Record keeping is a critical part of any business, and a task most of us don't like. Without a clear picture of your income and expenses, it is impossible to monitor the financial health of your business and make sound decisions. Many small businesses fail because they choose to ignore or postpone the task of record keeping.
eBay is fun. We all love the shopping, and some of us even like listing and shipping. Keeping accurate and current financial records isn’t anyone’s favorite activity. But neglect this task and it will come back to haunt you. I am speaking from the heart and from experience when I say that if you want to create a home business that will take care of you in the future, you must put a record keeping system in place.
One of the most important reasons to keep thorough records is to enable you to monitor the financial health of your business. Records can help determine if your income is covering your expenses and leaving room for growth. It’s important to keep accurate financial information throughout the year so you’re not stuck with a nasty surprise at tax time. Money in your bank account does not equal success in all cases.
I can’t tell you how many times I have consulted with clients about growing or fine-tuning their business, and they do not know simple numbers like their monthly profit or the amount of money invested in inventory. If you are not keeping track of your numbers, this is a recipe for disaster later. And most importantly, sales does not equal profit. I am shocked at how many eBay sellers don't know what percent of their sales they are actually keeping. Those charts on eBay and Paypal are pretty, they don't account for expenses like office supplies or inventory costs.
You’ll also need financial records if you decide apply for a business loan. The bank will want to review your history to determine your ability to repay the loan. Poor records could result in being turned down for a loan or getting stuck with a higher interest rate.
Good records can also help make tax preparation smoother and less expensive. If you don’t keep track of expenses properly, you may miss out on deductions. CPAs charge by the hour. If your records are not organized, you will pay for more work because the CPA will need more time to sift through your documents to find information to complete your returns.
Staying organized saves time. If you don’t ever get behind, you won’t have to spend days getting caught up. Plus, you’ll be ready for any business opportunities that may pop up. To stay current, it’s important to have a good system in place.
If you are selling on eBay, you must report the income on your taxes. Use a system that keeps information accessible so you can quickly find what's needed to do your taxes, or what your CPA asks for.
I recommend the eBay and Amazon Esales Tracking Spreadsheet. It was developed by a bookkeeper has also been an eBay and Amazon seller for years. This will be my 5th year using Vickie's spreadsheet and it does everything I need. Vickie’s customer service is unmatched. If you aren’t Excel savvy, she will help you get started. The spreadsheet works on both PCs and MACs and Vickie is always responsive to questions if you need help.
The regular cost of the spreadsheet is $29.97, but Vickie is offering a special 25% discount from January 7 – 10 for my readers. She is also including some freebies if you purchase during this time:
- Inventory to list form: jot down the highlights of your thrifting or garage sale-ing trips so you don’t forget the details
- Master password log: For those zillion passwords you have scattered all over the place!
- Master to do list: A great way to prioritize everything you need to do today or this week
Please don’t wait until April to start getting eBay financial information in order. Save time and frustration by starting now and tackle this project during the slow month of January. When April rolls around, you will be all set!