Oh help! Ive got the January Blues again! :(

[pbsdirect]

The last three years Ive had the same pattern. We are in online retail and make 80% of our own products.
I really want to expand a bit our business, nothing dramatic just I would love to upgrade our warehouse which is falling down around us Just maybe some internal works and essential roof work, Clearing the back. Id love to be able to pay the workers a bit more, and add a couple of new employees.
Ive invested mainly in machinery the last few years not as much as I have wanted.
I am in the same or even worse position now though as company is growing profit is growing I'm hit in January with astronomical tax bills x6
Ive got Vat Q4 enormous, Corporation Tax Enormous, My income Tax Enormous, Partners income tax enorm.
Don't get me wrong, its almost all paid, toast and beans till March but is there any way to ever improve when you get to a point a plateaux I maybe hit I feel where I feel it would be difficult to expand, I just really thought and hoped after the best Q4 we have had in both sales and profit that we would be left with something?
I am like oh well back to the drawing board but I seriously think I'm missing something.

 

[Mr D]

The VAT part, put money aside each week from what the buyers pay. The buyers should be paying the VAT bill, not you. The collection is down to you.

 

[pbsdirect]

Yes I know that but we sell products with 3 different VAT rates 0% 20% and 9% maybe we should calculate each week it really varys.

 

[pbsdirect]

But yes I understand the "put it aside each week" thing but when 80% of your sales happen in one month its tricky

 

[tony84]

Or just put away say 20% of everything and by the end of the year it will pay a good chink of that.

I put away 20% of evrything I earn for the tax bill. It still hurts when I pay it, but its there and I am not worrying about it.

 

[pbsdirect]

But I'm paying 20% corporation 20% VAT 40% Income how much should I put away?

 

[Mr D]

But yes I understand the "put it aside each week" thing but when 80% of your sales happen in one month its tricky

Its not tricky, its simply not your money.
You have lots of money coming in, put 16% to one side in another account until you can sort out what belongs to you and what belongs to government. Sorted.
Or have processes whereby the VAT amount on each sale every day is put to one side.

 

[Mr D]

But I'm paying 20% corporation 20% VAT 40% Income how much should I put away?

You pay 20% corporation tax on your profit. Not on the sales. The VAT is 1/6th of what the buyer pays at 20% rate we have currently as a maximum, the buyer, not you, is paying it. You collect it as an unpaid tax collector.

 

[billmccallum1957]

Sounds like you need an independent review of your business strategy.

All too often business owners can be blinkered to what's going wrong.

If your paying a huge corporation tax bill you must be making even bigger profits, but not spending them in the right way, it may be that you're taking too much out of the business (hence the high personal tax bill).

It's impossible for anyone to give you real advice without knowing lots of detail.

 

[pbsdirect]

Hi
ok fair point I will seek a full review I think.
Happy January Everyone!

 

[JEREMY HAWKE]

Are you actually making a profit ?
Are your sums being calculated correctly