I run a small sole trader business but the step from decorating to trading in goods online has added a few extra confusions to my tax return. I'll try put a basic idea below of where I'm just not 100% and hopefully somebody can help me out?
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Example:
Good Sold:
Item 1 - £5.74 (including 74p P&P)
[Gross Income - £5.74]
Cost Of Good Sold:
Item 1 - £1.00
[Gross Profit - £4.74]
Expenses:
Ebay Fees - 50p
PayPal Fees - 50p
Packaging - 20p
Postage - 74p
[Total Expenses - £1.94]
Net Profit - £2.80
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Now can anybody explain which part is taxed. Am I paying tax on total income (despite item cost and P&P being included in that?) Am I supposed to add the P&P to the Goods Cost section and then pay tax on what remains there? Or is the Net the taxable part after all my business expenses that went into the sale are deducted?
Really sorry for bothering people but it's a bit of a step from just taking 20% of my earnings as a decorator haha.
-------------------------------
Example:
Good Sold:
Item 1 - £5.74 (including 74p P&P)
[Gross Income - £5.74]
Cost Of Good Sold:
Item 1 - £1.00
[Gross Profit - £4.74]
Expenses:
Ebay Fees - 50p
PayPal Fees - 50p
Packaging - 20p
Postage - 74p
[Total Expenses - £1.94]
Net Profit - £2.80
--------------------------------------
Now can anybody explain which part is taxed. Am I paying tax on total income (despite item cost and P&P being included in that?) Am I supposed to add the P&P to the Goods Cost section and then pay tax on what remains there? Or is the Net the taxable part after all my business expenses that went into the sale are deducted?
Really sorry for bothering people but it's a bit of a step from just taking 20% of my earnings as a decorator haha.
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