The second, and last, part of this short series will cover suggested expense categories for bookkeeping for an eBay business. If you missed the first part of the series you can read it at Bookkeeping For An eBay Business - Part 1.
As shown yesterday, these are the categories that I use personally. At first glance it may appear the system could be simplified by combining some categories into one broader single one. However, doing so will not allow you to gain a quick picture of how your business is doing or where changes need to be made if necessary.
Depending upon what you sell and how you do business you may be able to get by with fewer categories, or you may need to add additional one.
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Expense Accounts
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| Account Name |
Account Type |
| Cost Of Goods Sold |
An umbrella category of merchandise costs |
| Inventory Purchases |
A sub-category of Cost Of Goods Sold - Actual money spent to purchase inventory items |
| Inventory Improvement |
A sub-category of Cost Of Goods Sold - Money spent to have an item cleaned, repaired, for batteries, or other services performed prior to the item being listed. |
| Advertising |
Money you spend to advertise your business or to acquire inventory |
| Bad Debts |
Accounts payable that will not be collected |
| Bank Service Charges |
An umbrella category of service charges paid to financial institutions |
| Bank Charges |
A sub-category of Bank Service Charges - any service charges paid to your bank |
| PayPal Charges |
A sub-category of Bank Service Charges - PayPal fees for individual transactions |
| Bookkeeping/Accounting |
Money spent for bookkeeping and tax preparation |
| Charitable Contributions |
Donations made to organized charities including the value of any unsold inventory contributed to them |
| Computer Supplies |
Computer accessories and supplies |
| Dues, Subscriptions, & Publications |
Money spent for business related memberships, subscriptions to newsletters/magazines, business related books, and monthly fees for auction management or research services, eBay store rental, etc. |
| eBay Listing Fees - Regular |
Fees you pay for standard eBay listings |
| eBay Listing Fees - Enhanced |
Fees you pay for enhanced eBay services such as multiple pictures, scheduled start times, subtitles, bold headlines, etc. |
| Education Expenses |
Money spent for business seminars, eBay University classes, workshops, etc. |
| Insurance Expenses |
An umbrella category for insurance expenses |
| Health Insurance |
Health insurance premiums you pay for yourself |
| Liability Insurance |
Business insurance, or the business related portion, of any fire, loss, liability, etc. insurance premiums you pay |
| Interest Expenses |
Any interest you pay on business related loans |
| Internet Service Provider Fees |
Internet Service Provider Fees |
| Legal Fees |
Any Attorney fees you may incur |
| Licenses & Permits |
Any business license fees, sales permit fees, etc. you pay |
| Misc. Expenses |
Any occasional business related expense that doesn’t fit one of the other categories. If the same expense occurs more than three or four times, you should probably create a category for it |
| Office Expenses |
An umbrella category for office expenses |
| Office Supplies |
A sub-category of Office Expenses - money spent for normal office supplies - printer paper, tablets, pens, pencils, paper clips, tape, etc. |
| Postage & Delivery |
A sub-category of Office Expenses - these are your actual shipping expense for whatever shipper you use |
| Printing |
A sub-category of Office Expenses - money spent for the printing of business cards, fliers, etc. |
| Rent |
Money spent for the rental or storage space, money paid to you if you rent space in your home to your eBay business, etc. |
| Repairs |
Money spent for repair costs for computers, printers, fax machines, and other office equipment |
| Sales Tax Expenses |
This category is used when you make payments of the sales tax you collect to your state taxation agency. This offsets the sale tax income you record |
| Sales Tax Paid |
Any sales tax you pay on inventory meant for resale |
| Shipping Expenses |
Money you spend for shipping and packing supplies - boxes, bubble wrap, tape, packing peanuts, etc. |
| Travel Expenses |
An umbrella category for travel expenses |
| Lodging |
A sub-category of Travel Expenses - the cost of hotels/motels when away from home on business |
| Meals |
A sub-category of Travel Expenses - the cost of meals when away from home on business |
| Travel |
A sub-category of Travel Expenses - other business travel costs including airfare, rental cars, etc. |
| Utilities |
A percentage of heat, light, water, gas, electricity, etc. costs if you claim a home office on your tax return |
| Wages and Contractor Fees |
Any money you take out of the business for personal use. Payments made to independent contractors you might use. |
These accounts and categories aren’t hard and fast rules, but most are one’s you would be glad you had if you were ever audited. They work for the business model I use, but depending upon the individual business, some could be deleted while others might need to be added.
As an example, I don’t do any Trading Assistant business. If I did, I would probably add a ‘Trading Assistant Sales’ sub-category to the Income Account as well as a ‘Trading Assistant Expense’ category in the Expense Account to cover costs directly associated with my Trading Assistant business.
In a similar vein, if my business grew so large it was necessary to hire one or more people, I would need to add categories related to Payroll Expenses, Payroll Taxes, Social Security Withholdings, etc. to the system.
I also use Quicken Home & Business for maintaining my Auto Expenses Record. I use the mileage method for computing auto expenses and Home & Business has a special section for keeping track of mileage driven.
If you set one up yourself, you should include the years beginning and ending mileage reading, the date each trip was made, what it was for, what vehicle you used if you use more than one in your business, where you went, any parking costs, and the odometer mileage at the beginning and the end of the trip.
The IRS also offers the option of deducting actual vehicle expense incurred. If you choose this option you should add additional categories under your Expense Accounts to cover things such as gas & oil, maintenance costs, repairs, insurance costs, etc.
Setting up a sound system of bookkeeping for and eBay business involves a little time and thought, but the investment will be one well spent come tax-time or if you are ever audited by the IRS or your state tax authority.
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