What are the basic overheads that need to be covered in retail?

[Adam H]

I'm looking at setting up a store selling videogames, consoles, films, as well as a few computers for internet cafe-type shenanigans. But, trying to find a definitive list anywhere about what needs to be covered before going to market is pretty hard.

Finding a place seems to be the last of my worries right now! So, what are the basic overheads I need to think about and get sorted before even opening? So far I have:


Rent
Rates (is there a way to find them out?)
Water
Gas
Electricity
Shop fittings and signs
Tills and stock system
Stock
Accountant? Or is a till enough?
Employees
VAT
Accountant
Liability insurance, stock insurance?
Bank charges (merchant account)
Credit card charges
Line rental for the telephone
Broadband bill
Website
Mobile bill

Is there anything I've missed out? Will an accountant tell me how much I'll have to figure in to pay (in VAT) with second hand goods (like games and films)?

Are there any recommendations for who to go for with an accountant, credit card machines/charges, business accounts, gas/electricity suppliers, shop fittings and a stock system/till system, so I can keep track of what is kept in store?

When employing people for 16 hours or less, is it okay to pay cash in hand since it is below the national limit which covers part-time hours, and let them sort out the tax if they do have to pay any with earnings from elsewhere?

Thanks in advance, I know it's a fair bit to ask on here.

 

[Astaroth]

Maintance - general up keep
Lost stock - stolen/ damaged/ unsellable
Corporation Tax etc
If ecommerce then post and packaging

Accountants it is best to get personal recommendations and make use of the normal free initial consultation you get to get advice, make sure you get on with the person and get costs.

 

[Adam H]

Maintanence I guess will be cleaning? If so, the part-time lackies can do that, if not me.

Looking in to Corporation Tax, what's the best way to go if it's one shop, me as the manager and a few employees, sole trader, limited company?

I'll try and get some recommendations on an accountant then, cheers.

 

[Strath]

Hi

Thats exactly the business we are in. You've got everything covered there ref the costs. Although afew of the costs you put as overheads can be capitised in the balance sheet (i.e signs, tills, systems)

If your trading pre-owned items you will need to account for the second hand margin scheme and obtain details of who you purchased second hand items from. Also your local council may have a scheme you will need to register for ref buying and selling second hand items.

I strongly recommend selling on internet too, it compliments the offline side of things nicely and is an avenue to offload alot of crap you trade in. (we all get crap traded in).

Referrence company structure, thats down to your self, we started as a sole but have recently changed to LTD as things have expanded.

Reference accountants, i would strongly recommend one, definatly if you are going LTD. There are many recommendations on here. I would strongly recommend a firm called "Upton & Co", run by Darren Upton, i found him on this very site afew years ago and he's always sorted our accounts.

Regards

Chris

 

[Adam H]

Then you are exactly who I need to be speaking to.

Balance sheet - what does that mean? Self explanatory I imagine but just to make sure..

What till system did you go for?

What is the second hand margin scheme? When buying in products, in the stores I've worked it it's just name, address and signature, is that information fine?

To get rid of the crap, we have a local market in the centre of the town which someone else also uses to get rid of his rubbish that he gets traded in, so we'd be using that as well as the internet to shift items that I think would benefit from being sold on there, rather than depreciate in a store.

Is it okay for me to register as a sole trader and employ others? Is it beneficial for me to be sole or better as a LTD?

I'll check out that accountant and see what he says.

Thanks in advance!

 

[Adam H]

I just called Upton and Co and he's gone on holiday, heh.

 

[Astaroth]

Accountants will also discuss things like legal structure from a taxation/ cost point of view

Maintanence such as cleaning but also just the general upkeep - basically ongoing shop fitting etc.

Also missing any marketing material if you are intending to use it. Solicitor fees for contracts etc.

 

[Strath]

Adam

The second hand margin scheme is there to account for VAt on 2nd hand items, purchased from th general public. You'll need to speak to an accountant for details putting a record keeping procedure in place. I did mine myself as i have a little accounting experience as i'm part qualified.

You'll need to keep an eye on that market you mentioned, as it could end up as a hinderans as they have no fixed expenses and can operate on more relaxed margins. Also watch out for them dumping their crap on you. It does happen.

As to company structure its something that you would need to talk to your accountant about as they can advise you based on other incomes ect you have.

 

[mountie]

The premises:

presumably leased retail space -

1. solicitor to act for you on lease preparation
2. most landlords also expect the ingoing tenant to pay for their 'reasonable' legal fees
3. type of lease (internal repair and insuring or full repair and insuring)
4. ingoing schedule of condition prepared by a surveyor to record the condition of the premises at the start of your occupation (limits your liability if/when you terminate your lease)
5. Building insurance - most leases will stipulate that the tenant reimburses landlords annual building insurance
6. service charge - if part of a parade or 'cluster' of units there may be a service charge to cover maintenance of common parts)
7. Business rates - ring your local council and ask for 'Business Rates dept' and they will tell you the rateable value. Rates payable is currently 44.4 p in the £ (reduced for premises under £15k pa or £21,500 pa in London).

 

[Adam H]

Adam

The second hand margin scheme is there to account for VAt on 2nd hand items, purchased from th general public. You'll need to speak to an accountant for details putting a record keeping procedure in place. I did mine myself as i have a little accounting experience as i'm part qualified.

You'll need to keep an eye on that market you mentioned, as it could end up as a hinderans as they have no fixed expenses and can operate on more relaxed margins. Also watch out for them dumping their crap on you. It does happen.

As to company structure its something that you would need to talk to your accountant about as they can advise you based on other incomes ect you have.

Usually where I've been it's literally keeping them filed in a box/folder in chronological order.

What about the market? Dumping what crap? Sorry, I don't understand that part.

Yeah, I'll speak to an accountant about this. I don't have another income, or one at all right now.

 

[Strath]

The way you are filing sounds fine.

What i ment by the market dumping there crap, is watch out if someone else is already using the market to off load their rubbish, be carefull they dont start using you.

I.e they trade in 4 of their old rubbish for 1 of your better games, its a trick many indie retailers use to off load their rubbish trade ins with places like GAME and gamestation

 

[Adam H]

Ahh, I getcha now. Yeah, I got rid of a lot of rubbish at GAME with that one. I was thinking about certain promotions, as Blockbuster take fairly new games in and give you any new game for £9.99, which is a decent deal when you find stuff like Flatout for £15 and add a tenner (of credit!) on top and get the new Tiger Woods/Stuntman for example. Using Blockbuster to acquire new releases could help..

Do you know if with a receipt from Blockbuster, if you could claim VAT if it was a trade-in? Or is that not accepted?

All trade-ins would go through me anyway, it'll only be a small operation to start with really and trade-in prices are easily checkable online.

 

[Strath]

So long as the receipt has a VAT number on. The blockbusters ones do, as i've used that promo a couple of times too

 

[Adam H]

That's really good then, the promotion is extremely good, especially as you can return games for credit too!

Is there a limit on the amount of time you can claim VAT on? What I didn't understand is, if you find a receipt for a product (or get one from someone for example) that you're also selling, what's stopping you use that receipt to claim the VAT back if it's priced a lot higher? You'd get much more VAT back. This is completely hypothetical of course as it doesn't sound like a legitimate thing to do, I was just wondering what's stopping someone.

 

[stugster]

Hi Mate,

Your rates will be governed by the RV of the property.

Rateable value is set by an independent office (the VOA), and the rate is then set by them.

You pay (this year) 44.1p i think per £1 of RV on the property.

i.e. £1000 RV property would be £441.00 rates.

This is also subject to discount for small businesses. Speak to your solicitor/accountant.

From the point of moving into the premises (I think) you have (i really stress: THINK) about 6 months or so to challenge the RV of the property and have it reassessed.

http://www.voa.gov.uk/council_tax/can_i_appeal.htm