Requesting Income Tax Preparation Help/Tips

[ae_purveyors]

Hello fellow Sellers

I was hoping I could get some more information from you seasoned pros here. 

How do we report our income on T2125?

Our Total Sales shown by eBay includes taxes. eBay charges and collects taxes for me from the Buyers. 

Do you report total income as the Total sales, with Taxes? And then deduct from expenses the selling fees and the taxes collected by eBay?

Unfortunately, I haven't found an accountant willing to work with me, due to being "small potatoes." One accountant told me, "Look, I can charge you $500/hour to explain it to you. I can make $1,000 but then I'll never see you again, because you'll do it on your own. As a business owner, don't you want repeat business?" Fair enough, but I can't afford hiring a bookkeeper on my paltry sales. Hopefully, one day. So, until then, I keep plugging away at doing my own research.

I have tried calling the CRA during the tax-time extended hours. But I haven't been able to reach someone who is knowledgeable and can answer my questions in confidence. I have a feeling it's because the tax implications are all new for these situations (gig-economy, side-hustles, online revenue-streams, etc).

If anyone can offer me any advice on:

- How you prepare your Income Tax

- What you know about an eBay Seller's Income Tax preparation

- Any accountants who work with eBay Sellers, or provide tutorials on eBay Seller Income Tax Prep

- Any tutorials online that you can direct me to

If anyone has any advice or information you can offer, I would be most appreciative. 

Thank you very much in advance!!!

[ypdc_dennis]

Are you registered for GST/HST ?

[ae_purveyors]

No, I haven't registered. I only started selling in 2021, and so didn't meet the threshold. Then I received the email that eBay would start charging in July 2022. For those sellers who weren't registered, the email said there was noting required for them to do on their part. 

[regs43]

I download a transaction report and use the numbers from that

Its under the Payments tab on seller hub - Reports

This is a very basic answer and I am not an accountant.

I just sum total all the colums and use the numbers from the report. Then do all your deductions. I do a bit more then that but all the info you need is in the reports you can download 🙂 I do my stuff monthly and then cross check it a the end of the year.

Good Luck

[recped]

GST/HST/PST collected by eBay should not be included in your Gross Income number.

One accountant told me, "Look, I can charge you $500/hour to explain it to you. I can make $1,000 but then I'll never see you again, because you'll do it on your own.

That account spoke the absolute truth, he is not going to get any repeat business from you once he shows you how easy it is to complete the tax forms.

90% of the work involved is assembling all the numbers accurately, revenue, expenses etc. Accountants don't do that part they just take the totals you provide, punch them into a computer, click a button and they are done. 

Different story if you have payroll, capital investment, qualify for R&D credits, file corporate returns and so on. In that case a good accountant with tax law experience can be worthwhile.

[ae_purveyors]

Yes, I certainly see it from his point of view.

I’m kinda disappointed that I haven’t found any assistance from the CRA though. I have called over 6 times.

Sadly, the agents simply don’t know, or I have received different answers. I’ve heard it’s an expense. I’ve heard I need to register and collect it myself in addition to the tax that eBay charges. I have also heard to sell directly on my own website and charge because “that’s how a n e-commerce business is run.”

This is what I don’t get. The CRA acknowledges the online peer-to-peer platforms and wants them to charge and remit taxes. So they create a law requiring it. But I can’t believe I can’t get clear answers and information on what is required from me with respect to said law.

Has it been this frustrating for other sellers when contacting the CRA? Is there a specific department/hotline I should be contacting?

[flipistics]

@ae_purveyors  I'm not a tax professional so you should ignore what I say and talk to one.

My impression is that Total Sales wouldn't include the taxes since we're not the ones collecting them. This is somewhat supported when you look at your financial statements you can download from eBay (not that I necessarily trust eBay to get it right). The totals that are shown there don't seem to include the tax the buyer paid.

Whether you need to register yourself depends on your sales. I believe if you're over $30K in sales you do have to register to collect GST/HST. However, after doing so you would fill out a form with eBay giving them permission to do so on your behalf. If you were over the sales threshhold and either didn't register or never filled out the form with eBay, MAYBE you would be liable for it as well, I'm not sure.

As for the "your own website" comment, your eBay store IS effectively your website.

Some of the things I track:

Total Inventory Count (apparently it matters, but not sure exactly why)

Total Inventory Cost of Goods

Mileage (business and total)

Sales

Adjustments (refunds, etc)

Cost of Goods Sold

Inventory Purchases

Capital Purchases

Business Supplies

Shipping Costs

Selling Fees

Other Expenses (related to running the business)