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Permalink Reply by Mark C on March 1, 2012 at 10:58

Thought I'd give this a gentle bump as I really need to get out of spreadsheet hell.... :D

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Permalink Reply by Adrian Pearson on March 2, 2012 at 15:57

Hi Mark,

Good to have you with us!

Firstly, regarding question 1. what information you want out of the system dictates the amount of work needed recording transactions. If you want your reports to show gross sales less website cost less transfer fee then that is more work. If you are happy to just record the net sale of £72.45 then things are easy.

Assuming recording the net sale is ok, when you import your bank statement, the £72.45 will appear as money received. Simply allocate that amount to your general ledger account for sales and you are done. You could then setup a reconciliation rule which will mean that all future amounts of this type will automatically get allocated to sales for you.

If you want to report the elements of the transaction separately, then I suggest you create a "Cash Sale" invoice for each one, then break down the various elements on the invoice, like this:

When the money comes in on your bank statement, you allocate it against this invoice.

On question 2. if you are not VAT registered, you tell Xero that when you setup your account. Thereafter the system will default your data entry to "No VAT" and will set all of your general ledger accounts accordingly. Effectively, you will then just enter the VAT inclusive price shown on the total of your purchase invoice. From the wording of your question, I suspect you may be worried about working out the VAT on individual lines of a purchase invoice? If so, I cannot see a way around that I am afraid.

Regards,

Adrian

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Permalink Reply by Mark C on March 4, 2012 at 16:20

Thanks for the help with this.  Sorry to be a nusance with probably such an obvious answer.

Can I just confirm that this is a way to do this.

In the chart of accounts I could create something like

201 - PlayTrade - Type = Revenue - No vat

405 - PlayTrade Sale Fee - Type = Overhead - No vat

406 - PlayTrade Transfer Fee - Type = Overhead - No vat

I'm assuming that its an overhead and not a direct fee, is that ok?  I'm not charged a fee to me, its deducted at the time I transfer the money.

The sales reports I get show the sale value, fees for that sale and then the final proceeds.  As an example

17.00 - .034 (2%) = 16.66

Should I be recording that into PT Account, and then record the fee from transferring from PT account to my actual bank account.  The PT account is where all the money goes from sales until I transfer it and it's then physically mine.

Lynsay.  With regards to the VAT questions.  My purchases are broken down by ex vat then postage added then the vat added at the end.  I was trying to work out a way I wouldnt have to take the ex vat price and then manually work out the vat to be added to get a net cost.

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Permalink Reply by Adrian Pearson on March 5, 2012 at 15:44

Hi Mark,

You Playtrade Sale Fee should be of type = Direct Cost. The Transfer Fee should also be treated as a direct cost if you transfer each and every individual amount at the time. If you sometimes accumulate the amounts and withdraw in one amount later, there may be an argument for using Type = Overhead.

If you want to keep a PT and actual bank account as separate accounts then you need to work a little harder than in my original example. Create the invoice without the third line item (-3.81). You can enter the net sale of 76.26 as a receipt into the PT account and match that to the invoice.

When you transfer the money to your own bank account, enter the charge of -3.81 as a payment on the PT account and then enter a bank transfer between PT account and own bank account for the balance 72.45.

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Permalink Reply by Lyndsay W on March 6, 2012 at 8:29

I am still not quite sure about your Q. As postage is freight is a cost of sale why not just take the invoice total inc the postage and divide it by how many items you bought, that would be your cost.

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Permalink Reply by Lyndsay W on March 2, 2012 at 23:13

Hi I dont understand your VAT question really, can you expand on it? I think with your purchases you need to account for the bank charges and fees as per the example given below as they are all a cost to your business and affect your P and L, so just recording the nett purchase price these costs would be somehow 'lost' and not claimed as expenses.

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Permalink Reply by Lyndsay W on March 7, 2012 at 5:32

There is no need to apologise, your Q is not basic or anything like that, we all struggle with this stuff daily! I just googled and your vat is 20% so if the invoice has many lines on it just take the total of each line and multiply it by 1.2 and divide it by the number of items on that line. Otherwise if the invoice has only one line I would just use the total inc the vat and including the postage and divide by the number of items to get the cost per item. On invoices of multiple lines code the postage to freight which is Cost Of Goods Sold code, in Xero this is called a direct cost in the chart of accounts. I could be quite wrong here but I just do what I think is the right thing logically.

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