Ebay - Switching from Private to business account

[BullionBob]

Hi

I have been listing a variety of silver and gold on ebay since the beginning of April to help pay some bills. Last month, ebay requested that I must convert my account to a 'business' account and as of today, they have suspended my account for selling purposes and cancelled my 7 active listings.

However, I work full time and do not have any form of business, so do not feel comfortable converting my account.

Also, if i converted my account, would I have to register a business with HMRC and use a business bank account?

I have collected Silver for many years and have mainly used ebay as way to free up some cash from time to time.

I would be very grateful if anyone could offer any advice on the subject.

Thanks

Rob

[BackyardBullion]

This is another reason eBay will be out of business in a decade. 

Sorry to hear you are experiencing this but eBay are moving more to an amazon style system where the sellers have to be almost vetted and as such the payments can be moved to "managed" payments, this protects eBay more and makes life harder for sellers that are not just selling some junk from their own house. 

In terms of business bank accounts etc. I am not sure about that - you presumably have a PayPal account - you might have to open a business version for that (they are basically identical). 

Also, as with HMRC, you really need to have a look at the "badges of trade" https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

These give a good indication of whether your selling activities are a business or just releasing assets that you are selling. 

Also, I am pretty sure that eBay already sends lots of data to HMRC because there are plenty of stories out there of people getting nasty letters and/or audits leading to prosecutions for not declaring income as a direct result of eBay selling. 

Their ain't nothing that Big Brother don't know - so don't try and fake it - you won't make it!

Good luck and let us know what you decide to do. 

[BullionBob]

Thank you for your response, I will certainly look into this further.

I have always viewed PM's as a way of saving money and then only selling when needing to do so. However, due to working from home and the increased prices, it looks like i have sold enough to flag up on the ebay system.

I have no intention of selling continually, although I would still like to have the option of using my ebay account periodically.

I guess I will need to speak to an accountant to enquire about the potential costs etc, before making a final decision.

It never crossed my mind that this would be an issue, especially as we are not talking about huge sums, compare to some sellers on ebay.

My maximum listing were approx. 20 items but i have noticed some sellers have in excess of 250 items and appear to be operating from private accounts.

Thanks again 

Rob

 

[kojak]

If you need to setup a business account, there's online only banks like Starling which offer a free business account (you need a normal account with them first of all).

I'd also set up a separate PayPal account and it would need to be set up as a business account.

I think you only need to pay tax on any profits over something like £1200 for the financial year. It all on the HMRC website and the agents are generally helpful answering questions.

I know the above because I was looking to start trading items on ebay (as a business), so set up accounts in preparation but decided against it for the time being (not comfortable with the risk).

It may seem a bit scary because of the 'Business' term but anyone can set up a business!

You'll need a basic spreadsheet at the least to log your transactions incase HMRC ask for records. There's spreadsheets for ebay available that you can put in PayPal fees, ebay fees, postage costs etc. Remember postage costs etc are expenses and I believe can be written off against your profits (HMRC can answer any questions you might have).

Hope that helps a bit, there will be people here who will have a lot more knowledge to help.

All the best if you do decide to go down the rabbit hole.

[BullionBob]

Great advice, I will pop a call into HMRC tomorrow. 

Thanks

Rob

 

[Robda1986]

If you have any more why not chuck it on here on the selling section rather than having to deal with ebay 

[BullionBob]

I'm still quite new to the forum and have noticed you need to be a fairly established member to attract buyers. I will at some point, begin to list items on here.

[Jimmock]

5 minutes ago, BullionBob said:

I'm still quite new to the forum and have noticed you need to be a fairly established member to attract buyers. I will at some point, begin to list items on here.

You have positive feedback,and if you price fairly with an honest description of condition etc,you'll have on problem selling on here. 😁

[Martlet]

Unless something new occured, a business (ebay, paypal) saying you need a business account doesn't make you a business.  They are just bumping you to a paid for service.  Dont go down the route of looking for expenses, right offs against tax, as they will be against income tax, while silver will be against lower CGT (or none for Brits etc). 

[Goldhooked]

8 hours ago, Martlet said:

Unless something new occured, a business (ebay, paypal) saying you need a business account doesn't make you a business.  They are just bumping you to a paid for service.

This is spot on.  It is eBay’s way of making more money from you.  Rarely any free listings on business accounts - you will have to pay listing insertion fees or pay a monthly fee for an eBay shop that includes some listings.

[BullionBob]

Thanks for the replies guys, there is certainly a lot to consider. Will look into this further today and make a decision.

I know there are some people on the forum who list on ebay and wondered if anyone else may of encountered the same scenario.

Thanks

Rob

[AppleZippoandMetronome]

Agree with all of the above. I moved my own eBay business from a personal account to a business account as it made financial sense (you can pay less fees as a business using a shop tier combined with top rated seller discounts on final value fees). If you're only listing a few items it is never going to be in your financial interest to go with a business account. The cheapest shop tier for the business account is £30/month. Then on top of that you still have to pay final value fees.

One note of clarity you don't necessarily need a seperate business bank account if you go down this route. It can be helpful from a paperwork point of view but again if you're only selling a few items/month its never going to be difficult to keep track of that.

Also I agree very much with the others - start trying to sell on the forum here. eBay does have a lot of good points but with how they've treated you here its clear you'd personally be better off finding a different platform to list items. Again only listing a few items/month is never going to make sense financially to go down the businss account route.

[BullionBob]

Thank you for all of the replies.

A quick update - Contacted HMRC and it was a quick and simple process to register as a 'self employed' sole trader and will need to file a tax return each year. Just allows me to continue selling from time to time without having to worry about the potential consequences further down the line.

It's amazing how quickly turnover increases when selling PM's and i can now breath more easily, comfortable that all of my ducks are in a row!

Thanks

Rob

[BackyardBullion]

3 minutes ago, BullionBob said:

Thank you for all of the replies.

A quick update - Contacted HMRC and it was a quick and simple process to register as a 'self employed' sole trader and will need to file a tax return each year. Just allows me to continue selling from time to time without having to worry about the potential consequences further down the line.

It's amazing how quickly turnover increases when selling PM's and i can now breath more easily, comfortable that all of my ducks are in a row!

Thanks

Rob

It is certainly a interesting process. 

Be careful with your turnover, if you get to £85,000 TURNOVER (not profit) in any rolling 12 month period you will be required to register for and charge VAT. 

[BullionBob]

I don't intend to go over the threshold, certainly not anytime soon. Will see how the next 12 months go.

[Martlet]

4 hours ago, BullionBob said:

Thank you for all of the replies.

A quick update - Contacted HMRC and it was a quick and simple process to register as a 'self employed' sole trader and will need to file a tax return each year. Just allows me to continue selling from time to time without having to worry about the potential consequences further down the line.

It's amazing how quickly turnover increases when selling PM's and i can now breath more easily, comfortable that all of my ducks are in a row!

Thanks

Rob

Unless you meet the badge of trade criteria (see Backyards post), you do not want to go down this path.  This will make you liable for 20% income tax plus NI contributions rather than 10% captial gains tax, and not benefit from the CGT allowance.  You dont pay any CGT until you make 12k profit on the sale of silver assets. As someone in full time employment selling as a trader, you'll pay 20% on everything, may even put you into 40% bracket. 

[BullionBob]

1 hour ago, Martlet said:

Unless you meet the badge of trade criteria (see Backyards post), you do not want to go down this path.  This will make you liable for 20% income tax plus NI contributions rather than 10% captial gains tax, and not benefit from the CGT allowance.  You dont pay any CGT until you make 12k profit on the sale of silver assets. As someone in full time employment selling as a trader, you'll pay 20% on everything, may even put you into 40% bracket. 

I did take a close look following the advice from Backyard and I think I have no choice other than the sole trader option. Some of my recent purchases from dealers, auctions etc have been purchased with the intention of making a profit in a short space of time.

I guess I will see how things go over the next 12 months and review my situation to see if it has been worth it.

To be honest, i would have thought many others on the forum would be in a similar position but i appreciate each individuals circumstances are different.

[Booky586]

Have you also considered having more than one eBay account? 1 buying account and 2 selling accounts? You're purchases won't be visible on your sales accounts and between the 2 sales accounts you'll probably get a reduced sellers final fee offer every time there's one on.

[BullionBob]

19 minutes ago, Booky586 said:

Have you also considered having more than one eBay account? 1 buying account and 2 selling accounts? You're purchases won't be visible on your sales accounts and between the 2 sales accounts you'll probably get a reduced sellers final fee offer every time there's one on.

I didn't realise having more than one account was an option. However, i think the same thing would probably happen in a matter of months, based on my recent experience.