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if you're looking to get an understanding of how to do your bookkeeping for your ebay business then this video is for you let's go [Music] what's going on people welcome back to my channel if you're new my name is sam and what i do here is break down various different tips and tricks to help you make money online but in today's video what i'm going to be doing is giving you a quick basic understanding of everything you need to be aware of when it comes to doing bookkeeping for your ebay business in 2022 the same methods that i'm going to go through right now when it comes to doing bookkeeping are the same ones that i've been using for the past three four five years for my ebay business so even if you're watching this in 2023 or 2024 you're still going to be able to use everything that i'm going to teach you in this video as always i don't waste any more time i want to jump straight into it so if you find any value in the video don't forget to press the like button don't forget to subscribe hit the bell notification let's get right into the video so first and foremost for anyone out there that's not aware what exactly is the definition of bookkeeping so bookkeeping is simply the activity that you're going to be doing every week every couple weeks every month to make sure that you're keeping the right records for the money that's moving in and out of your business so bookkeeping is very important when it comes to doing your taxes because if you haven't been doing the right bookkeeping every single month for your business then it's going to be complicated when it comes to tax season because you're ever going to be rushing to do your bookkeeping for a whole year's worth at one time or you're going to get the numbers incorrect and you're going to be either paying more tax than what you should do or you're going to be paying less tax than what you should do which could also lead into some sort of problem so it's very important that you make sure to do the right bookkeeping for your ebay business and this video is going to be basically me breaking down how i've been doing bookkeeping for my ebay business for the past few years so there's two different types of ebay sellers there's one that will have a limited company and there's one that will be a sole trader so depending on which type you are it's going to depend on which type of bookkeeping you need to do so a sole trader essentially doesn't have a limited company and they're basically selling as an individual however if you have a limited company you're gonna have to do a few more things when it comes to doing your bookkeeping you're going to have to do a profit and loss statement as well as doing a balance sheet every single month however when you're a sole trader all you need to do is calculate how much profit you made you don't necessarily have to do a balance sheet now a profit and loss statement is self-explanatory essentially you're just going to be calculating how much profit or loss you made with your business and depending on what profit you made or what loss you had with your business is going to depend on what taxes you're going to have to pay and the balance sheet essentially shows the value of your business is going to show exactly how much your business is worth and this is simply calculated by the assets minus liabilities equals the equity within your business so if you're a sole trader and you haven't necessarily registered your ebay store as a limited company you don't have to worry about the balance sheet all you need to do is calculate exactly how much profit you made all right so what we're going to be looking at now is the free bookkeeping steps for profit and loss all right so the first step is that you need to export bank statement and reports from ebay so when i do my bookkeeping every single month for my ebay business what i do is i export the statements from my business bank account my business credit cards as well as the report from ebay and the reason why i do this is because these are all the places where money is passing in and out of now of course if money is moving in and out of a different place for you then you also need to export that but for me it's mainly my bank accounts credit cards and my ebay statements that's why i'm going to be able to get all of the numbers that i need so you need to make sure that you figure out exactly where money is moving in and out of your e-commerce business but if you are selling on ebay and it's going to be these main places your bank accounts your ebay report as well as any business credit cards that you're using so when it comes to exporting the statement from your ebay account what you need to do is log into your ebay account you're going to see payments at the top right here you're going to click on reports right here and then you're going to see this page and then what you need to do is export it on a month to month basis so i've already exported it from the first to december 2021 to the 31st of december 2021 and you're gonna be able to download it right there now the reason why you want to do it on a month-to-month basis is because it makes it easier when it comes to doing your bookkeeping because you can just remember at the end of the month and it also makes things a little bit more easier when it comes to your financial statements which i'm going to show you in a minute so once you've exported or downloaded the report from your ebay account you now need to do the same thing with your bank account make sure that you log in and export it for the same day so if you're doing it from the first of december 2021 export the same statement from your bank account and make sure that it's an excel format and once you've got all the statements ready for all the money that moved in and out of your business right in front of you what you now need to do is insert the numbers into a spreadsheet so this right here is an example of a spreadsheet that i like to use when it comes to doing my profit and loss every single month for my business so whether you're a limited company or you're a sole trader you can use something very similar to this and this is going to help you on a monthly basis to see exactly where your money's coming from where your money's going and exactly how much profit you made so the way that it works is very simple all you need to do is look at your statements so once you've exported them you're going to see you know all the money that came in for your ebay business so you're going to put that right there so let's say for example you made 2 000 pounds or 2 000 with your ebay business you're going to put it right there and because i use this spreadsheet for my e-commerce business in general that's the reason why it says amazon revenue and shopify revenue so for me i would put something like two thousand dollars again for amazon revenue and maybe four thousand dollars for shopify revenue and then shipping fees so this is the shipping fees that i collected for my customers so every time i charge a shipping fee you know for the international customers that pay me a shipping fee i'm gonna put that right there because that's money that came into my business and by the way this section right here is for all the money that came into my business so i'm going to enter all of this first so for example let's say if i made 500 for any shipping fees and other income so this is for like direct sales that came directly into my business not through a particular platform because some customers like to buy items over the phone some customers like to send me money directly to my business bank account and then i ship it out to them so with these customers let's say if it was 300 so as we can see right there the total revenue after returns is around eight thousand eight hundred dollars so in this section right here you need to enter the cost of goods so if you're not sure exactly what cost of goods is because i know when i first started my e-commerce business i wasn't really too sure in this as well but a simple definition of cost of goods basically refers to the direct cost of producing the goods sold by a company that generated the revenue this amount will include the cost of materials and labor to produce the actual product that was sold so basically in this section right here you need to work out exactly how much it cost you for you to make this amount of money so if you bought a product for let's say 10 and you sold it for 30 you need to calculate all of that in this section right here and by the way guys this video is just to give you a basic understanding of what you need to do when it comes to calculating your profit and loss i may make another video down the line breaking down in detail how to do this but i just want to give you an understanding because from what i'm telling you in this video you should be able to go away and do your profit and loss calculations yourself so in this section right here i'm just going to enter some random numbers and as you guys can see right there the spreadsheet has already calculated the gross profit amount which is this amount right here as well as the gross profit margin which is 65 this spreadsheet has already got formulas in it so whenever i enter the details of the numbers into these sections right here it calculates everything for me in terms of the gross profit margin right here we've got the operating expenses as you can see ebay fees shopify fees amazon fees packing supplies etc any other costs that are associated with your business you're going to insert it into this section right here so i've just entered in all of these different random numbers right here it's giving me the total operating cost as well as the operating profit so whenever i do the bookkeeping for a particular month i always make sure that i've entered in the right details because once i finish with it i don't necessarily come back to double check it after i've done it so i need to make sure that at the time when i'm doing it i need to make sure that everything is correct because next month i'm not gonna have to enter all the numbers for february and in march april and so on and at the end of the year i don't want to have to now double check every single month i want to be able to know that everything is done right all the formulas are right everything is correct so that i know that the amount that i'm gonna have to pay in corporation taxes or just general taxes if i'm a sole trader is correct and i don't have to spend too much time double checking everything after i've already spent all this time doing it don't forget if you registered your ebay business as a limited company in addition to doing your profit and loss every single month you also need to do your balance sheet as well i didn't want to go too much into the balance sheet in this video otherwise this video would have ended up being two hours long so i just wanted to give you the basics of profit and loss but if you do want me to make another video breaking down exactly how you need to structure your balance sheet for your ebay business then put in the comments down below do the balance sheet video and i'll make that video asap and if you wanna watch a video that i made not too long ago where i broke down most of the things you need to know when it comes to doing your taxes as an ebay seller you can click right there if you enjoyed this video then you're definitely going to enjoy that one because it's going to give you a little bit more information that you need to know when it comes to doing your taxes if you enjoyed this video don't forget to press the like button don't forget to subscribe as well hit the bell notification so that youtube can let you know when a new video has been released all right guys i'll see on the next one make sure you stay safe out there peace [Music] you