Starting A New Business On Ebay

[Elley]

How do I register for hmrc as self employed or business I already have a job where I pay tax and ni this is just part time and do i get all ebay , postal, pay pal fees back at the end of year from hmrc?

[Old_Jim]

Start here https://online.hmrc.gov.uk/registration/newbusiness/introduction You can do it all online.
You need to keep proper books so that you have a record of your income, expenditure and overheads. You also need to choose an accounting date (up to 15 months after you start, most people pick one year after). With an eBay business, your income is the total paid for things you sell, your expenditure is the cost of acquiring the things you sell and your overheads include eBay and PayPal fees, computer costs etc. On your accounting date, you calculate your net profit and you pay tax on that. You declare your profits - as well as your salary and the tax deducted from it - on a self-assessment return (which you can also do online). The tax calculation is to take your salary plus profits, deduct your personal allowance, calculate the total tax, then deduct what you have already paid under PAYE. NI is more complicated. There's a flat rate paid by self-employed people but you may get some back if you've paid enough on your salary.

A session with an accountant will set you in the right direction and should pay for itself in tax saving hints.

[Elley]

So ebay paypal postage costs you will not get back but they will show as expense do you get expenses back

[boxtops]

You don't get them back as such, but if they are legitimate expenses, you show them in your books and they may be offset against your tax liabilities. You would show them as outgoings in your books on the expenses side.

[Elley]

So if I buy something for 50p ebay,post,paypal expense is £1.20 total expense £1.70 profit will be 30p do I pay tax on the. 30p

[black_cat51]

you pay tax on your net earnings

[boxtops]

That transaction would be recorded on your expenditure page under several columns - cost of item 50p. postage costs , ebay/paypal fees should all have separate columns making up the £1.20.

The sale for £2 goes in your income column.

At the end of the year you add up all the columns and declare your profit on the total difference between your income and your outgoings. It's the total profit you will be taxed on, and yes, the 30p would be the taxable amount in that case you quote.

[boxtops]

You need to bear in mind also that if your full tax allowance is currently set against your earned job income, then your eBay business nett profits would be taxed as basic rate (mine's like this at the moment because I have other income sources as well as my paid job).

[Elley]

Final question if my profit is 18k I will have to pay 20%tax which is 3,600 my expenses will be 7200 how much money will I get back

[factor-fiction]

If your profit figure is £18000 that figure surely already allows for your expenses.

[Elley]

Yes this will be a second income will that mean I will pay more tax I'm only gonna make 30p per item profit

[factor-fiction]

If the £18000 is income, you deduct the £8200 expenses from that. If your tax free allowances have already been used up you pay 20% (if that's your marginal rate) on profit figure of £9800

[factor-fiction]

Not sure what you mean by 'more tax' . if your tax allowance has already been used up against your main income you will pay tax at 20% (or 40%) on your net income from the ebay business after allowing for expenses

[factor-fiction]

20% of 30 p is 6p.
If you only sell one item a year i doubt the taxman will be interested. If you sell 10000 a year he will want his 20% of your £3000 profit

[black_cat51]

blimey, what are you going to sell sixty thousand of a year??!

[factor-fiction]

Number plates, I think, black_cat

[black_cat51]

sixty thousand people need numberplates?

[factor-fiction]

I think the selling price is £2 an item (of which costs are £1.70 and profit £0.30), so if the £18000 is income (rather than profit) then it means 9000 items a year, black-cat

[black_cat51]

but she is expecting 18k profit, not income

[boxtops]

I think you are confusing income with profit.

As I said earlier, you list all the costs of making/purchasing each item, which comes to £1.70. You then sell it for £2. Your profit (as you say) is 30p per item. If you sold 9000 of things, that would come to £18000 income, and you set all your expenses/outgoings against that income, to give you the net profit figure. That's what you are taxed on, the net profit.

[boxtops]

..and yes, you will pay extra tax, because the taxman adds up ALL your income including your day job and (as I've said above) taxes the extra income at basic rate, assuming that all your allowances are taken up with your day job.