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bigduckontax, Accountant
Category: Tax
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I have started up a new business on eBay. Partly with stock

Customer Question

I have started up a new business on eBay. Partly with stock I have bought with money on loan...£3,000.
I have also been given a quantity of stock from a friend who bought it from someone closing a ladies fashion party plan business. It is similar styles to what I already sell, but I have no invoice for it. Can I just ask my friend to write out an invoice, she just paid cash for it and was not given the promised invoice/receipt for the cash payment.. or can I put it through as start up cash (in kind), It is approximately worth £2,500.
I just do not want to have to pay tax on the full value.
I hope to hear back as I am about to do my first 5 months account. Maggie
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, Maggie, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Firstly, did you give your friend any money for this stock? If you did then she can quite properly issue you with an invoice and you can process it in the normal way. If you did not give her any money then, although you have more stock, you have no expenditure to offset income. Any invoice she might give you would be phony and to use it to support costs, tax evasion, a criminal offence. Of course, if you intend to pay her at some future date then she would become a creditor and the sum due allowable as a business expense. I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.
Thank you for the reply...It is not exactly what I wanted, but what I suspected...I am hoping to pay for it as my business grows. Should I ask her for an invoice from the date she passed it on to me, for the full amount...and mark it to be paid in 4 payments over 12 months....would that be ok?As I shall be keeping the business quite small, and shall use the 'cash basis' for my tax returns. I am now retired, or was until I got involved with this, so I want to keep it simple.I have to go out now, so please don't think I am ignoring your reply...Thank you so much, Maggie
Expert:  bigduckontax replied 1 year ago.
If payment is intended in the future for this stock then it is perfectly proper for your friend to issue an invoice in the manner you suggest and appropriate payments made. Please be so kind as to rate me before you leave the Just Answer site.
Expert:  bigduckontax replied 1 year ago.
Post to clear my question list, question came up twice on there!