Quote:
Originally Posted by glchen
It's reconciliation. Paypal and your bank accounts can have multiple types of payments going into those accounts. Not all of them may be related to your business. It could be friends paying you for their share of a dinner expense. How do you determine which payments into your accounts are personal and which are for your business? Or you may receive your regular paycheck deposited into your bank account. How do you handle this? You reconcile your paypal and bank account transactions with your ebay transactions. In addition, your ebay fees are still a business expense when you are working on your federal and state taxes, so you still need to loop back to your ebay documentation if you are audited for income tax purposes. Your monthly account statement from ebay with your fees also has your sales figures so you can use this in conjunction with your paypal statements.
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Wow, I would think it foolish if an ebay seller(who receives a 1099 from PP) put themselves in a position of not utilizing both a separate bank account and paypal account that is only used for their ebay selling and is not used for personal type transactions.....I certainly use separate accounts. This makes it VERY easy to differentiate any ebay business transactions from any personal income transactions.
As far as outgoing payments, I use one credit card for all expenses, such as inventory, supplies or paying bills like my ebay (fees) bill. Since I keep all outgoing payments for ebay only expenses on one account, it is quite easy to forward these expenses at year end to my accountant for accurate tax preparation purposes.