Hi I have a new client who sells jewellery on Ebay and Amazon.
I just want to ask a few questions - some of these have been asked before I've seen but I haven't been able to find the right answer. I am trying to separate between cost of sales and expenses.
I just need someone to check that I have done this right.
Cost of sales
Jewellery parts
Jewellery components
Packaging (what the jewellery is sold as and what it comes in i.e. sealed bags and boxes)
Packing (for postage)
Postage costs - the cost to send the jewellery in a parcel.
Expenses
Paypal fees
Ebay fees (insertion fees and final value fees)
Amazon fees
Thanks in advance for any help on this, much appreciated as always
I have PayPal fees and eBay fees as an indirect cost of sales, my accountant seems to agree, reason being they are only charged as per item sold and value of item, no sale no fee rather than a fixed charge. Amazon I've never dealt with so I really don't know how they charge.
I show Ebay and Amazon fees as sales commissions, and Payal fees as bank charges. Ebay and Amazon are commissions based on the selling price, Paypal is a money transfer system, much like a bank account. Thats just my way of seeing it, and I dont think its a big issue how you present it, so long as you pay the tax man the right amount ;0)
Paypal fees are linked to sales though which is why I don't see them as an overhead. There are so many ways of interpreting things it's hard to tell what's right :P
The fees are linked to the value of the money being transferred - they aren't commissions on the sale, they are bank charges for moving the money. Paypal is not a selling platform. Ebay and Amazon are.
I'm not disagreeing with you just giving you my take on it. Anything that is variable dependent on sales I put as an indirect cost of sales. We have a webshop where the only way you can pay is through paypal so I see it as a cost of sale of sorts. When I enquired with our accountant he agreed (although this could have been just to get me off the phone). My point is that bookkeeping has a certain level of ambiguity and different things can be interpreted differently. I see exactly where you are coming from in that it is a bank account of sorts, and I don't disagree. When we look at our costings we look at what the product cost, how much it costs to send and how much it costs us to receive the money so for my boss it is seen as a cost of sale. Weirdly I also put my credit card fees there as well :)
Hi Steve, not to worry, just giving you the facts about the online platforms. Sorry if the wording of my post seemed punchy, wasn't meant that way, hun!
I don't think it matters ultimately for HMRC, or the accounts.. you should present it in a way that helps you work out your true GP margin. Some prefer one way, others the other way.. gotta make it work for you :)
I'm with Michelle, John and Joanne in that these are bank charges.
I always drop clients PayPal fee's to bank charges (although I do give them a seperate bucket all of their own).
However.....
There are two ways that those bank charges can be treated. Either as steve has done and treat the PayPal charges as a cost of sale or treat them as an expense along with the other bank charges (which is the approach that I take with them and sounds as though Michelle and Joanne do as well).
The reason that there is a choice is that unlike general bank charges there is a constant direct correlation between the sale and the charge.
The key is that no matter how one treats it, it must be treated in the same manner consistently.
So, as I say, everyone is right... But the one's who expense them are more right (oh, look, coincidentally thats what I do with them, lol).
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Oops, the above two responses were'nt there when I started to write the above reply!
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
