Bookkeeping is a crucial part of financial management for any small business. It’s the process of recording your business transactions for tax reporting and understanding your financial position. But it can feel confusing when you’re not a natural at mathematics. With a small eBay shop, you may want to simplify the process as much as possible. 

This guide will cover simple bookkeeping for your small eBay shop, including: 

  • Separating finances
  • Recording transactions 
  • Understanding your cash flow
  • Tracking invoices and inventory 
  • Preparing for taxes 
  • Finding accounting software

Separating your eBay business finances

The first step to simplify your eBay bookkeeping is by separating your business finances from your personal ones. To do this, open a business current account for your eBay shop. It’s just like a regular bank account, but specifically for your business. This account can help you track your transactions for your bookkeeping records. 

When choosing a business account, you may want to pick one that does more than hold your funds, like Countingup. Countingup is the business account with built-in accounting software that can separate your business finances and bring everyone in one place.   

Recording your transactions for your eBay business 

Your business current account can help you with the most important part of bookkeeping: recording your transactions. To stay on top of your finances, you’ll need to put in time each day to update the sales and spending of your business. 

Creating a ledger 

For simple bookkeeping for eBay, consider keeping a physical and digital ledger for your transaction. This way, if something goes wrong, you’ll have updated backup information. To stay on top of this efficiently, update your transactions each day, including sales, inventory, amounts, dates, and other expenses. The more detailed your record-keeping, the easier it will be to track.  

Taking time

By putting in half an hour a day, you can have clear records of any financial transactions for your eBay shop. Plus, since your business is online and your eBay account keeps records of your sales, you can easily pull this information to update your records. To make records easier to follow, consider highlighting expenses in red and earnings in green.

Using tools

Luckily, Countingup can help you stay on top of everything and easily find and understand transactions for better bookkeeping. With the automatic expense categorisation feature, you can easily track and find your business expenses. Countingup also offers a receipt capture tool that allows you to immediately record proof of your expenses. As a result, you can stay on top of how much you spend.

This information will be necessary when creating your income statement, which shows how much you earn next to how much you spend. An income statement is an essential financial document to understand your eBay shop performance and report accurate taxes income. Plus, you can use your recorded transactions to see how much of a profit you make compared to your expenses and alter your budget accordingly. 

Understanding your cash flow 

On top of recording your transactions, it’s important to be aware of your cash flow. Cash flow is different from revenue. It’s the amount of cash that enters and exits your business over a given time. So if you earn enough of a profit, but the cash comes in from those profits less frequently, you may suffer from poor cash flow. 

It’s essential to have this available cash to cover short term expenses of your business, such as inventory or monthly payments towards your eBay membership. That’s why the Countingup app generates ongoing cash flow insights so you can easily track the money you bring in to meet financial obligations. 

Track your invoices and inventory 

To make sure you bring in the cash from your sales, you’ll need to create and send invoices to your customers. This is especially important since your sales are entirely online, and customers may often pay with credit. For simple bookkeeping for eBay, consider creating a timetable for sending out invoices and using invoice templates to save time. 

But, you can simplify the process even more with Countingup. The app allows you to create and send unlimited invoices on the go. You can even personalise these invoices by adding your logo. Then, the app will automatically match received invoices to payments and notify you when they come in so you can track the cash you earn. 

Similarly, keep a spreadsheet of your shop product inventories. You can track how much you have left of each product as you make sales and ship those products. With clear records, you can see how quickly you go through your stock and when you’ll need to restock. It can also help you manage your business expenses to see how much profit you turn over compared to your inventory costs. 

Preparing for taxes 

As a small business owner, you’ll need to manage your own taxes. You’ll likely need to pay income tax, dividend tax, and national insurance. Plus, you can add your sales tax to the price of your products. Your updated transaction records will help you put together crucial financial documents, such as your income statement, for accurate tax reporting. 

If you don’t have clear and correct records, you could end up paying more than you need to when it comes to tax reasons. But with the right preparations, you can anticipate what you’ll need to pay and set money aside for your tax expenses. 

Again, you can simplify this process with Countingup. The app generates year-round tax estimates that help you prepare for what you owe so you can avoid surprises. You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Simplifying your bookkeeping with the right accounting software

The best way to simplify the bookkeeping of your eBay business is by using the right accounting software. Financial management can indeed be stressful and time-consuming when you’re running your own business. But, the right tools can streamline your bookkeeping process to save you time. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. Not only does this create simple bookkeeping for eBay, but it also helps you better understand your financial performance. 

But the Countingup app does more than just streamline the bookkeeping process; it also helps you understand your money. The app shows you how much to make and spend in a crystal clear way with cash flow insights. These insights can help you plan for better profits and put excess cash aside for growth. 

With these tools, you can confidently keep on top of your business finances wherever you are. 

Start your three-month free trial today. 

Find out more here.