Buying goods from China and selling online
- Thread starter ulitich
- Start date
- Original Poster
- #4
Guys, of course I tried to find out myself. But I don't want to have any prtoblems with law. I need to be 100% sure that everything is right.
1. I know I need the invoice from my supplier. Do I need a special invoice or any other documents?!
2. I have to pay import tax and VAT. What else? Or just 2 taxes?
3. Everyone is against registering for VAT. I can't understand why. If I can return VAT I will have a better profit. What are the minuses?
P.s. I wouild like to sell hair extensions.
1. I know I need the invoice from my supplier. Do I need a special invoice or any other documents?!
2. I have to pay import tax and VAT. What else? Or just 2 taxes?
3. Everyone is against registering for VAT. I can't understand why. If I can return VAT I will have a better profit. What are the minuses?
P.s. I wouild like to sell hair extensions.
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Firstly VAT - You can register voluntarily for VAT if you wish, if you are under the current threshold (nearly £80K turnover). If your business will turn over more than this you MUST be registered. However, if your customers are individuals, this makes all your sales 20% more expensive than an unregistered competitor, so the usual advice is that voluntary registration to sell to domestic customers is unlikely to be good for you. You will pay 20% to HMRC on your stock, but that's on the trade price, not the retail price.
So if you buy £100 worth of stock, the supplier will charge you £20 VAT if you are registered, you recover £20 VAT from the Government, however, if you sell this stock for £200, you will charge your customer £40 VAT, making the real cost to the customer £240, and pass the £40 on to HMRC. If you are not registered, you can't claim the VAT back, but you can keep everything you sell it for - so if you keep the price at £240, you make a bit more.
The VAT and import duty, if applicable, is charged by the freight company (TNT, FEDEX, UPS etc) and a handling charge for them paying it on your behalf.
The supplier fills in a declaration of the value (which they often under price) - this is what the duty and VAT are based on. Invoice wise, you just need documentation to keep the tax people happy - same as normal.
There's no problem with any laws. Importing gets really expensive when you have weight and size - apart from that it can be fairly cheap. I've had a quick look at the CE Marking list, and I can't find hair extensions listed there, so CE marking seems not to be required. You'll probably NOT have to pay duty - I couldn't find a category for extensions, but most hair products seem to not attract duty.
So expect VAT on your supplies (usually 2-3 weeks after it is delivered), no import duty, and this VAT won't be recoverable, but you won't need to pass on any VAT on sales while your turnover is low - which will save you money.
So if you buy £100 worth of stock, the supplier will charge you £20 VAT if you are registered, you recover £20 VAT from the Government, however, if you sell this stock for £200, you will charge your customer £40 VAT, making the real cost to the customer £240, and pass the £40 on to HMRC. If you are not registered, you can't claim the VAT back, but you can keep everything you sell it for - so if you keep the price at £240, you make a bit more.
The VAT and import duty, if applicable, is charged by the freight company (TNT, FEDEX, UPS etc) and a handling charge for them paying it on your behalf.
The supplier fills in a declaration of the value (which they often under price) - this is what the duty and VAT are based on. Invoice wise, you just need documentation to keep the tax people happy - same as normal.
There's no problem with any laws. Importing gets really expensive when you have weight and size - apart from that it can be fairly cheap. I've had a quick look at the CE Marking list, and I can't find hair extensions listed there, so CE marking seems not to be required. You'll probably NOT have to pay duty - I couldn't find a category for extensions, but most hair products seem to not attract duty.
So expect VAT on your supplies (usually 2-3 weeks after it is delivered), no import duty, and this VAT won't be recoverable, but you won't need to pass on any VAT on sales while your turnover is low - which will save you money.
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As a small importer of quite expensive technical kit, it's impossible to check quality control in advance. There are firms who can do this for you if the margin is sufficient.
One thing I have learned is that in the main you will be dealing with intermediaries - who may never see what's in the packages being sent out.
For me, this means that each batch of equipment that arrives needs to be checked to see it's the same as the last. There's no guarantee that the product delivered this month is exactly the same as last month. My equipment is complex and although I have never had any mechanical or electronic problems on delivery - cosmetically it's very different. Yesterday brought me another 4 units, and each one has 4 plastic case mouldings. The factory (as usual) are sending me replacements because 7 of the 16 were cracked. They are protected by good quality flight cases, and the breakages clearly are due to rough treatment by the carrier - I suspect the cases being pushed over on their sides, where the contents then suddenly have pressure from the non-gravity direction, and as they weigh a bit, this flexes the panels and they crack and break.
With hair extensions, I doubt you'll find problems in this area as they're light and soft - but if i can happen, it will!
The suppliers like to build relationships with UK customers, and it works - I just tell them what's broken, and they send replacements out straight away.
One thing I have learned is that in the main you will be dealing with intermediaries - who may never see what's in the packages being sent out.
For me, this means that each batch of equipment that arrives needs to be checked to see it's the same as the last. There's no guarantee that the product delivered this month is exactly the same as last month. My equipment is complex and although I have never had any mechanical or electronic problems on delivery - cosmetically it's very different. Yesterday brought me another 4 units, and each one has 4 plastic case mouldings. The factory (as usual) are sending me replacements because 7 of the 16 were cracked. They are protected by good quality flight cases, and the breakages clearly are due to rough treatment by the carrier - I suspect the cases being pushed over on their sides, where the contents then suddenly have pressure from the non-gravity direction, and as they weigh a bit, this flexes the panels and they crack and break.
With hair extensions, I doubt you'll find problems in this area as they're light and soft - but if i can happen, it will!
The suppliers like to build relationships with UK customers, and it works - I just tell them what's broken, and they send replacements out straight away.
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Hello Ulitich:
Question 1: Documents needed from the supplier.
Firstly: The company certificate and the export certificate: the export certificate is in both Chinese and English, so that you could make sure the Chinese name and English name refer to the same company.
Their bank account to receive your payment: is the account of the same name that appears in the company export certificate? If not, please ask the factory to explain. (This normally means the factory is exporting through a different Imp & exp company)
Is the address of the bank in the same city of the supplier, or it’s a H.K account? If it’s a H.K account, please ask the factory to explain. (In H.K, company of any name could be registered and open a bank account, that “company” doesn’t have to have any relationship with a company of the same name in China mainland.) That doesn’t mean the supplier is a scammer but they should be honest and have good explanation.
Secondly, for some products, they are required to have special certificates in order to be imported to certain countries. Such as CE, EEC, etc for European countries, EPA, DOT, etc... for North America, depending on the specific products and countries. You should obtain such information from local customs.
Question 2 and Question 3:
Regarding the tax you have to pay, such as import tax, the most accurate way is to ask your shipping agency, because they offer such information while working on the delivery for you. As they are shipping different kinds of products, they know more about specific cases.
Good luck with your business!
Mr. Drou
Question 1: Documents needed from the supplier.
Firstly: The company certificate and the export certificate: the export certificate is in both Chinese and English, so that you could make sure the Chinese name and English name refer to the same company.
Their bank account to receive your payment: is the account of the same name that appears in the company export certificate? If not, please ask the factory to explain. (This normally means the factory is exporting through a different Imp & exp company)
Is the address of the bank in the same city of the supplier, or it’s a H.K account? If it’s a H.K account, please ask the factory to explain. (In H.K, company of any name could be registered and open a bank account, that “company” doesn’t have to have any relationship with a company of the same name in China mainland.) That doesn’t mean the supplier is a scammer but they should be honest and have good explanation.
Secondly, for some products, they are required to have special certificates in order to be imported to certain countries. Such as CE, EEC, etc for European countries, EPA, DOT, etc... for North America, depending on the specific products and countries. You should obtain such information from local customs.
Question 2 and Question 3:
Regarding the tax you have to pay, such as import tax, the most accurate way is to ask your shipping agency, because they offer such information while working on the delivery for you. As they are shipping different kinds of products, they know more about specific cases.
Good luck with your business!
Mr. Drou
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I'm an importer of hair extensions.
There is duty on hair extensions. It is 1.7%. HS code 670300000
It's quite a difficult market place. If you buy poor quality you will quickly lose customers and they will tell their friends and family.,, youtube video reviews can be disastrous. If your customers don't look after the hair properly, they will claim that it's poor quality and demand a refund.
It is true that (almost) all Chinese hair extension suppliers will undervalue the commercial invoice unless you press them to write the correct value. If they undervalue it's left to you to voluntarily pay the difference, but most of your competitors will not, so it will be difficult to be competitive.
We've just had to register for VAT. We can't reduce our prices or will lose custom, so will just accept the reduced profit.
There is duty on hair extensions. It is 1.7%. HS code 670300000
It's quite a difficult market place. If you buy poor quality you will quickly lose customers and they will tell their friends and family.,, youtube video reviews can be disastrous. If your customers don't look after the hair properly, they will claim that it's poor quality and demand a refund.
It is true that (almost) all Chinese hair extension suppliers will undervalue the commercial invoice unless you press them to write the correct value. If they undervalue it's left to you to voluntarily pay the difference, but most of your competitors will not, so it will be difficult to be competitive.
We've just had to register for VAT. We can't reduce our prices or will lose custom, so will just accept the reduced profit.
Upvote
0
Yes, my client's experience is to only sell good quality products, although at beginning it's not very competitive, but you will win good reviews and the reviews will help you to sell very well, and sales data will help you for ranking.
A tip is to adjust your price at different stage, for example, you may give a big discount for a period, so as to get good sales data and good reviews, then, you can raise the price back to normal, few people will notice the price change, so looking at the good reviews, they will trust your quality and reputation and purchase from you.
My American clients sourced very high quality flashlight from me, very expensive one, but selling very well on Amazon (one day sold 150 pcs another day sold 119 pcs) now, after working hard for half year. Quality tells a lot!
A tip is to adjust your price at different stage, for example, you may give a big discount for a period, so as to get good sales data and good reviews, then, you can raise the price back to normal, few people will notice the price change, so looking at the good reviews, they will trust your quality and reputation and purchase from you.
My American clients sourced very high quality flashlight from me, very expensive one, but selling very well on Amazon (one day sold 150 pcs another day sold 119 pcs) now, after working hard for half year. Quality tells a lot!
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