It’s almost the time of year to pay the final tax bill which prompted a visit to my accountant today. This got me thinking – just how does the typical eBayer view their accountant? A while ago in conjunction with another eBayer I wrote a guide “BOOK KEEPING, TAX & BUSINESS REGISTRATION” which examined the basics of keeping financial records. Many sellers on eBay appear to leave record keeping to their accountant and view them as little more than glorified bookkeepers.
Accountants should have a much more active role in a business then simple book keeping and completing a tax return. Discussions with mine today focussed on plans for the last three months of the 2006 – 2007 tax year to minimise next years tax bill. One possible idea is to purchase a motor specifically for business use – commercial vehicles can be fully offset as a business expense, VAT can be claimed back and all servicing and running expenses are deductible. This affects my decision to replace either my car or the 4×4 I currently use and of course purchase of the new vehicle can be done in the most tax efficient way possible.
The other good news from the meeting today is that my accountancy fees for the year will actually be less than previously charged. This is due mainly to keeping records up to date and leaving very little work for my accountant to do. The way I keep records is described in another eBay guide “Basic Excel Accounts and Book Keeping for eBay Sellers“. By keeping records all my accountant has to do is tally the columns and include allowances for which there isn’t a direct cost – like use of my home office.
To hand over a pile of receipts and sales data to an accountant is wasting their qualifications, book keeping isn’t that onerous if done daily or weekly. Consider them as an expert business advisor and allow them to have input on shaping your business for the future. Don’t make decisions and purchases and then expect your accountant to “get the tax back”. Discuss in advance and find the best way to invest your money in the first place. Use them as the highly paid consultant that they are… you never know, your accountant may turn round and tell you they’re reducing their invoice too.