@natalie*rose*designs
What @luckythewinner said!
I have Excel an old computer but not on the other ones, so I use Open Office "Calculate". It is set up pretty close to the way Excel runs and one can't beet the free price. So learning Calculate should put you in good stead if you have to switch to Excel.
I assuming you are a small seller without tens of transactions each day? When you get that big there maybe commercial software that can help. Just remember one needs to spot check the software to make sure imports, calcs, etc are being done correctly!
Learning how a spreadsheet works and setting up the spreadsheet is the hardest part. However, once you get it set up, it is easy to maintain and a breeze to "collect" the information off of the spreadsheet! Just don't forget to save it after every transaction or use! Rookie mistake is entering a bunch of info and then getting distracted and closing the program and all changes/entered data is lost! So watch for that!
BUT for it to work well, you need to set it up and use it ALL year and update it with every transaction, not just put numbers in at the end of the year!
An easy set up for a spreadsheet might have columns that are:
- identifiers (item sold, eBay number, etc)
- Price Paid buy Buyer (including shipping)
- Let the sheet calculate: eBay fees & PP fees since those are known formulas
- Amount of shipping I paid for.
- Price paid for the item (if bought bulk, I keep a record of how I divided up the costs to each item)
To the right of that the sheet can calculate gross profit for the transaction. and one can add columns that show the Cost of Goods Sold, COGS (price paid for item, fees, shipping). Finally I keep a running total of the fees due eBay as a check on the monthly invoice to make sure there isn't a slip up there!
First I can see the "gross profit" of each transaction. This is helpful as one can quickly see that on low priced items they earned say $5. Since it takes at least an hour to photograph, list, price, source and package items one can quickly see determine if they want to work for $5/hr?
Then at the bottom of the columns one adds up the total for the column. This way one can check the the total sales versus eBay's figures and over all gross profits for the year as well as %s or COGS, % spent on Shipping etc.
THEN one needs a separate tab or SS that is a journal of business expenses (what was paid for bubble wrap, boxes, washi tape, shipping tape, labels, photographic equipment). Any time money is spent on the "business" note the date, item, price with shipping and keep a receipt or copy. In fact, I often drive my packages to the PO, FedEx or UPS Store to get them scanned and keep a record of those trips and the mileage and use the IRS allowed 58-cents per mile as a business expense!
Keeping this information and going/updated each week is a lot easier than trying to find receipts later and enter all of that info in one BIG effort. I close out every sale after shipping by going into my spreadsheets and updating them. Takes 5-10 minutes and saves a HUGE amount of time come tax time.
Finally one can create a "mini" Income Statement from the data by linking to the spreadsheets or tabs:
Sales
-COGS
-Transport
Operating Profit
-Overhead/Business Expenses
= Net Income
You are taxed on the Net Income so this is what you want. Plus you you can take the info from here and add it directly to the Schedule C. But also it helps remind you to keep track of EVERY business expense!
Hope this helps!
mam98031 • Volunteer Community Member • Buyer/Seller since 1999
