Ebay business sellers, what % profit is acceptable

blue_monkey_2

kaza wrote: »

No I dont include my time as I am at home anyway, I literally just buy items to resell, so the only time really is packaging an going to the post office, but I know what you mean.

As for the vat its a new business I only started this April, but I will aim to keep my turnover below £73000, on your tax return I didnt think they asked for turnover just tax payable?

I think you need help - and quick. If you have not been keeping proper records and you have that sort of turnover you have got to get everything up to date.

When you work for yourself you do not bill your time, you get paid whatever profit is left, and then you pay tax and NI on these profits.

You have registered as Self Employed haven't you?

kaza

blue_monkey wrote: »

I think you need help - and quick. If you have not been keeping proper records and you have that sort of turnover you have got to get everything up to date.

When you work for yourself you do not bill your time, you get paid whatever profit is left, and then you pay tax and NI on these profits.

You have registered as Self Employed haven't you?

Hi, thanks for all your replies, yes I have registered as self employed and I am keeping proper records , I just have not done a self assesment yet and wasn't sure what was on it. It wont be a problem to break my figures down into details.

As for the vat personally I have nothing to hide, I just dont want the extra paperwork and hassle.

thanks
karen

blue_monkey_2

kaza wrote: »

Hi, thanks for all your replies, yes I have registered as self employed and I am keeping proper records , I just have not done a self assesment yet and wasn't sure what was on it. It wont be a problem to break my figures down into details.

As for the vat personally I have nothing to hide, I just dont want the extra paperwork and hassle.

thanks
karen

No worries. Keps you on top of everything and it's not actually that hard with usng Sage Instant Accounting - it does it all for you. Obviously it helps to know where the entries are going but I do not think it takes me more than an extra 15 minutes a quarter. It's getting it does that is the hassle. But if I did not have my VAT return to do I'd have a year to do in April. :eek::eek::eek:

kaza

Thanks for the advice, I actually just do it the old fashioned way! a book with columns in, as I kind of thought it would be quicker, can you just import all your ebay sales into sage or do you have to manually input each sale?

martindow

I'm not sure you should be so frightened of getting into VAT. Your business has grown very quickly and if it has scope to continue expanding maybe you should go for it.

If your margins mean you can cope with adding VAT to UK and EC items the business would still be viable. Items you are sending outside the EC have no VAT even though you can still offset the VAT paid. If you sell a lot internationally it could well be very worthwhile.

kaza

martindow wrote: »

I'm not sure you should be so frightened of getting into VAT. Your business has grown very quickly and if it has scope to continue expanding maybe you should go for it.

If your margins mean you can cope with adding VAT to UK and EC items the business would still be viable. Items you are sending outside the EC have no VAT even though you can still offset the VAT paid. If you sell a lot internationally it could well be very worthwhile.

Thank you, I understand what you are saying, at the moment I dont sell a lot outside of the EC, however most of it isn't listed with international (usa, australia) on the items that are I have sold a bit to Australia.

I think you may be right it's a bit of a fear of the unknown! and maybe I should just go for and sell as much as possible, whilst the going is good.

You have got me thinking now!

Thanks
Karen

theonlywayisup

kaza wrote: »

Thank you, I understand what you are saying, at the moment I dont sell a lot outside of the EC, however most of it isn't listed with international (usa, australia) on the items that are I have sold a bit to Australia.

I think you may be right it's a bit of a fear of the unknown! and maybe I should just go for and sell as much as possible, whilst the going is good.

You have got me thinking now!

Thanks
Karen

I was in a similar predicament some years ago. Hit near to VAT and stayed below it for a couple of years before deciding to either do it as a onemanband or go for broke. I went for broke. I now operate wholesale, retail, etail and Ebay, with a warehouse and staff. My first few years of VAT were scary as I was relatively self-taught but with a very good accountant. I bought SAGE IA from Ebay and now my accountant can see my accounts in the blink of an eye.

As has been said, if you are VAT registered you offset your purchases against your sales and any sales outside of the EU can be sold with no VAT to the customer, making it cheaper and therefore increasing your sales. With the recent VAT status change of Royal Mail, I now find that my sales have been boosted again as my non VAT registered competitors are having to pay RM VAT.

Also, you will be able to claim back the VAT on things like a PC/Mac for a period before you were registered - I am no accountant but I think it was something like 3 years - but check that!

Don't be afraid of it. It is easy if you have SAGE, I did it alone for some years and if I can, anyone can!

macfly

A lot of Sage fans. I personally find it overkill. Many traditional accountants promote it because they trained with it.

kaza

Thanks for the advice everyone, I appreciate it.

Hammyman

kaza wrote: »

I know its my decision, I just dont know if Its better to sell less and keep my turnover below the VAT threshold and make say 40% or just go for it and sell as much as possible?

Hell yes. Once you go above the VAT threshold you have two choices:

1) Add 20% on for VAT which makes you uncompetitive to anyone except VAT registered buyers.
2) Absorb the 20% VAT and make less profit.

Now even though 2) sounds like your thought of taking a hit on the markup to keep you below the VAT threshold, it isn't. It isn't because you end up becoming an unpaid tax collector, having to keep VAT accounts and all that goes with it. However conversely, you'll be able to claim VAT on your expenses and stock so it would compensate for the reduction if you absorb the VAT on the top line.