New online retailer - Advice needed

[Itsacraig]

Hi,
I have just set up my own online retail business. I dont expect my sales to be £70k + yet so will probably not go Ltd or Vat Registered for some time yet. But I am still debating the idea as I heard it has got its tax benefits.
I am new to this, and would just like an understanding regarding VAT and Import/ Export.

I ope you can help a couple of questions I have for now. I have so many, but will try and keep it short for now.


1. VAT - I get charged VAT by my supplier and I also have to charge my customer VAT.
I understand I cant claim back the VAT paid to my supplier unless I am registered for VAT.
What I dont understand is, how does VAT work if I am merely a sole proprietor?
Every sale I make, do I have to put aside 17.5% of the order amount (excl. postage)and give this to to tax man when it is required? Or is it a simple case of me having to list all my incomings and outgoings and pay a certain percentage of the profit once all costs have been deducted? (Excl. Drawings)


2. Import/ Export..
I have the commodity codes of my stock which I will be selling to foreign countries. Do I need to pay anything additionaly when exporting or importing goods? My suppliers are within the EEC.
I am concerned that my customers in these countries will be deterred by the customs and excise in their country and may not want to pay more, so was hoping I could somehow incorporate it into the price and pay it myself if this is possibe?


Thanks for all your input.


Craig

 

[wizzard]

You cannot charge your customers VAT as you aren't VAT registered.

You don't collect VAT on HMRC's behalf because you aren't registered for VAT. You just have to suck up the 17.5% you've been charged by your supplier or increase the costs to your customers. So at the moment until you are near the threshold forget about it.

You could register voluntarily for VAT if you are supplying other businesses.

For importing depending on the commodity code there maybe additional duty fees to pay together with extra VAT.

Not too sure about exporting.

Feel free to correct me if anything I've said is incorrect.

 

[HonestSEO]

Have you thought about increasing the sales/enquiries through the site yet? by this i mean search engine optimisation? Most new businesses do not factor this in when building a new website but it is the most important area to concentrate on because the best looking website in the world will be useless without traffic coming through?

Cheers

 

[MyAccountantOnline]

1. VAT - I get charged VAT by my supplier and I also have to charge my customer VAT.
I understand I cant claim back the VAT paid to my supplier unless I am registered for VAT.
What I dont understand is, how does VAT work if I am merely a sole proprietor?
Every sale I make, do I have to put aside 17.5% of the order amount (excl. postage)and give this to to tax man when it is required?

Hi Craig

In simple terms if you register for VAT as a soletrader or a limited company you charge VAT on your sales, and claim back VAT on your costs and pay the net amount to HM Revenue & Customs (or claim a refund if the VAT on your costs exceeds your sales). Generally you pay VAT each quarter ie 3 months.

But their are different ways of accounting for VAT one way being the flat rate scheme which works differently.

If you are selling to the public ie people not registered for VAT as a general rule if you can avoid VAT registration its best to do so to maximise the amount you keep.

 

[MyAccountantOnline]

Business Link have some information regarding VAT which you might find helpful -

http://www.businesslink.gov.uk/bdot...05&r.lc=en&r.l2=1073859188&topicId=1081167361

This section may also be useful -

http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&r.lc=en&topicId=1079717544

 

[Itsacraig]

Have you thought about increasing the sales/enquiries through the site yet? by this i mean search engine optimisation? Most new businesses do not factor this in when building a new website but it is the most important area to concentrate on because the best looking website in the world will be useless without traffic coming through?

Cheers

Thanks HonestSEO, but im pretty clued up with SEO, and got my site listed top with various key words used.

 

[Itsacraig]

Thanks for your input everyone. Im impressed with the response my post received.

Ok, so I can forget about VAT for now, but I have a feeling it wont be too long before my turnover will reach 70k+ pa.

Ok, so will stay as a sole proprietor for now, and I just deduct all costs from sales made which leaves a gross profit. What percentage of this am I looking at being taxed on?

 

[Itsacraig]

I think I will request the services of an accountant to assist me also. Is there any here from Chester? And what am I expected to pay for

a. Consultations or hourly advice

b. Tax Returns

 

[MyAccountantOnline]

I think I will request the services of an accountant to assist me also. Is there any here from Chester? And what am I expected to pay for

a. Consultations or hourly advice

b. Tax Returns

Hi Craig

Not sure if anyone on here is from Chester but if you would be happy working online our fees are shown on our website. We work with clients based all over the UK and beyond.

 

[MyAccountantOnline]

I think I will request the services of an accountant to assist me also. Is there any here from Chester? And what am I expected to pay for

a. Consultations or hourly advice

b. Tax Returns

To answer your qestion it varies considerably.

Most accountants will give an free intial 1/2 to 1 hour consultation and hourly advice after that can be anything from about £75 to £250 per hour for a qualified accountant.

Some accountants, myself included, include in their fixed fees support for routine questions which can be a huge saving.

Tax returns - again that will vary from about £75 to £300 depending on the individual, how many sources of income they have and the complexity of their tax affairs.

 

[Itsacraig]

Thanks Nicola, nice site. Have sent u a message

 

[Williams lester]

Hi Craig, we also offer an all inclusive package price for all your accounting needs, again detailed on our website. Feel free to PM if you have any questions regarding the service.

 

[MyAccountantOnline]

Thanks Nicola, nice site. Have sent u a message

Thank you very much Craig - much appreciated

I've just sent a PM back.

 

[Itsacraig]

Thanks again for all your info. Ive also checked out the businesslink websites, very knowledgeable!!


Ideally I would like to go LTD & VAT Registered, but the paperwork and everything else that is required deters me.

I lead a hectic life with one thing and an other and I would prefer not to have to deal with this side of things, but at the same time, I do want to understand what is being done.

The transactions will all be paypal, got to remain cautious of mnthly expenditure for one thing and another, and Im also looking into software that can allow me to intergrate it into sageline 50 to reduce my accountancy fees. I have SageLine 50, but need to familiarise myself with VAT input and settings etc. As im not VAT Registered, I dont know if I need to include VAT in any of the transations or leave as nil for everything?

The service I would like from someone, is to be able to offer advice on using Sage and input all my data within it myself, get some basic help in solving some issues i may have, and for me to send over details each month and also have a brief 30 min consultation on what i have so far submitted, as well as things to consider for the following month.

The number of transactions is unsure at present, but ideally, I would like to see about 1,000 paypal transactions per month, but whether this happens or not is another matter that I would need to look at, by various advertising channels used.

I would like some one to submit my returns, all other paper work required for smooth running of my company, especially if I do decide to go LTD for reduced tax reasons, as well as offer other general advice on other company legalities I need to consider.

Thanks again everyone

 

[Williams lester]

Thanks again for all your info. Ive also checked out the businesslink websites, very knowledgeable!!


Ideally I would like to go LTD & VAT Registered, but the paperwork and everything else that is required deters me.

I lead a hectic life with one thing and an other and I would prefer not to have to deal with this side of things, but at the same time, I do want to understand what is being done.

The transactions will all be paypal, got to remain cautious of mnthly expenditure for one thing and another, and Im also looking into software that can allow me to intergrate it into sageline 50 to reduce my accountancy fees. I have SageLine 50, but need to familiarise myself with VAT input and settings etc. As im not VAT Registered, I dont know if I need to include VAT in any of the transations or leave as nil for everything?

The service I would like from someone, is to be able to offer advice on using Sage and input all my data within it myself, get some basic help in solving some issues i may have, and for me to send over details each month and also have a brief 30 min consultation on what i have so far submitted, as well as things to consider for the following month.

The number of transactions is unsure at present, but ideally, I would like to see about 1,000 paypal transactions per month, but whether this happens or not is another matter that I would need to look at, by various advertising channels used.

I would like some one to submit my returns, all other paper work required for smooth running of my company, especially if I do decide to go LTD for reduced tax reasons, as well as offer other general advice on other company legalities I need to consider.

Thanks again everyone

To integrate your Paypal transactions into Sage 50 you will need something like Tradebox, a third party app which will put the transactions in the right places in Sage! John of Tradebox is a member on here and I am sure he will be along in a while to give a fuller (and more accurate) description of how it works...

 

[Itsacraig]

I did check out Tradebox, theres one app they sell for £60, which downloads all paypal transx and fees into Sage, so will look into this some more.
As most of my transx will be made this way, it sounds the most simplified and automated way to deal with it.

Gaining a better insite into Sage I feel would be more beneficial in the longrun, allowing me to create reports amongst other things.