eBay Charges, VAT Return and Bank Reconciliation

Raas

Hi everyone, I have a client, runs part worn tyres business, vat registered, sells tyres on eBay. eBay deduct their charges including vat from the sale and transfer rest of the money to business bank account of the trader. my question is, If I use the sale figure from the Bank statement and enter eBay charges for VAT return purposes. In this case bank statement will reconcile but it means eBay charges will be deducted from the net sale twice and it will be wrong. If I increase sale by what the eBay fee charged then bank wont reconcile. Can any one help me, are there anything I am not considering? Your help will be much appreciated. I want to do VAT return and wants bank to be reconciled as well. Thank you.

shamilkaria

@Raas

Hi, hope you are well?

I am not too sure what accounting software you use but this is how I may do it not 100% sure if right though.

I'm not sure if you have just one Sales Ledger account called eBay and every customer purchase goes through that or you have a Sales Ledger account for each customer. But in general I would raise the Sales Invoice in the ledger at Gross full price of what they sell it at (Including Vat). Then raise a Sales Credit Note for the invoice raised which will hit the eBay charges nominal code, again making sure including Vat charges. When you allocate this into the bank you will get the gross less the eBay charges which should balance back to the amount you have received into your bank from eBay

Hope this helps

Shamil

Raas

Thank you very much Shamil. I use VT transaction for accounts production.

shamilkaria

Hi @Raas

Thank you for letting me know about the software you use. How did you manage to process the eBay transactions on your system? Did my suggestion help you out?

Kind regards

Shamil

WarrenJAllen

> @shamilkaria said:
> @Raas
>
> Hi, hope you are well?
>
> I am not too sure what accounting software you use but this is how I may do it not 100% sure if right though.
>
> I'm not sure if you have just one Sales Ledger account called eBay and every customer purchase goes through that or you have a Sales Ledger account for each customer. But in general I would raise the Sales Invoice in the ledger at Gross full price of what they sell it at (Including Vat). Then raise a Sales Credit Note for the invoice raised which will hit the eBay charges nominal code, again making sure including Vat charges. When you allocate this into the bank you will get the gross less the eBay charges which should balance back to the amount you have received into your bank from eBay
>
> Hope this helps
>
> Shamil


I agree this is one way of tackling this, but it could prove a lot of admin work if there is a large volume of sales.

I think perhaps a slightly more efficient way to do this would be to run a monthly sales report from eBay (I’m sure there will be one) and post journals.

CR Sales (P&L) with Net Sales
CR VAT (Output) (BS) with VAT on Sales
DR eBay Sales Awaiting Settlement (BS) Gross Sales

eBay should also provide an invoice for the value of their fees, which can be entered as a journal too.

DR Platform Fees (P&L) Net Fees
DR VAT (Input) (BS) with VAT on Fees
CR eBay Sales Awaiting Settlement (BS) Gross Fees

Once the payment comes in from eBay you can post the appropriate journal/cashbook journal to record the receipt:

DR Bank Account (BS) with Gross Receipt
CR eBay Sales Awaiting Settlement (BS) with Gross Receipt

This way you’ll only have to do the postings once a month. It will ensure you always know how much is owed by eBay at each month end. When there’s a high volume of sales it’s very rare that the payments into the bank align perfectly with sales as there may be multiple sales settled in a single payment.

That’s how I’d tackle it anyway! Let me know if you’d like me to clarify anything, assuming this is remotely helpful!

shamilkaria

@WarrenJAllen

@Raas

Hi Warren

That's well explained and the better way of doing it

Shamil