turn around and close the whole thing down for me which would be devestating.
I say the business is set up in her name, its only the ebay account and paypal account is set up in her name and the money goes into her bank account.
Im worried now!
And you should be 
.
The arrangement between you (or your partner) and ebay is your business to sort out. In reality, YOU are trading and it's YOU who needs to notify HMRC.
You started formally trading in September 2008 so you should have notified HMRC by 31 December 2008. I would still go ahead and let them know what you are doing. When did you receive your first proper "income" from the ebay trading? That might be a bit later and could push the start date a bit further along.
You commenced in tax year 2008/09 so you have not missed out on a Self Assessment tax return. The first SA return you will need to complete is one for 2008/09 and that is due to be submitted to HMRC by 31 October 2009 (if submitting a paper return) or 31 January 2010 (if filing the return electronically).
Tax due for 2008/09 is payable by 31 January 2010.
.The arrangement between you (or your partner) and ebay is your business to sort out. In reality, YOU are trading and it's YOU who needs to notify HMRC.
You started formally trading in September 2008 so you should have notified HMRC by 31 December 2008. I would still go ahead and let them know what you are doing. When did you receive your first proper "income" from the ebay trading? That might be a bit later and could push the start date a bit further along.
You commenced in tax year 2008/09 so you have not missed out on a Self Assessment tax return. The first SA return you will need to complete is one for 2008/09 and that is due to be submitted to HMRC by 31 October 2009 (if submitting a paper return) or 31 January 2010 (if filing the return electronically).
Tax due for 2008/09 is payable by 31 January 2010.
Edited by Eric Mc on Tuesday 10th February 11:37
Ok so all I need to be worried about now is keeping a book of all transactions going forward etc.
As for notifying HMRC could I not just let them know I am running an ebay business but in my partners name.
Could I not just set up a small business in my name which operates using ebay but in her name?
As for notifying HMRC, how the hell do I do that?
As for notifying HMRC could I not just let them know I am running an ebay business but in my partners name.
Could I not just set up a small business in my name which operates using ebay but in her name?
As for notifying HMRC, how the hell do I do that?
JonX2C said:
Ok so all I need to be worried about now is keeping a book of all transactions going forward etc.
As for notifying HMRC could I not just let them know I am running an ebay business but in my partners name.
Could I not just set up a small business in my name which operates using ebay but in her name?
As for notifying HMRC, how the hell do I do that?
It's either your business or her business - unless you want to complicate matters by turning it into a business partnership - which I wouldn't recommend as the business is still pretty small. You have no authority to notify to HMRC someoe else as the "named" proprietor of "your" business.As for notifying HMRC could I not just let them know I am running an ebay business but in my partners name.
Could I not just set up a small business in my name which operates using ebay but in her name?
As for notifying HMRC, how the hell do I do that?
As I said, how you chose to handle your ebay situation is down to you and your partner - but the Revenue will want YOU to own up to YOUR business.
Notiying is easy - there is a contact number in the telephone directory and Yellow Pages. Just look up under HM Revenue and Customs or Inland Revenue.
It's not a question of registration.
As I said, you need to NOTIFY (by phone - it's easy) HMRC that you commenced a sole trading business on a certain date.
That is all you have to do at the moment.
A limited company is a different type of business vehicle that is often set up by traders who want to limit their exposure to financial risk i.e. by limiting their personal liability. It is something you might want to do at a later date - especially if the business grows and becomes successful but at this stage in the proceedings it would probably be a bit of overkill to try to operate through a limited company set up.
Many, many businesses operate as simple sole-traders without ever feeling the need to incorporate as a limited company.
As I said, you need to NOTIFY (by phone - it's easy) HMRC that you commenced a sole trading business on a certain date.
That is all you have to do at the moment.
A limited company is a different type of business vehicle that is often set up by traders who want to limit their exposure to financial risk i.e. by limiting their personal liability. It is something you might want to do at a later date - especially if the business grows and becomes successful but at this stage in the proceedings it would probably be a bit of overkill to try to operate through a limited company set up.
Many, many businesses operate as simple sole-traders without ever feeling the need to incorporate as a limited company.
Edited by Eric Mc on Tuesday 10th February 12:25
I'd just add that it will keep things much simpler if you have one bank account which is used solely for your business. Business income and expenditure goes in and out; anything not related to the business goes elsewhere. Sole trading is very simple; I've done it for years. But set your systems up correctly to start with.
You deffo need to set up a "trading as" bank account just to keep things clear.
Picking out business activity to personal activity in your partners account will be a nightmare and get harder and harder the longer you leave it.
Get an accountant, if you arnt sure on what is being said on this forum, speak to a local accountant and get him/her to keep you on the financial straight and narrow.
As boring as it sounds you must keep your financial info as straight as possible becasue if there ever was an investigation 9/10 times the HMRC would find something wrong and YOU would end up footing the bill. Remember as well you are technically self employed trading under you own name so you are personally liable for anything that went wrong (defective products, fine from HMRC etc).
I can understand why eBay would close your account due to non payment of fees but why PayPal? You dont have any "credit" fee's to pay on PayPal as such and you can use it totally independently of ebay. Are you sure there wasnt something else dodgy you did?
Picking out business activity to personal activity in your partners account will be a nightmare and get harder and harder the longer you leave it.
Get an accountant, if you arnt sure on what is being said on this forum, speak to a local accountant and get him/her to keep you on the financial straight and narrow.
As boring as it sounds you must keep your financial info as straight as possible becasue if there ever was an investigation 9/10 times the HMRC would find something wrong and YOU would end up footing the bill. Remember as well you are technically self employed trading under you own name so you are personally liable for anything that went wrong (defective products, fine from HMRC etc).
I can understand why eBay would close your account due to non payment of fees but why PayPal? You dont have any "credit" fee's to pay on PayPal as such and you can use it totally independently of ebay. Are you sure there wasnt something else dodgy you did?
Yes - on the assumption that you are making taxable trading profits from this activity. Just because you sell the odd item on e-bay does not in itself mean you are genuinely trading. Yoiu have to be buying and selling with a view to making a profit.
Edited by Eric Mc on Wednesday 11th February 14:12
Jon,
I think there in another point to be made.
You say that this hobby is driving you mad. I think you need to read Tim Ferris' book. His website is http://www.fourhourworkweek.com.
His book will show you how to set up drop shipping so that you do not even need to see the product or deal with the sales admin. You can simply take the profit!
I also think you need to do some sums. Lets assume you are making £100 per day or £36,500 per annum. You go to work nine to five, traveling cost £10 per day plus lunch £5 if you only eat a sandwich. £15 times 5 is £75 per week and there are say 47 working weeks in the year. Cost of going to work is therefore £3525 plus taxes .....£4582.50.
Unless you earn more than £36500 plus £4582.50 ie. £41082.50 pa you should consider quitting your job to concentrate on your hobby!
If you follow Tim's method of automating your sales process from ebay you could then stay at home and build your business. He also has some handy suggestions for staying at home, running your hobby and keeping your old job!
I think there in another point to be made.
You say that this hobby is driving you mad. I think you need to read Tim Ferris' book. His website is http://www.fourhourworkweek.com.
His book will show you how to set up drop shipping so that you do not even need to see the product or deal with the sales admin. You can simply take the profit!
I also think you need to do some sums. Lets assume you are making £100 per day or £36,500 per annum. You go to work nine to five, traveling cost £10 per day plus lunch £5 if you only eat a sandwich. £15 times 5 is £75 per week and there are say 47 working weeks in the year. Cost of going to work is therefore £3525 plus taxes .....£4582.50.
Unless you earn more than £36500 plus £4582.50 ie. £41082.50 pa you should consider quitting your job to concentrate on your hobby!
If you follow Tim's method of automating your sales process from ebay you could then stay at home and build your business. He also has some handy suggestions for staying at home, running your hobby and keeping your old job!
I having been selling on ebay as a sideline for a few years - 99% of the time when you start doing well with a product competitors WILL catch on and undercut you - so I would not quit they day job yet - just work out how to manage your ebay business more efficiently - (pack products ready to go) etc. Good luck.
THere is no point in me quitting the day job.
I do earn a healthy salary and it gets me lots of international travel,
Im only 24 as well so there is no point in packing things up to soon.
The financial crisis in effect is helping me more than most as I head up European sales for a well know Financial Risk magazine which is doing very well on the back of this crisis and as long as the comission is coming in like it is at the moment im not going anywhere.
The money being made from ebay is just being used as extra beer money, and to build some savings as I dont manage to save much living in central London.
I will however look at the book you mentioned.
But yes the after hours hours are taking its toll and starting to run me down a bit.
However I have just managed to get my bronze powerseller within 2 months of operating properly so im quite happy with the way things are going.
Drop shipping could be an idea, not sure how I would do it, but will look into this.
With my next bonus i might just buy mass amounts and then sell them on to other ebay hopefulls looking to make a few quid on the side.
I do earn a healthy salary and it gets me lots of international travel,
Im only 24 as well so there is no point in packing things up to soon.
The financial crisis in effect is helping me more than most as I head up European sales for a well know Financial Risk magazine which is doing very well on the back of this crisis and as long as the comission is coming in like it is at the moment im not going anywhere.
The money being made from ebay is just being used as extra beer money, and to build some savings as I dont manage to save much living in central London.
I will however look at the book you mentioned.
But yes the after hours hours are taking its toll and starting to run me down a bit.
However I have just managed to get my bronze powerseller within 2 months of operating properly so im quite happy with the way things are going.
Drop shipping could be an idea, not sure how I would do it, but will look into this.
With my next bonus i might just buy mass amounts and then sell them on to other ebay hopefulls looking to make a few quid on the side.
Paypal may have 'closed' your account if you exceeded the turnover threshold - anti-money-laundering and all that. You can unlock it but you need to give them lots more information. Arguing with Paypal is like arguing with a traffic warden; if you want to use them, you have to play by the rules, even if you don't like them.
More imporantly, by the time you've paid eBay and Paypal fees you could be losing 15% of turnover, and much more of profit margin.
More imporantly, by the time you've paid eBay and Paypal fees you could be losing 15% of turnover, and much more of profit margin.
D Stanley said:
Jon,
I think there in another point to be made.
You say that this hobby is driving you mad. I think you need to read Tim Ferris' book. His website is http://www.fourhourworkweek.com.
His book will show you how to set up drop shipping so that you do not even need to see the product or deal with the sales admin. You can simply take the profit!
I also think you need to do some sums. Lets assume you are making £100 per day or £36,500 per annum. You go to work nine to five, traveling cost £10 per day plus lunch £5 if you only eat a sandwich. £15 times 5 is £75 per week and there are say 47 working weeks in the year. Cost of going to work is therefore £3525 plus taxes .....£4582.50.
Unless you earn more than £36500 plus £4582.50 ie. £41082.50 pa you should consider quitting your job to concentrate on your hobby!
If you follow Tim's method of automating your sales process from ebay you could then stay at home and build your business. He also has some handy suggestions for staying at home, running your hobby and keeping your old job!
One of the fundamentals of business is understanding the difference between turnover and profit. The O/P (recently) has noticed an increase in sales to £100 a day. I think there in another point to be made.
You say that this hobby is driving you mad. I think you need to read Tim Ferris' book. His website is http://www.fourhourworkweek.com.
His book will show you how to set up drop shipping so that you do not even need to see the product or deal with the sales admin. You can simply take the profit!
I also think you need to do some sums. Lets assume you are making £100 per day or £36,500 per annum. You go to work nine to five, traveling cost £10 per day plus lunch £5 if you only eat a sandwich. £15 times 5 is £75 per week and there are say 47 working weeks in the year. Cost of going to work is therefore £3525 plus taxes .....£4582.50.
Unless you earn more than £36500 plus £4582.50 ie. £41082.50 pa you should consider quitting your job to concentrate on your hobby!
If you follow Tim's method of automating your sales process from ebay you could then stay at home and build your business. He also has some handy suggestions for staying at home, running your hobby and keeping your old job!
Another fundamental is sustainability - six weeks of £100 a day sales, does not warrant believing you have £36500 turnover a year.
The next one is there is a big difference between a hobby - as it is at the moment - making some extra cash and it being a business and thus subject to tax, possibly VAT, accountancy costs, etc.
Finally, as the o/p is no doubt aware - but you may not be, ebay is an extremely volatile market. It only takes someone to sell at 1p less than you for the bulk of your sales to go there. Also, ebay is not the place for drop shipping as your feedback relies on prompt delivery, quality items, and having the stock in hand - none of which you will have control over with a drop shipper.
Edited by pgilc1 on Thursday 12th February 13:09
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