Tax discussion -was -At the risk of being flamed !!

arushofblood

I'm sorry, I've only just realised... I need to go through and press all the thank you buttons !

You all have really been such inspiration to me ! I was getting really down with it all, not knowing whether I ought just throw in the towel. The more I'm beginning to understand things the more interested I'm beginning to become again ! Infact, I'm full of such enthusiasm it's worrying me ! I get so high, then fall so low

Right, I need to go a read a chapter of me novel or I'm never going to sleep with all this planning of arushofblood taking over the world economy

Thanks again ! Till next time

cafenervosa_2

arushofblood wrote:

The Taxman'll be oweing me money soon, lol !! Oh, it doesn't quite work like that

Well I'm not what happens when losses are declared but many companies do report losses....HMV & Chelsea FC come to mind

Sugar_Coated_Owl

So much information for my brain to comprehend.

I'm not sure I could cope with the accounts side of things myself. Hmm I think I need to think about things in more depth.

cafenervosa_2

razorbladekisses wrote:

So much information for my brain to comprehend.

I'm not sure I could cope with the accounts side of things myself. Hmm I think I need to think about things in more depth.

There comes a point when you go past the occasional sale side of it. If you keep on selling for a good time then the tax issue slowly builds up on you and the more your feedback grows the more chance of you will attract the attention of the tax men going through the ebay accounts one by one. This time is when we need to pay tax on the money we make, theres no way around it, would you want to risk not paying tax for the sake of a big multi thousand pound fine or maybe even prison.

We are blessed to have ebay and to live in this country so lets keep our country ticking over

Its a bit like your not paying your tv licence, it makes sence to pay it and then you don't worry each time you get a knock at the door.

baffcat

cafenervosa wrote:

I don't want to give my information away but my general feeling on £60,000 turnover is not that brill. I mean if you only make 10% profit per sale after all expenses thats only £6,000, then theres the tax and NI on top. This is why I want to rethink my ideas because from 60k you need to be making 40%+ profit per sale to make a living from it at least, that is not easy to do when clearly there are competitors happy to work on 10-20% profit for the same item!

I'm nearly in the same position as you, CN. My turnover (not profit) is going to be close to £60k by tax year end, so I'm keeping an eye on it to make sure I don't go over. I'm determined to stay below the VAT threshhold as my stock cost me so little my margins are huge. If I had to start paying VAT, that'd knock £9k off my margins (based on 60k turnover), and that's not something I wish to contemplate.

I'd have so little VAT to reclaim - maybe on some fuel, packaging, van hire, etc - that nearly all of that £9k would be lost. The only saving I'd make would to be charged without VAT by ebay. My two biggest expenses are ebay fees and postage, which seem to work out as roughly £700 each monthly. There's no VAT on postage, and I'd regain about £1100 by paying lower ebay fees. At a push (a huge push) maybe another £1000 from other sundry VAT, so I'd be £7k down.

My margins are better than the 40% you mentioned, so I employ my wife, which has two benefits:

1/ We use her personal tax allowances, and

2/ We get to spend more time together, and at home. Trading online, mostly ebay presently, allows us to decide that we can go for a blast on the Harley if the sun's shining, or take a walk in the woods, or lie in late.

I mentioned earlier in this thread that there are two types of taxes to consider - VAT and income tax/NI. If anyone's turnover is getting near to £60k, and that includes all SALES before any deductions, then they really have to consider their margins very carefully, because going over the VAT threshhold is very likely to impact on the after-tax income greatly. As a percentage, it'll hurt more the more you pay for your goods, as your margins are already going to be smaller than someone who pays next to nothing for their items. Set against this is the fact that the £9k is no longer profit, so you wouldn't be paying income tax on it, saving another £2k or so.

Well, this long-winded diatribe (sp?) boils down to - stay under the VAT threshhold unless you can increase sales enough and maintain margins to (more than) cover the money you'd have to pay the nasty ol' VATman.

HTH

Baff

Sugar_Coated_Owl

cafenervosa wrote:

There comes a point when you go past the occasional sale side of it. If you keep on selling for a good time then the tax issue slowly builds up on you and the more your feedback grows the more chance of you will attract the attention of the tax men going through the ebay accounts one by one. This time is when we need to pay tax on the money we make, theres no way around it, would you want to risk not paying tax for the sake of a big multi thousand pound fine or maybe even prison.

We are blessed to have ebay and to live in this country so lets keep our country ticking over

Its a bit like your not paying your tv licence, it makes sence to pay it and then you don't worry each time you get a knock at the door.

Oh don't worry. If I do decide to embark on a business venture I will definately make sure everything is accurate and declared e.t.c. I'd be too scared not to declare it anyway.

What I meant was that I didn't realise the whole tax thing could be so complicated. Perhaps it isn't really. It might be because I'm reading it when I should be sleeping and therefore I'm not thinking straight.

Anyway, hope I made my point this time.

cafenervosa_2

baffcat wrote:

I'm nearly in the same position as you, CN. My turnover (not profit) is going to be close to £60k by tax year end, so I'm keeping an eye on it to make sure I don't go over. I'm determined to stay below the VAT threshhold as my stock cost me so little my margins are huge. If I had to start paying VAT, that'd knock £9k off my margins (based on 60k turnover), and that's not something I wish to contemplate.

I'd have so little VAT to reclaim - maybe on some fuel, packaging, van hire, etc - that nearly all of that £9k would be lost. The only saving I'd make would to be charged without VAT by ebay. My two biggest expenses are ebay fees and postage, which seem to work out as roughly £700 each monthly. There's no VAT on postage, and I'd regain about £1100 by paying lower ebay fees. At a push (a huge push) maybe another £1000 from other sundry VAT, so I'd be £7k down.

My margins are better than the 40% you mentioned, so I employ my wife, which has two benefits:

1/ We use her personal tax allowances, and

2/ We get to spend more time together, and at home. Trading online, mostly ebay presently, allows us to decide that we can go for a blast on the Harley if the sun's shining, or take a walk in the woods, or lie in late.

I mentioned earlier in this thread that there are two types of taxes to consider - VAT and income tax/NI. If anyone's turnover is getting near to £60k, and that includes all SALES before any deductions, then they really have to consider their margins very carefully, because going over the VAT threshhold is very likely to impact on the after-tax income greatly. As a percentage, it'll hurt more the more you pay for your goods, as your margins are already going to be smaller than someone who pays next to nothing for their items. Set against this is the fact that the £9k is no longer profit, so you wouldn't be paying income tax on it, saving another £2k or so.

Well, this long-winded diatribe (sp?) boils down to - stay under the VAT threshhold unless you can increase sales enough and maintain margins to (more than) cover the money you'd have to pay the nasty ol' VATman.

HTH

Baff

Thats a great post Baff thanks for sharing some of your info. I know I asked this before in a different way but am I right in thinking P&P from buyers is counted as turnover or is that classed as something else?

cafenervosa_2

razorbladekisses wrote:

Oh don't worry. If I do decide to embark on a business venture I will definately make sure everything is accurate and declared e.t.c. I'd be too scared not to declare it anyway.

What I meant was that I didn't realise the whole tax thing could be so complicated. Perhaps it isn't really. It might be because I'm reading it when I should be sleeping and therefore I'm not thinking straight.

Anyway, hope I made my point this time.

Yea thats cool no worries.

My experience of registering for tax last year was very easy in the end I was surprised. However it did seem really daunting at first but you soon get used to the idea

apprentice_tycoon

If it helps....

I've described how my accountant has me fill in my spreadsheets - the only other point to make is that it makes sense to keep organised as you go -

I use an A4 envelope for all my months papers, everything that I spend is shoved in this envelope marked for the month, including notes to remind myself of an amount that will appear in my bank statement, like the example I gave of a cheque for my birthday so that when I come to look at my bank statement I'll know what that entry was.
At the end of the year when I do my spreadsheets all I have to do is tip each one out on the table in turn - total up the postage as that gets entered as one sum, not one for each day I posted - then key all the figures in.

The accountant gets given all these envelopes, my bank statements and credit card statements plus the spreadsheets that I copy onto CD - that's it, I've done my bit.

For all those that are feeling overwhelmed I'd really recommend using an accountant, mine is £200 per year (he says that little traders like me are easy to deal with, therefore cheap!) and it's money well spent, it frees my silly head up from worrying about filling in the return and he saves me money by pointing thigs out that I wouldn't have known, like 'use of home' allowance etc. Even if you only use one for the first year, he's going to get you started on the right path and from then on maybe you can just copy the way he does things by yourself.

soolin

cafenervosa wrote:

Thats a great post Baff thanks for sharing some of your info. I know I asked this before in a different way but am I right in thinking P&P from buyers is counted as turnover or is that classed as something else?

It's turnover as it is amount received, that's why it gets so easy to start creeping up on the VAT threshold.

Soo