New Guy, basic question about expenses, proof of purchases?

[Dreamer]

I'm very sorry for this basic question, and hope I don't offend anyone here if this question does not belong here on this forum.

background. I just started selling used vehicle parts on ebay. I have been selling about 1000-2000$ per month into paypal.

The thing is, it's not 1000-2000$ in profit! heck, I probably pay out 300-600$ per month in ebay fees and shipping costs. I may buy a machine for 650$, and sell about 1000$. Selling $1000 on ebay and paypal, after fee's is approximately $825.00.

so i'm deeply concerned that it appears that I have made $1000.00 but in actuality, I have only "made" $175.00.

My main concern is how do I prove my main expense ( the amount I pay for a machine)? I do have a hand written bill of sale for several of the machines I bought, but they do not appear very official.

I'm afraid it appears like i'm selling much more than I really am, and I need to know what kind of documentation I need for Tax purposes.

Thank you very much for your time

[Steve B]

You just need a receipt from where you bought it. Receipts come in all shapes and sizes, but it's pretty standard to have a date, the price, and the name and address of the seller.

[vangogh]

I agree with Steve. Don't worry that the receipt is hand written. Some of them will be. From now on make sure the standard information is on the receipt, but I wouldn't worry too much about the ones you already have. Also keep records for yourself, whether it's in some accounting software or a simple notebook. That should help keep track of everything too.

With all the eBay fees and shipping costs, there should be electronic records of everything you paid.

[Dreamer]

Thank you both for the quick answers.

I have been keeping records and receipts of supplies and I do rely on ebay, and paypal for my records off deposits, fee's, and transfers. I also keep a record of every part sold to every machine.

Thank you very much for your input.

[vangogh]

Glad we could help. As long as you keep a record of everything you should be fine. When you're filling out taxes, you don't need to send in your receipts to the IRS. You need to keep them just in case they audit you for any reason, but odds are they aren't going to and so they'll never see the receipts. You mainly need them for your own records to calculate everything. And of course you do need to keep everything just in case.

[jamesray50]

And everyone knows that just because you collected $1000 for a sale, that is not your profit on that sale. Like everyone else said, it doesn't matter what type of paper your receipt is, just keep it and record it as an expense. Good luck.

[Evan]

The important thing is that you have the information about the seller available on the receipt, so if I "write" you a receipt on a napkin, it's fine -- but you should make sure it has enough details to trace it back to me. If you think the receipts are not legitimate, then perhaps the problem is with your vendors and you should find another source that seems more credible.